Along with clients’ traditional measures of value — quality, service, time and total cost — what’s new (or now has increased emphasis) is that more law firm clients are demanding (and in some cases, requiring) a law firm’s use of diverse lawyers to staff their matters and are also demanding total cost predictability.
It is well known that there remains a lack of qualified, diverse lawyers working in law firms and law firms continue to invest heavily to attract, train, develop and retain diverse lawyers, which is an ongoing challenge.
Regardless of the number of diverse lawyers working in any law firm, all outside lawyers and law firms should be aware that clients no longer want “budgets.” Instead, they want 100% cost predictability, which is defined as follows: Before work on the case/matter has started, the client knows exactly the total amount of fees they will be billed. For example, almost 90% of Pratt & Whitney’s (PW) outside legal work is now completed by firms under a flat/fixed fee, and PW is not alone. For more info, see this article on 3 Trends in Pricing Legal Services.
Of course, working to add other and more value to clients is important. But, actual value is not defined by the lawyer or firm. The actual value perceived and received is totally up to the client.
Almost every major law firm already offers common, complimentary, price-of-admission “value-adds” to key clients, which no longer necessarily make a firm stand out as distinctly different, better, faster or more cost effective. Examples of these common price-of-admission value-adds that are required as the “price of admission to even compete” are listed below.
- Firm hospitality offers, including event access, tickets, meals and periodic entertainment.
- Firm diversity and inclusion data, programs and initiatives.
- Newsletters, alerts and other publications relevant to the client’s needs/business.
- Seminars, workshops, CLEs and other training sessions.
- Budgets for case(s), transaction(s) or matter(s).
- Fixed or flat fees for case(s), transaction(s) or matter(s).
- Secure private portals or extranets, which may include access to a private, secure or custom docket, case or precedent and/or document databases hosted, built or used by the firm.
- Complimentary quarterly or annual check-ins to review results and services.
- No markups charged to clients for out-of-pocket costs the firm spends on behalf of the client.
- Complimentary access to and use of firm resources and/or firm employees, such as librarians, researchers, public relations representatives and others.
Some leading law firms are going above and beyond the commonly offered price-of-admission value-adds listed above by creating and offering features and benefits that add more value from the clients’ perspective. Here are eight specific examples:
- Investing in centralized up-to-date technology. Law firms and their clients must be able to leverage their data in order to enhance client relationships. One way to do that efficiently is to use advanced software and artificial intelligence. For example, 96 of the Global 100 law firms and more than 1,000 other law and professional services firms are now using Intapp’s seamless platform to streamline, manage and analyze their firm’s data in order to enhance client relationships and win more business. As Dan Tacone, president of Intapp, says, “Our platform provides a common data-rich view of each step in the entire lifecycle of a client, deal, case or matter. This data fuels more productive attorney-client collaboration and communication around current relationships and new work.”
- Common Software and Systems. Either the firm as a whole, the key client team or practice group buys the same matter management, case, docket, document and/or contract management systems the key client has. Or, the firm provide the client theirs or programs existing systems to sync up or otherwise harmonize, so the key client is fully automated on secure, online platforms with the firm.For example, many leading private equity, venture capital and other institutional investment companies (all of whom hire and use law firms regularly) have been successfully using Deal Cloud for years (which is Intapp’s latest addition to client development solutions). Now, some leading law firms are also using it, such as Baker McKenzie and Fish & Richardson.
- Annual Flat or Fixed Fees for All or Certain Types of Legal Work. Increasingly, law firms are offering key clients and then working under an annual flat or fixed-fee agreement for all outside legal work done for the client by the firm. These agreements take time to initiate and calculate in a win-win manner and are usually renegotiated annually. Clients pay the firm a percentage on a monthly or quarterly basis.
- Partnering with Procurement. Now that law firm clients increasingly have procurement professionals involved in the selection and hiring of outside legal counsel and law firms, some firms are finding creative ways to enhance their relationships with procurement officers. For example, Brandi Hobbs, Client Service and Strategy Director at Poyner Spruill LLP invited firm clients to a Six Sigma Certification course the firm was hosting for lawyers and staff, led by Catherine MacDonagh. Brandi says, “Several clients sent their procurement, project management, and financial team members. We were very pleased with the turnout and the projects that emerged after the course. Having the chance to meet and get to know the professionals who are tasked with finding efficiencies, reducing costs, and managing workflow is incredibly beneficial to the experience we can provide those clients. We are having enriched conversations about how they run their businesses and ways our own processes best complement theirs.” Client procurement professionals are also increasingly working closely with law firm pricing professionals and project managers. “The business people in law firms leverage data and aim to present it in a way that validates their firm’s business case for hiring the firm,” says Dr. Silvia Hodges Silverstein, executive director of the international trade organization Buying Legal Council. “The involvement of procurement changes the nature of the firm-client relationship. We see a more process-driven approach, more focused on measurable performance and results than in the past. So, law firms and lawyers need to integrate technology into their delivery of services, need to be prepared to work with other alternative providers, and be able to scope the work, to put together budgets and deliver the work and results within the budget and be able to report those results in a measurable manner to clients.” says Hodges Silverstein. For example, one pricing director in an AmLaw 100 firm says: “We analyze rate agreements in a very data-driven and thoughtful way and reconcile differences based on patterns and consistency. Limits on rate increase or rate freezes have a distorting effect on rosters of timekeepers as the seniority of the timekeepers changes over time, new timekeepers are added and so on. You can end up with two timekeepers of similar title, location, specialty, and experience level with rates that can be 20 percent or more apart. We analyze our data to draw references and correlations that justify harmonizing the rates around the higher, more market-appropriate levels versus the lower ones, vice-versa or versus keeping rates randomly and unsystematically distributed.” Another example are law firms who share non-client-specific data with clients’ procurement professionals, including average total fees and costs by matter or case type to help educate the procurement officers employed by their clients and establish their databases and benchmarks.
- Complimentary Audits and Assessments. Years ago, major accounting, consulting and other professional services firm created free assessments, audits or tool kits as a service and/or more recently in app form designed to provide organized guidance to systemically identify risks, common steps or possible company assets that can be leveraged or exploited, such as patent aggregators, common issues entrepreneurs face and risk management worksheets. Some innovative law firms are following suit. For example, Fenwick & West created and offers a startup resource center.
- Diversity and Inclusion. According to Pamela Cone, who holds a graduate certificate in corporate social responsibility from the University of Toronto and serves as the global social responsibility officer at Milliman Inc., “It’s no longer enough for law firms to think that simply trying to recruit diverse lawyers, supporting an internal Women’s Group and providing paid volunteer time is sufficient.” Global companies are increasingly expecting their outside firms and suppliers to broaden their diversity and inclusion efforts to be more socially responsible as a corporation or firm.
- Social Responsibility and Sustainability. As Pamela Cone points out, when the phrase “social responsibility and sustainability” is read or heard, most law firm leaders and lawyers think: write a check, donate some time, volunteer and recycle. But a few firms are taking social responsibility to the next level by doing more than simply writing a check or volunteering. Nixon Peabody is taking its commitment to social responsibility and sustainability to the next level by initiating sustainability projects to allow them to apply their highest and best expertise and skills for socially responsible causes. For example, the firm’s recent pro bono New Partners Community Solar project was initiated by Nixon Peabody lawyers. Once completed, the project will provide sustainable solar power for low-income residents in a Washington, D.C.-based affordable housing development. Nixon Peabody attorneys in several practice areas have and are donating their legal advice, drafting skills and representation to the project. As Nixon Peabody partner Alison Torbitt says, “We are always looking for opportunities where our sustainability, energy finance and affordable housing practices can converge in a way that benefits clients and communities. Our attorneys initiated this project, reached out to potential external partners (some of whom are firm clients), drafted the documents and are continuing to work on this truly groundbreaking project.” Other major law firms, such as McGuire Woods are also initiating partnerships with some of their key clients to collaboratively work on and donate their expertise to various pro bono projects and charitable work.
- Other Innovative Value-Added Initiatives. After Susan Hackett and the Association of Corporate Counsel invented the Value Challenge seven years ago, the challenge continues to annually recognize law firms’ and law departments’ collaborative work that results in cutting costs associated with legal work, improving predictability and transparency, and helping attain better outcomes. Check out the 2018 ACC Value Champions, who won by applying innovative thinking and work on projects such as writing apps, leveraging AI, and applying sophisticated sourcing and staffing models.
For more information, check out this article “Best Ways to Expand Client Relationships”. If you have any comments, questions or suggestions, please contact the author Julie Savarino, Julie@BusDevInc.com.