Preventing client leakage

Peter ScottPeter Scott Consultingwww.peterscottconsult.co.uk

Preventing client leakage

Clients usually do not tell their law firm they are leaving – they just never again instruct the firm.

Are you unknowingly at risk of losing part of your client base?

Key issues for clients?

Client – based research consistently demonstrates that unless law firms listen to their clients and act accordingly, then those clients are likely to migrate to other firms.

Your client base

It is not only the at risk clients you should be concerned about.

The graph shows that typically three out of ten clients have hidden potential to grow that has not been identified.

The cost of sales

The cost and effort to ensure client satisfaction and thus the retention and development of clients is many times less than the cost of trying to win new business

Do you know your clients’ potential which could be unlocked for your firm?

Protect your backyard

This should be an obvious and profitable way to ensure

-not only survival but also-one of the best ways to build long term competitive advantage

But are law firms doing so?

Strategic forward planning

What services are your clients going to need in the future?

What are clients looking for?

Core issue is to add value

• More than the competitors

• In a way which is regarded as valuable by clients and which differentiates you – to create a

‘brand’

What is ‘added value’?

Value Clients Care About

• Our clients’ perspective

• Not our own perspective

• Is there a gap?

The value gap

• It is the client’s perception of value that matters

• Professionals often put too much emphasis on service attributes

• Not enough on helping clients achieve results

You will add value if…

• You provide clients with what they want – and more

• At prices they perceive to be value for money; and

• You do this better than the competition

Understanding the client’s needs and requirements

So what do clients want?

Price on its own is rarely a determining factor

However, value for money is key

The client’s perspective

“They always try to sell to us on price – but what we really want is to have a good job done at a reasonable price”

Client feedback from a perception survey commissioned by a law firm

PETER SCOTT CONSULTING

Positioning your practice to be competitive by adding value more than your competitors

( Brown and Faulkner 1994, Long Range Planning)

Client

Perceived

Added

Value

Client Perceived Cost

High

HighLow

Low

Ave

Ave

X

Suicide Zone

So what do clients want?

Here are some of our most important research findings from interviewing clients of law firms and in particular from those clients which were in the at risk category

Perceived lack of skills and technical expertise

Clients absolutely expect that law firms have the necessary technical expertise to get the results clients require

This should be a given – but unfortunately it is often not the case

What some clients said

• “They are OK for most work but when it comes to something really important to us, we go [elsewhere]”

• “If [named partner] is not there we go elsewhere because they

lack depth of expertise.” • “They need to improve the quality of staff in the 2nd tier”.

However, it is not enough just to be a good lawyer

The following factors can all influence a client’s choice of law firm

Brand and Positioning

Law firms win and lose work based on how clients and key decision makers perceive them, and particularly in relation to transactions, factors around-complexity-risk; or -size

Some relevant client comments

• “For high value / high risk work I would use a big name firm – very unlikely to get bad advice”

• “Our accountants tell us to use a ‘corporate’ firm”

• “The firm is under pressure if it does not do some bigger corporate work” • “Sometimes we don’t use them for complex work” • “(They) may not be able to do complex transactions”

Lack of client awareness of specialisms offered

Sometimes the problem is not so much actual lack of technical expertise but more a failure on the part of the law firm to make clients aware of what the firm can do

The following client quotes show this

•“They must not assume that people know what they do” •“If I had a £5m project, would I think of (Firm)…probably not…I would think of one or two others first… it may be that I don’t know enough re: the full extent of their expertise”. •“Not sure if they have certain capabilities” •“They are not proactive with their own clients” •“I don’t think they have anyone in litigation...but if (the client partner) told me they did, I would trust him...I’d be interested in talking to them” •“Maybe not so good at telling people what they do”

Speed and other service factors including

- Meeting deadlines- Keeping commitments- Ability to offer advice quickly and efficiently- Keeping clients informed of progress- Care and attention to work- Billing as expected- Personable and likeable people / rapport with the team- Interest in / knowledge of client’s business

These client comments help to illustrate this

•“Their response times leave much to be desired” •“We had to chase all the time … we said it was urgent but it still ended up drifting” •“They didn’t communicate enough, or didn’t seem to be on top of things” •“I don’t believe they have the resources”

Relationship and understanding of needs

If a law firm is unaware of a client’s strategic needs then it is at risk

An example of this was a firm which was unaware that it was likely to lose a large client relationship in an imminent review of panel firms

“For service, I would rate them 8.5 out of 10 (they are upper quartile on this)...for strategic value I would rate

them 2/10”

Being aware of this client feedback, and effectively responding to it, enabled the firm to retain what was its largest single client

Referrers of work

Different factors are likely to be identified from listening to referrers of work such as accountants, banks, overseas lawyers, IFAs, surveyors and estate agents

Research indicates that referrers consider these factors important

• Knowing the individual / the personal relationship / having confidence in the individual

• Expertise / technical ability / good quality advice• Track record in an area of work• Turnaround time / speed / ability to meet deadlines• A fit with client• Location• Reciprocation• Working as a team

Your firm

For any individual firm it is key to identify what is important to your clients and referrers of work and how you perform in key areas

Understanding and then responding to the issues can create immediate financial benefit and clarify the future direction of your firm

To be unaware of or to ignore client and referrer perceptions is to put at risk a firm’s very existence

Any questions?