world services group how to out perform your larger rivals

WORLD SERVICES GROUPWORLD SERVICES GROUP

HOW TO OUT PERFORM YOUR LARGER

RIVALS

THE TYRANNY OF CHOICE:THE TYRANNY OF CHOICE:

“As A Prospective Client . . . Tell Me Please, Why Should I Choose Your Firm (difficult)

What Makes You Distinctive, andWhat Added-Value Do You Bring To My Business Matters, (more difficult)

THAT I CANNOT GET ANYWHERE ELSE?” (most

difficult)

DIFFERENTIATION VIA CLIENT INTIMACY DIFFERENTIATION VIA CLIENT INTIMACY

DEGREE OF DIFFERENTIATION

PROVIDES NOTICEABLY GREATER VALUE

Fell Short Tolerated Satisfied ‘Redefined’

EXPECTATIONS

RESULTS

EFFORTS

QUIZ: A Company You Consider Your Most Significant ClientQUIZ: A Company You Consider Your Most Significant Client

DURING THE PAST 6 MONTHS, GIVE YOURSELF ONE POINT, IF YOU . . .

1. Personally visited this key client at their place of business (off the current matter), just to see how things were going with the business?

2. Voluntarily devoted non-billable time to attending one of this client’s management meetings?

3. Specifically invited this client to attend and participate in a practice, industry, or client team meeting in order to brief the group on new developments in their company or their industry?

QUIZ - 10 Questions Continued:QUIZ - 10 Questions Continued:

DURING THE PAST 6 MONTHS, GIVE YOURSELF ONE POINT, IF YOU . . .

4. Introduced your key client contact to some individual of strategic importance to them or some individual that represents for them a potential future customer?

5. Attended any industry event (meeting, trade show or conference) with this key client?

6. Proactively interviewed this key client and subsequently drafted and circulated a written report

on what this client has told you about their specific needs?

QUIZ: Give Yourself One Point If . . . QUIZ: Give Yourself One Point If . . .

7. You have obtained a copy of and personally read the strategic plan of this company?

8. There is any active internal effort to subscribe to, read, and circulate pertinent clippings from this client’s trade publications?

9. You have established a direct technology link or extranet to service this key Client?

10 You have developed written service standards, which identifies how you are working to address this client’s needs?

WHAT WE HEAR:WHAT WE HEAR:

““From a client’s From a client’s perspective”perspective”

FROM A CLIENT’S PERSPECTIVE:FROM A CLIENT’S PERSPECTIVE:

“If I could say one thing to the two or three professional firms we work with, it would be for them to talk less and listen to me more.”

FROM A CLIENT’S PERSPECTIVE:FROM A CLIENT’S PERSPECTIVE:

“Of the firms we’ve used over the years, I can certainly confirm that they will do exactly what they’re asked . . . and nothing more. I don’t think any of them could spell proactive!”

FROM A CLIENT’S PERSPECTIVE:FROM A CLIENT’S PERSPECTIVE:

“At least once a year, our bankers spend an afternoon with us to become familiar with our business plan. Neither our accountants nor our lawyers have ever even suggested it.”

FROM A CLIENT’S PERSPECTIVE:FROM A CLIENT’S PERSPECTIVE:

“These professionals think we are always on about costs, but some things are worth $600 an hour, some are worth $100. Our invoices seldom reflect this difference . . . unless we complain.”

FROM A CLIENT’S PERSPECTIVE:FROM A CLIENT’S PERSPECTIVE:

“I read professional service firm adverts all the time, look at websites, read newsletters. I can’t see any difference between most firms; they pretty much all say the same thing about themselves.”

FROM A CLIENT’S PERSPECTIVE:FROM A CLIENT’S PERSPECTIVE:

“We got invited to one of our firms to hear a ‘pitch’ on what they do and why we should use them more. I’ve never been asked to come explain to these people what we do or how they could help us more.”

FROM A CLIENT’S PERSPECTIVE:FROM A CLIENT’S PERSPECTIVE:

“I walk into meetings expecting to see one or two professionals and find a room full of them. Must be a slow month at the firm and they need to up their billings . . . Wish they weren’t doing it on our tab.”

FROM A CLIENT’S PERSPECTIVE:FROM A CLIENT’S PERSPECTIVE:

“I spent about 90 minutes with a managing partner, and laid out two or three issues I had with some of his people. I never heard back from him or anyone else. Makes me wonder why I bother.”

MARKET RESPONSES OF:MARKET RESPONSES OF:

The FORTUNE 1000 The FORTUNE 1000

(& Sophisticated)(& Sophisticated)

CLIENT MARKETCLIENT MARKET

FORTUNE 1000 LEGAL SPEND:FORTUNE 1000 LEGAL SPEND:

The (Average) Fortune 1000 Company’s

Spend on Outside Legal Counsel in 2006:

$ 19,500,000

(high of $200m to low of $150,000)

WHERE THE BUDGET IS SPENT:WHERE THE BUDGET IS SPENT:

#1 Litigation $ 7,020,000#2 Securities & Finance 1,852,500#3 Employment 1,813,500 #4 M&A 1,755,000 #5 Corporate 1,677,400#6 Regulatory 1,657,100 #7 Intellectual Property1,598,800 #8 Environmental 799,600#9 Real Estate 312,000 #10 Other 1,014,000

PROJECTED 2007 BUDGET GROWTH:PROJECTED 2007 BUDGET GROWTH:

Class Actions 19.2% Regulatory 18.1% Bet-the-Company 16.7% IP Litigation 12.5% Securities 11.8% Merger&Acquisitions 11.2% Litigation 10.1% Employment 9.5% Intellectual Property 7.9% Investigations 6.3% Corporate 6.0% Restructuring 5.4% Bankruptcy 4.8% Tax 4.1% Environmental 2.7%

Real Estate 2.2% Source: BTI Research - 2007

WHO GETS THE MONEY:WHO GETS THE MONEY:

CORE CATEGORIES:

“DOMINANT” FIRMS (1-3)

Awarded the most valuable work

Have strong relationship predicated on confidence and trust

“SECOND-TIER” FIRMS (8)

Provide advice in specialized and high value practice areas

“CONTENDER” FIRMS (30+)

Receive only case specific, jurisdiction specific, or routine matters

WHO GETS THE MONEY (on average):WHO GETS THE MONEY (on average):

CORE CATEGORIES:

“DOMINANT” FIRMS (1-3)

Awarded $ 2.6 Million each

“SECOND-TIER” FIRMS (8)

Awarded $ 550,000 + each

“CONTENDER” FIRMS (30+)

Awarded $ 160,000 + each

OUTSIDE COUNSEL UTILIZATION:OUTSIDE COUNSEL UTILIZATION:

In 2001 - Fortune 1000 Used 75 Law Firms

In 2005 - Fortune 1000 Used 48 Law Firms

By 2009 - Expect Fortune 1000 to Use

ONLY 31 Law Firms in Total

Average size of Approved List of Firms is being reduced by 1/3 every 4 years

CONVERGENCE LOOMS:CONVERGENCE LOOMS:

• “Are you planning to reduce the number of law firms you use?”

37% completed first stage of convergence

35% currently in progress

27% planning reductions

• Of those Corporate Counsel who plan cuts, they plan to cut over 35% of the law firms from their current line-up.

Research - July 2007

SATISFACTION DECLINES:SATISFACTION DECLINES:

• “In 2007, how would you score the performance of your outside law firms?”

70.5% scored B for overall performance

10.5% scored C or worseInside-Counsel’s 18th Annual Survey of General Counsel - July 2007

• Of those Corporate Counsel who were asked if they would recommend one of their primary firms, only 32.1% claimed they would.

BTI Research - February 2007

DEFINING QUESTION TO CEO’S, CFO’S & GC’S:DEFINING QUESTION TO CEO’S, CFO’S & GC’S:

““If a firm you never used, If a firm you never used, wanted to attract some of wanted to attract some of your company’s work, what your company’s work, what is the best approach they is the best approach they could take, to get their foot could take, to get their foot in the door?”in the door?”

SO HOW VULNERABLE ARE YOU?SO HOW VULNERABLE ARE YOU?

CLIENT DEFECTION WARNING SIGNS:

• Rates become subject of continued discussion.

• Number of matters sent to firm is flat or reduced.

• Approvals for informal proposals continually postponed.

• Communications becomes more formal with less discussion about client’s needs.

• Calls are not being returned as promptly.

• Invitees don’t attend your functions.

• Access to key decision-makers starts to decrease. • Well of constructive feedback dries up. • You receive an unexpected RFP.

AND IS THERE AN OPPORTUNITY HERE?AND IS THERE AN OPPORTUNITY HERE?

• While a minimum of 33% claimed to have fired or plan to fire at least one of their law firms in 2007.

(Inside-Counsel - July ‘07)

• 75% claim to be open to accepting new firms to their rosters. (Edge)

WHY COMPANIES RECOMMEND:WHY COMPANIES RECOMMEND:

65%

of recommendations are driven by

“SUPERIOR SERVICE AND

CLIENT FOCUSED ACTIVITIES”

These firms understand the client’s needs, the client’s

business goals, and the industry in which the client competes.

THE LOGICAL ACTION PLAN:THE LOGICAL ACTION PLAN:

Initiate some

“Client Teams”to better serve your signature clients.

MISTAKE #1: FOCUSING ON SALESMISTAKE #1: FOCUSING ON SALES

“Most of these efforts are defined and managed to serve the firm’s interests. To us they are nothing more than thinly veiled sales campaigns. Someone comes in, asks how their firm is doing and if we dare say okay, they then want to immediately introduce us to a number of other professionals.”

MISTAKE #2: MOVING TOO FAR TOO FAST:MISTAKE #2: MOVING TOO FAR TOO FAST:

“Rather than being strategic, this would appear to be the latest fad; with some firms boasting of having anywhere from 75 to 120 clients in their ‘exclusive’ key client program.”

DECIDE WHAT CLIENTS TO FOCUS ON?

% CLIENTS = % REVENUES

1% = 14%

4% = 38%

15% = 27%

80% = 21%

AND BEYOND THE LARGEST CLIENTS . . .AND BEYOND THE LARGEST CLIENTS . . .

Which of your key clients are strategically important to protecting your core strengths?

What of the clients are really profitable and not just adding volume?

Which of the largest companies you serve (not necessarily the largest revenue clients) have been declining in their annual spend with your firm over the past 5 years?

DETERMINE AN INVESTMENT BUDGET:DETERMINE AN INVESTMENT BUDGET:

CATEGORY “C” CLIENT:Fee level of $200,000 – $ 500,000 in annual billingsInvest 30 non-billable hours per core team member

CATEGORY “B” CLIENT:Fee level of $500,000 - $ 1,000,000 in annual billingsInvest 40 non-billable hours per core team member

CATEGORY “A” CLIENT:Fee level of $ 1,000,000 and above in annual billingsInvest 50 non-billable hours per core team member

CHANGE IN PROFESSIONAL FOCUS:CHANGE IN PROFESSIONAL FOCUS:

ADDED-ADDED-VALUEVALUE

ADVISERADVISER(care why)(care why)

BUSINESS BUSINESS ADVISERADVISER

(know why)(know why)

TRANSACTIONAL ADVISERTRANSACTIONAL ADVISER(know how)(know how)

TECHNICAL ADVISORTECHNICAL ADVISOR(know what)(know what)

AND A LOGICAL PROCESS:AND A LOGICAL PROCESS:

strategic STEPSstrategic STEPS

STEPS:STEPS:

1. GATHER INTELLIGENCE

2. INTERVIEW THE CLIENT

3. DEVELOP YOUR CLIENT STRATEGY

a. Your “Value-Added” Action Plan

Strengthen the value you add and increase your differentiation

b. Your “Relationship Enhancement” Action Plan

Build and deepen key relationships

c. You “Business Development” Action Plan

Identify revenue goals by service offering

STEP ONE:STEP ONE:

strategic STEPSstrategic STEPS

#1: Gather Intelligence#1: Gather Intelligence

CLIENT KNOWLEDGE?CLIENT KNOWLEDGE?

How much do you really understand about your client’s business and their corporate culture?

FROM A CLIENT’S PERSPECTIVE:FROM A CLIENT’S PERSPECTIVE:

“If you call them ‘trucks’, you don’t understand the nature of our business. I recently fired a firm that had worked for UPS for over 40 years. The firm didn’t understand what we were trying to accomplish.”

Teri P. McClure - VP Legal

PURPOSE :PURPOSE :

• To provide background on client company, snapshot of our work history, a marketing audit, and information about the competitive legal environment;

• Outline an account history and relationship matrix;

• Uncover potential opportunity or risk for client revenues;

• Identify potential client issues or challenges that could impact the demand for future services; and

• Aid in developing a client retention / expansion action plan.

DATA GATHERING PARAMETERS:DATA GATHERING PARAMETERS:

•Revenue / profitability•Areas served•Average matter value•Frequency of firm being used•Geographic reach

•Client financial performance•Client’s goals and strategies•Industry changes•Competitive firms used•Current ‘wallet share’

•Quality of relationships•Position in client league table•Satisfaction / loyalty•Importance of service to client

•Client problem and needs•Perception of firms•How they select•Use of outside firms•Total revenue potential

INTERNALINTERNAL EXTERNALEXTERNAL

HARDHARD

SOFTSOFT

WHAT INTELLIGENCE NEEDS TO BE GATHERED?WHAT INTELLIGENCE NEEDS TO BE GATHERED?

• What business / industry is this client in and how has that industry been changing?

• What are C-Executives saying about the company, and their place in their markets, their growth strategies, or their vision of themselves in the future?

• What are their short-term plan or initiatives – and what do these initiatives imply about their need for our services?

• How is this company organized and what does their organization reveal about how they manage their business and create value for their customers?

• Where are their locations and which of these use our firm and which do not (and why not?)

• How is this company performing and where are they failing to reach their goals and why?

IMPLICATIONS OF CLIENT INTELLIGENCE:IMPLICATIONS OF CLIENT INTELLIGENCE:

CLIENT PROFILE

INTELLIGENCEWhat did we learn about this client?

SO WHAT?What are the implications for our client team?

INDUSTRY AND MARKETANALYSIS

CLIENT’S STRATEGY AND PERFORMANCE

STRUCTURE AND MANAGEMENT

POSSIBLE NEEDS

USE OF OTHERPROFESSIONALFIRMS

STEP TWO:STEP TWO:

strategic STEPSstrategic STEPS

#2: Interview The Client#2: Interview The Client

PRINCIPLES OF INTERVIEW PROCESS:PRINCIPLES OF INTERVIEW PROCESS:

GET MULTIPLE PERSPECTIVES.

Look for those corporate executives that can provide useful insight.

DEVELOP QUESTIONS TO BE USED.

Determine the various ‘open-ended’ questions that will be asked.

SEEK INFORMATION AND LISTEN.

The only purpose of the interview is to seek information on the client’s business objectives, current problems, and expectations for receiving exceptional service.

DO NOT SELL OR SOLVE PROBLEMS.

Agree that whomever on the team is doing the interviewing will not offer solutions to any of the issues uncovered – no matter how tempted.

HIERARCHY OF CLIENT NEEDSHIERARCHY OF CLIENT NEEDS

1: ROUTINE NEEDS1: ROUTINE NEEDS

Satisfying these needs does not add value, as these are considered by clients as your “table stakes” to even be able to play the game:

• Being responsive

• Easy accessibility

• Good interpersonal skills

• Keeping the client informed

• Meeting technical specifications

• Providing quality services

• Handling problems

• Providing value for the dollar

2: EXPLICIT NEEDS2: EXPLICIT NEEDS

Occurs where clients know what they want and can start to comparison shop:

• Providing commitment to help

• Unprompted communications

• Understanding the client’s business

• Guiding national and international requirements

• Dealing with unexpected changes

These needs are the easiest to identify and thus, value comes in helping the clients solve their bigger, more compelling needs - not in tweaking existing offerings.

3: UNMET NEEDS3: UNMET NEEDS

Occurs where clients have a sense of what the service offering should be, but their needs generally exceed the scope of standard services offered:

• Develop proactive strategies

• Develop tools to manage the abundance of information

• Create solutions to manage internal staffing concerns

• Provide training in relevant changes in regulations

• Help company provide better service to internal departments

• Guide the coordination of PR related to high-profile litigation

The market for services to solve unmet needs has been growing and will continue to grow.

4: LATENT NEEDS4: LATENT NEEDS

Occurs where clients don’t recognize they have a problem and / or they don’t know exactly what services they are looking for:

• Adding business value to the organization

• Integrating your activities into the business

• Developing preventative strategies

• Defining meaningful performance metrics

• Defining and reducing overall costs

• Anticipating future business trends and challenges

These needs can only be unearthed through active collaboration and an investment of non-billable time spent learning the client’s business.

SAMPLE INTERVIEW QUESTIONS:SAMPLE INTERVIEW QUESTIONS:

• Please describe the top three ways you measure any professional firm’s performance?

• When you’re stuck in traffic and you’re thinking about the business, what issues are running through your mind?

• What could we be doing that would make your life easier?

• How could we better use technology to be of service to you?

• If you were appointed the Managing Partner for a firm like ours, what would you do differently?

CLIENT’S VALUE CHAINCLIENT’S VALUE CHAIN

Instructions

Transaction

Deliverables

Billing

Assessment & AfterCare

STEP THREE:STEP THREE:

strategic STEPSstrategic STEPS

#3: Develop ‘Value-Added’#3: Develop ‘Value-Added’

Action PlanAction Plan

EXAMINE CLIENT’S VALUE CHAIN:EXAMINE CLIENT’S VALUE CHAIN:

Examine each “TouchPoint” in your interaction with the client:

Instructions – Transaction – Deliverables – Billing – Assessment (Before) (During) (Upon Conclusion)

Ask:“What actions can we take to provide an experience that will

RAISE AND REDEFINE our client’s future expectations?”

1. INSTRUCTIONS (Sample Actions):1. INSTRUCTIONS (Sample Actions):

• Enhance the client’s need for assurance and understanding with a letter of thanks, reassurance and commitment at the outset of the matter.

• Invite the client to identify three ways that you can add more value beyond simply doing the work.

2. TRANSACTION (Sample Actions):2. TRANSACTION (Sample Actions):

• Schedule some non-billable, offsite meeting time with the client to brainstorm about their business and what it is that is “keeping them awake at night.”

• Initiate an appointment to solicit specific feedback from the client mid-way through the matter - when the feedback might be of real value to enhancing both the work product outcome and the client’s expectations.

3. DELIVERABLES (Sample Actions):3. DELIVERABLES (Sample Actions):

• Have your client instruct you on the format and presentation of any written reports they request. Make your reports more useful for your client and easier to pass along within the client organization.

• Help the client with implementation. Coach the client on how to deal with others in the organization, how to present their action plans, how to handle difficult questions, and overcome resistance.

4. BILLING (Sample Actions):4. BILLING (Sample Actions):

• Let the client design their own invoice by showing them a menu of options, offering alternatives, and inviting them to design something that meets their needs.

• Introduce greater transparency. Launch a work-in-progress service that enables clients to view their current matter details on-screen with a daily snapshot of time recorded on a secure extranet site.

5. ASSESSMENT & AFTERCARE (Sample Actions):5. ASSESSMENT & AFTERCARE (Sample Actions):

• Introduce a “Legal Autopsy” process at the conclusion of a transaction wherein you analyze the matter and debrief with the client to see what can be learned:

- future legal impacts of current business practices

- ways to avoid litigation and liability

- ways to accelerate the closing of transactions.

STEP FOUR:STEP FOUR:

strategic STEPSstrategic STEPS

#4: Develop ‘Relationship-#4: Develop ‘Relationship-

Enhancement’ Action PlanEnhancement’ Action Plan

CLIENT DECISION-MAKER MATRIX:CLIENT DECISION-MAKER MATRIX:

RECOMMEND US TO

OTHERS

STRONG FIRMSUPPORTER

SUPPORTER

INTERESTED

NO INFLUENCE

AT ALL

HARDLY INFLUENCES DECISIONS

SLIGHTLY INFLUENCES DECISIONS

STRONGLY INFLUENCEDECISIONS

MINOR DECISION

MAKER

DECISION MAKER

MAJOR DECISION

MAKER

ONLY DECISION

MAKER

SEES US AS SAME AS OTHERS

MILDLY NEGATIVE

STRONGLY NEGATIVE

RECOMMENDOTHER FIRMS

CAPTIVE CLIENT STRATEGIES:CAPTIVE CLIENT STRATEGIES:

What factors reduce a client’s

probability of switching firms?

Quality of working relations

High degree of integration

Perceived switching costs

Perceived risk in switching

BUILDING BARRIERS TO CLIENT EXIT:BUILDING BARRIERS TO CLIENT EXIT:

• Can we position our technical expertise to discourage this client from defecting?

• How do we become an inseparable part of the client’s day-to-day business operation?

• Can we create significant transfer costs to dissuade this company from ever moving their matters to some other firm?

• How do we provide this client with an economic incentive to use our firm more often?

STEP FIVE:STEP FIVE:

strategic STEPSstrategic STEPS

#5: Develop ‘Business#5: Develop ‘Business

Development’ Action PlanDevelopment’ Action Plan

SOLUTION-SPECIFIC PREDATORY PROPOSAL:SOLUTION-SPECIFIC PREDATORY PROPOSAL:

ISSUE(The client’s current concern – What it is about this that is keeping them awake at night)

OUR PROPOSAL(What we would propose to do or provide)

CLIENT BENEFITS(What our proposed course of action will do for the client)

OUR PROOF(Validation and substantiation of our claims)

ACID-TEST:ACID-TEST:

• Select your best performing Client Team(s);

• Review Team’s written ‘service’ plan; and

• Highlight every passage that speaks to how this team will deepen the relationship, add value and enhance the level of service provided.

• Highlight every passage that references how this team will attempt to schmooze the client in some manner, cross-sell, and get more work (“sell these suckers more stuff!”)