Wednesday, August 7, 2019

How Clients Define Value in 2019, Moving Beyond Price-of-Admission Value-Adds, & How to Create New Value-Added Services©

1.  How do clients define value?

Clients’ definitions of value vary. Common definitions include:
  • Value is low or lowest price. Some clients want only the absolute lowest price. But is that really value? That is, did they get what they expected and paid for?
  • Value is getting what is most wanted from a product or service, i.e., perceived value for the money.
  • Value is quality plus result received for total price paid, i.e., total received for total price paid.

A client’s overall evaluation and perception of value are based on his or her perception of the total benefits, results and utility received versus the total price paid (including time that is spent or given up). There are five main components of perceived value, but the relative importance of each varies by client, case/matter and situation:
  • Quality – Perceived excellence of expertise, experience and reputation; all work product created and delivered; all associated communications; and the final result/outcome. 
  • Service – Delivery of the work product (briefs, documents, conference calls, etc.) and all communications accompanying the delivery of the work product, plus any/all added extras/value-added items, and/or comp or free service(s).
  • Time – Client’s perceived level of importance/urgency in relation to the level of risk at stake, the speed of response and the total time to completion of case/matter.
  • Price – Client’s perceived value of total benefits received versus total paid.
  • Chemistry – Does the client like working with you? Does working with you make their work or life better or easier?

The weight and importance of each of the five components above varies by client and situation. But, all clients want and expect expertise, i.e. that the lawyer/professional working on their cases/matters is a subject-matter expert, has done it before, has experience handling, and knows what they are doing.

2.  Moving beyond common "price of admission" value-adds

To truly be different and to stand out, lawyers and firms need to move beyond offering  common “price of admission” value-adds – ones almost every other law firm also already offers. It’s time to create new, more and better value adds!

Below is a list of the eight very common “price of admission” value-adds that most clients are already offered in an RFP response or already receive from most law firms and lawyers with whom they work:
  1. Firm hospitality, event access, periodic entertainment – as acceptable under company policies.
  2. Requesting a lunch or meeting without a specific objective that has something in it for the client.
  3. Newsletters and alerts that are not relevant to the client’s needs.
  4. Seminars, workshops, training, CLE, boardroom lunches.
  5. Private extranets in some form. 
  6. Precedent databases.
  7. Complimentary access to firm’s resources or professionals such as library, knowledge management specialist, pricing or public relations professionals, etc.
  8. Secondments that cost the client money.
According to results from the 2019 Legal Procurement Survey, client’s favorite value-adds are complimentary:
  1. Hotlines/access to experts for quick questions
  2. Pre-matter planning sessions, and
  3. Tailored seminars and business-level training

3.  How to Create & Offer Value-Added Services*


In RFP responses, pitches and proposals lawyers and firms often talk about providing value-added services to clients.  But, when asked about the increased value they provide over the competition, most lawyers are unable to specifically and tangibly define the added value. 

What is value?  The answer to that question should be "whatever the client thinks it is".  In this hypercompetitive market for outside legal services, law firms and lawyers need to be increasingly innovative in creating and providing unique and useful value-added services for clients to differentiate their firm.

Clients most often define value in terms of performance, total cost and a combination of other subjective factors.  The ideal value is that performance which maximizes the result or potential outcome for the client at the least cost.  So, value-added to clients often means decreasing or maintaining cost while increasing or maintaining performance and results.   

Not all value-added services are as effective as others.  For example, a very common value-added service many law firms are providing clients are periodic seminars, alerts and newsletters.  Precisely because so many law firms and other providers offer complimentary seminars and newsletters, they no longer add much value.

To create effective value-added legal services, there are at least three steps to consider; initiation/origination, analysis/testing and implementation. 

Initiation/Origination - Creating useful value-added services requires information, research, thought and creativity.  Innovative ideas can be generated and developed in numerous ways.  An excellent source of value-added ideas and concepts come from client's needs and suggestions.  In order to assess client's needs and gather suggestions, lawyers must routinely ask for feedback on specific aspects of service.  Specifically, one question to ask when considering creating value-added services is, "How can we make our (fill-in-the-blank) service more useful to you." 

For example, an existing client of one law firm was asked how the firm's labor law services could be made more useful.  After an in-depth discussion, the client recommended the firm create private, secure app composed of a series of checklists with items and issues to consider when dealing with unions.  The law firm created the app with the checklists  and included the firm’s lawyers and all contact info if any client representative needed additional assistance or legal advice.  The client is satisfied because the firm provided a service which helps systematize procedures and reduce risk and the law firm has created a lead-in service to gain other labor-related work.  Thus, value is added for both the client and the law firm.

Vetting, Analysis & Testing - An effective method by which to analyze value-added services is to gather information from relevant stakeholders, then use strategic thinking and creativity to refine the innovative value-added service ideas.  For example, one law firm gathered specific information on certain clients' needs (companies operating cannabis-related businesses in certain states), then gathered input from other stakeholders and created a unique service package that responded to those needs and provided added-value services in the package.  The firm analyzed the service package for content, possible weaknesses, the process of the delivering the services, then consider input, internal feedback and other information to tweak and enhance the service package.

Testing value-added services is useful to measure client response and gauge the potential success of the service.  Testing can be conducted in a formal or informal manner, depending upon the nature of the services.  Identify a few key clients or targets and gather their comments, suggestions and feedback. If clients’ responses are not as anticipated or planned, further refinements and improvements can be made. 

Implementation - Before implementing value-added services, it is important to determine whether the service is intended for existing or potential clients.  With existing clients, it might be beneficial to provide value-added services on a complimentary basis i.e. at little or no cost to the client in order to cement significant existing client relationships.  However, if the value-added service is created as a “lead in” to potential new clients, a nominal or reduced price or fee should be considered.

Marketing truly innovative value-added services is an effective way to differentiate a firm.  As with all services, value-added services should be marketed in a coordinated and cost-effective manner, designed to contribute towards achieving the strategic goals of the firm.  Accordingly, a goal statement, strategy, budget, marketing vehicle implementation schedule and reporting procedures should be drafted.

Value-added service creation, refinement and implementation is a process.  Value-added services must be continually improved and refined to respond to the market's changing needs and to the client's definition of value, otherwise the value will erode and eventually become obsolete.

*A variation of this article also written by Julie Savarino was published over 27 years ago in the December 1992 hard copy edition of The American Lawyer magazine. If you would like the 1992 version, please email Julie@BusDevInc.com.

4.  How Clients Define Value in 2019

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.
  • Secondments.
  • 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:
  1. 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.”
  2. 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.
  3. 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. 
  4. 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. 
  5. 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.
  6. 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.
  7. 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.
  8. 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” or this book “Master-Level Business & Client Development Activity Checklists” on Amazon.

If you have any comments, questions or suggestions, please contact the author Julie Savarino, Julie@BusDevInc.com.


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