Chocolates…and legal services
Whether you’re selling cashmere sweaters, insurance plans or legal services, the truth is (with one or two sector exceptions) clients and customers are now smarter, more inquisitive and – yes – demanding. Ana Craveiro of Portugal’s Morais Leitao says it’s time for all of us to look carefully at the traditional business lifecycle.
Everybody believes their business is different from everything else. You may be selling chocolates, cashmere sweaters or insurance plans: in the end, it is your own business, which you carefully planned and implemented, and you are the best possible person to evaluate it.
When it comes to legal services, lawyers will add an extra layer, convinced of their exclusivity: they deliver knowledge and thought and find it hard to encompass their services in the traditional business lifecycle.
Clients should feel privileged to access this wealth of expertise. Yet, clients now question assumptions, billable hours and methodologies, challenging the traditional process of requesting of the proposal.
Let’s start with a rewind exercise. For a long time, legal services in Portugal were a privileged market. Lawyers imposed fees and decided on methodologies and assumptions. Clients depended heavily on their advice, and paid bills accordingly.
In a rather closed market, clients tended to be loyal and only left due to some conflict – personal or financial. Lawyers from opposite sides and respective clients put up with personality issues and sometimes less than desirable options because that was the way things worked.
In a way, the rules of the customer feedback were apparent to everyone: lawyers had to deliver the work and carry on; if the client was unsatisfied, one would ask if we could afford to lose him or if there was anything we could do to keep him.
It was the dream of every law firm, until the Portuguese economy finally left its infancy and opened-up, thus leading to change in a rather accelerated pace. As companies grew, clients developed in-house departments, hiring their former lawyers to lead these departments with the same rigour they had used before - maximise the rentability and be as efficient as you can about external billable hours.
Then international firms and accounting firms entered the market, commoditising what was once almost considered a work of art (and paid accordingly). And then, obviously, the crisis hit and inevitably prices were controlled, accompanying major changes in the client structure. New styles of management had to be drafted in a rather quick step into the future.
In less than 20 years, a full B2B experience was established with both inside and outside pressure to change. Firms evolved from a lawyer-centric approach to a client-centric culture (or what they identified as such) – including client feedback, i.e., actively listening to what clients think, so the narrative went. Or did they?
“(Law) firms, like all other companies, gather direct customer/client feedback. The problem is not the diagnosis or the means to diagnose. It’s what you do with that knowledge. Does it lead to behaviour change? Does it foster innovation? The answer to these questions will unfortunately probably be a big round ‘no’.”
If one asks firms whether they have client feedback programmes, most will probably confirm they do, albeit in an informal or unstructured way. Firms, like all other companies, gather direct customer/client feedback. The problem is not the diagnosis or the means to diagnose. It’s what you do with that knowledge. Does it lead to behaviour change? Does it foster innovation? The answer to these questions will unfortunately probably be a big round “no”.
We are used to rating the services we purchase. Clients expect this kind of quick evaluation. The problem gets more complicated if we analyse how the providers act upon the feedback, because it means change, and change is difficult. Law firms, like all other institutions, rely on formal and informal rules of organisation.
Managers have ruled new forms of organisation to respond to sector challenges, but culture did not follow as quickly, both due to institutional inertia and to a lag in the understanding of the role of legal services and lawyers in modern day society.
Culture changes entail planning, debating and convincing. It happens in a context of necessity, whether the necessity is immediately perceived or presented to those who need to convince.
More than ever, firm managers must be aware that if they want lawyers to adhere to the decisions made – and most of them are heavily demanding upon lawyers – they must include the why. For a long time, lawyers owned their own business; it is only fair that they are heard in its advancement, to join efforts and gain sense of purpose, specially at a time when culture is the first factor for quitting.
It will not be easy - human beings are predisposed to inertia and to avoid change and unpredictability. However, lawyers do have an advantage when it comes to changing the reaction to client feedback: they have always been at the forefront of client interaction.
It is their job to permanently evaluate the relationship – whether one thinks about profitability, team and billable hours management, the billing itself and thinking ahead about this client.
Will I be getting more work from this client? Do I want it, and if so, under what terms? Can I cross-sell this client to other colleagues at my firm? From the management perspective, it is a matter of systematically including their insights on the matter lifecycle.
Working with the lawyers, in the most collaborative way, instead of persisting on top-down procedural changes. Even if it’s not there, it is a skill that can be trained – and its results streamlined across the firm.
Most gains in law firm management will come from behavioural changes in our processes and approach to the business lifecycle. This means working more and more on the leadership skills, to rely on a mix of autonomy and responsibility, focused training and building a strong sense of collaboration.