Smith: firms need to put client relationships at the heart of everything they do
Many senior partners lack all but a “basic knowledge” of their clients’ businesses, leading to “superficial” interactions and a “disconnect between law firms and their clients”, a report has found.
Further, in-house counsel are now looking at alternative providers and also smaller firms that offer greater flexibility – as well as bringing more work in-house.
Researchers uncovered evidence that where partners did understand the “broader strategic context”, they failed to communicate it to the associates who actually handled the transactions.
The report, by LexisNexis and Cambridge University’s Judge Business School, was based on a series of interviews with 21 representatives from major corporate clients, including 12 general counsel, and 25 from leading law firms, including 13 partners from top 50 practices.
In Amplifying the voice of the client in law firms [1], researchers said that “not a single client interviewed was satisfied with what law firms provide”, and their list of complaints was long.
The report accused law firms of making “little effort” to understand their clients’ businesses and help improve them.
“Forty per cent of the clients interviewed noted that the senior partners of law firms working on their businesses appeared to lack more than a basic knowledge of their businesses.
“Several clients characterised partner interactions as superficial, with partners often not well briefed.
“More than one client expressed the view that the voice of the client is deliberately not communicated to the wider firm because this is expensive and time-consuming for the law firm.
“Many general counsel emphasised that their budgets remain under sustained cost pressure and yet when they look to law firms to provide better value, they are utterly underwhelmed with the response.”
Researchers identified three “common themes”: little appetite by law firms to offer alternative business models; the parameters of ‘fixed fee’ services changing “so frequently the fee is actually variable”; and “little desire” among law firms to help clients save costs.
“There is an acknowledgement that law firms are trying to implement better project management systems and practices, but the overall perception is that they remain far behind where they need to be.
“Seventy five per cent of the clients interviewed mentioned how they get little help from law firms when analysing the complex portfolio of legal work given to them: spends, trends, type of work, the life cycle of cases, impact, etc.”
The report’s main finding was of “unambiguous evidence of a significant and persistent disconnect between law firms and their clients”.
While both sides were aware of the disconnect, their “interpretations of the magnitude and underlying causes” were different. Researchers said the disconnect, which “permeates everyday interactions”, was increasingly prompting clients to look to non-traditional providers.
Law firms saw client relationships through the “lens” of the individual transaction or project, viewing the overall relationship as “the aggregate of the transactions”.
Clients, on the other hand, placed “great emphasis” on separating the relationship from the transactions.
“All clients were uniformly of the opinion that not only do the law firms not provide relationship services, in many cases they do not seem to see the need.”
One consequence of the disconnect was that 20% of clients said they switched law firms more than they wished, with some “long-standing relationships” coming under pressure.
While some clients “started working with much smaller law firms” outside the top 50, to benefit from their flexibility and responsiveness, 25% of all clients mentioned bringing more work in-house.
To improve the relationship between law firms and clients, the report recommended that firms appoint “key account representatives” to help ensure close co-ordination between different teams.
Inspired by “standard practice” in the consulting sector, firms should provide “dashboards of the status of completed and ongoing activities”, with billing and associated information.
The report recommended that law firms should spend more time building relationships with their clients and partners better co-ordinate their efforts.
“This requires moving beyond pragmatic engagements with the client and providing a sense of partnership where the client feels valued and protected.”
Some law firms have already made progress and their actions have been well received by clients, the report said.
Mark Smith, market development director at LexisNexis, said: “The research suggests that law firms need to improve their ability to work in a joined-up manner, focus on identifying opportunities that create mutual value, and start working harder at putting client relationships at the heart of everything they do.”
Kishore Sengupta, reader in operations, at Cambridge Judge Business School, added: “The findings highlight the need to rethink core client strategies. To succeed in the current climate, lawyers need to be more than just great lawyers – they need to understand their clients’ businesses more deeply.
“Lawyers now need to implement clear strategies to manage client relationships, moving beyond pragmatic engagements to providing a sense of partnership where the client feels valued and protected. Done well, such an approach will support firms in winning over their clients.”