Relationships + Insight = Opportunity (Part 2)

Excellent Customer ServiceFollowing on from last month's post 'Relationships + Insight = Opportunity (Part 1)', Kevin Wheeler looks at how to build a 'knowledge pool' on your clients to keep you ahead of the pack.

So, you’ve identified the key decision-makers at the client, ascertained their level of influence in determining which law firms are used by their organisation, and mapped the strength of relationships that the lawyers on your client service team have with these individuals. Now the client service team need to pool their intelligence on the client and conduct additional research to build the necessary insight which will allow them to fully exploit all the opportunities that exist at the client. At Wheeler Associates, we call this building a ‘knowledge pool’.

The other components of this knowledge pool are:

  • Analysis of the client’s business
  • Client perception and needs
  • Billing and margin analysis
  • Competitor activity

Analysis of the client’s business

Understanding the client’s business and industry is a basic requirement for providing effective client service by a lawyer. Sitting back and waiting for instructions is lazy. The most effective lawyers make it their job to be aware of their client’s plans, and developments in their industry, so that they can proactively offer advice.

The client service team need to be able to answer the following questions:

  • What is the nature of the client’s business and how do they make money?
  • How is the business structured?
  • What strategy are the directors pursuing for the business?
  • What issues is the business facing?
  • As a result, what legal services does the business require?
  • Are these requirements likely to change in the future and, if so, how?

Client perception and needs

The greatest source of opportunity for any law firm will come from seeking objective feedback on current performance from its key clients. Because so few law firms do this – our research shows that just around 10% of client / law firm relationships are formally audited on a regular basis – and as most clients welcome the opportunity to provide feedback, those firms that do so can achieve a huge client service advantage over their competitors.

As well as periodic client service reviews conducted by an independent party, say, every 18-24 months, firms should ideally commission post matter reviews conducted after every significant piece of work undertaken for the client, and also ensure that the CRP carries out quarterly reviews with the client specifically to explore client service issues.

Billing and margin analysis

Understanding how the firm is making money from each of its key client relationships is crucial for effective key account management. The CRP and his/her team need to work closely with the firm’s finance department to understand how to drive revenue and profit increases from the account.

The following questions need to be answered:

  • Which services is the client currently purchasing from the firm?
  • Is the revenue from these services increasing, static, or declining, and why?
  • What, if any, pricing regime has been agreed with the client?
  • What margin is the firm making overall and by service line on the work currently being undertaken for the client?
  • Are these margins increasing, static or declining, and why?
  • How much WIP does the firm have in relation to this client, and what is the trend?
  • How much WIP has the firm had to write off with this client, and why?
  • From the client feedback, what is the client’s view of our pricing and billing?
  • How much non-chargeable time is the firm ‘investing’ in developing its relationship with this client?

Competitor activity

Firms should never be obsessed with the other law firms acting for their key clients. Major organisations will usually use a range of firms for different things and many will have formalised panels to manage this activity. The first priority should be to do an excellent job for the client, which if achieved should ensure increased loyalty from the client, continued instructions, and referrals.

Having said this, some monitoring of competitor activity is sensible. If the firm has a robust feedback regime in place, feedback on competitor activity should flow from this. The key is to identify any areas of weakness by competitors which the client service team can then exploit, hopefully by displacing the other firm(s), or areas of threat, say, a competitor offering the client a novel solution, which can then be countered.

The team need to answer these questions:

  • Which other law firms is the client using?
  • Why is the client using these firms for these specific services and not us?
  • Which competitor weaknesses are we aware of that can be exploited?
  • Are our competitors offering ‘added-value’ and how can we replicate/beat this?
  • Does the client operate a formal panel and when is this next up for review?
Armed with this information, the client service team can then proceed to develop a client service strategy and an action plan. This will be the subject of my next blog.

 Kevin Wheeler is a consultant and coach with nearly 30 years’ experience advising professional services firms on all aspects of business development. He has particular expertise in designing and implementing KAM programmes for law firms, and coaches CRPs and their service teams to deliver great client service.

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Filed Under: Practice of Law

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