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