The Client Relationship Cycle: A Client Feedback-Based Approach to Matter Management

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The Client Relationship Cycle: A

Client Feedback-Based Approach to

Matter Management

Sharon Quaintance, Senior Director, HBR Consulting

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Purpose of Session

Building upon key observations from HBR’s Law Department Survey and other law department feedback, learn how creating positive

client outcomes takes far more than concluding matters successfully. Managing client relationships is a cycle that begins with

understanding client needs/expectations. Learn about current client expectations from actual survey results and how this information can be used to drive key metrics – impacting both the top and bottom lines – in a continuous improvement cycle.

Trends Client Matter Lifecycle

Success Factors

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Session Objectives

1. Define five law department trends in managing legal matters

2. Review the criteria used by several law departments to determine critical/high value matters

3. Explain a client-focused matter lifecycle approach to enhance service delivery

4. Identify three success factors for improving client satisfaction and efficient service delivery

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Increasing Internal Pressures, Commoditization, Differentiation

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HBR Law Department Survey

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30-Year History

• Record-breaking 292 corporate law departments participated

• Nearly 70 percent of participants had revenues =/+ 2013 Fortune 500 level

• 28% had $20 billion or more in revenues

• Includes companies that are privately held or based outside the U.S.

• Focuses on larger law departments; includes global and U.S. law departments

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• 80% of companies reported an increase in demand for

legal services

• 70% reported a budget increase for inside spending

• Only 40% of companies reporting a budget increase

for outside counsel

Source: 2014 HBR Law Department Survey – All Participants Report

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In a significant change, outside counsel spending went

down

in 2013

2012 All Participants / National Median 2013 All Participants / National Median

Total Legal Spending Up 3% Up 2%

Inside Legal Spending Up 5% Up 5%

Outside Counsel Spending Up 2% Down 2%

Source: 2014 HBR Law Department Survey – All Participants Report

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Perspective

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Better Planning & Budgeting

HBR LAW DEPT SURVEY:

• More consistent use of matter planning/budgeting – 71%, up 9%

LAW FIRM OBSERVATIONS:

• Growing understanding that predictability is critical, but many firms still don’t grasp the importance

• Some becoming more proactive in using Key Performance Indicators (KPIs) especially budget to actual

• Smart law firms creating budget models that mirror relevant AFAs

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Perspective

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3 - Increasing Use of Metrics

HBR LAW DEPT SURVEY:

• Use of analytics to select and improve negotiation – 50%, up from 43%

LAW DEPARTMENT OBSERVATIONS:

• Many law departments request information on firm’s efficiency and measurement tools as part of selection

• Dissatisfaction with tools, having to dedicate staff to provide required analysis

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Perspective

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4 - Frustration with Billing

• Some requiring shadow budgets, BUT getting push back and requires more staff, tools or both

• Many law departments express frustration with billing lags and “surprises”

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Webinar Survey

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5 - Control of Legal Spend

How would you rate your control over legal spending?

• I know exactly which firms my department is spending money with and if we are benefiting from the relationship

43%

• I can generally get a report of the largest firms my department is engaging with and the outcomes

29%

• Legal spend is a constant struggle. It is hard to determine which firms we are spending the most money with and if we are getting value from the relationship

27%

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Change Drivers

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Commoditization

Business Dictionary

Commoditization | Definition

Almost total lack of meaningful differentiation in the

manufactured goods. Commoditized products have thin

margins and are sold on the basis of price and not brand. This

situation is characterized by standardized, ever cheaper, and

common technology that invites more suppliers who lower the

prices even further.

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Informal Interviews

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Common Criteria for

“High Value” Classification

Detailed insight re: operations, regulatory, legislation, other key factors

Institutional Knowledge

Too significant to handle in-house particularly in publicly traded company

Risk

Highly confidential matter where GC wants another opinion

Sensitive

Disruptive technology (e.g., 3D printing) where few even comprehend the invention

Complex

Unusual “on-off” matter and/or a matter in jurisdiction with limited/no experience

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Summary

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Law Departments

1. More law department work staying in house

2. Greater focus on budgeting to achieve predictability

3. Desire for better metrics, but still struggling to find / implement the right tools

4. Frustration with billing lags / inaccuracy and poor communication

Conclusion: Although pricing is important, various aspects of service delivery impact client satisfaction

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Client Matter

Lifecycle

Examining the lifecycle of client interactions to improve service delivery

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Perspective

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Client Matter Lifecycle

Pricing / Staffing / Budgeting Conflicts Attorney Work Client & Matter

Quality-Vetting-Approval / Intake Client Needs Billing / Re-pricing / Write-offs / AR

Time Entry / Expenses / Budget-to-Actuals Closing /

Budget-to-Actuals / Client Satisfaction

Firms are beginning to view Client Matters as having a defined lifecycle with multiple sub-processes where there are opportunities to improve service delivery

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Pricing / Staffing /

Budgeting Conflicts

Attorney Work Client & Matter

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Perspective

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Pricing > Staff to Match Budget

• Establish clear processes to ensure staffing of

matters matches budget

• Marketing consortiums and Swiss verein entities need clearly defined rate bands and global calendaring

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Budgeting Conflicts

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Perspective

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Conflicts / New Business Intake

• What is your firm’s time to clear?

• How accurate are your NBI entries as measured by

billing rejections

• How many AFAs are not

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Budgeting Conflicts

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• Enforceable procedures for time entry

• Implement mobile time entry • Use time entry that

self-checks OCGs

• Clear policies to resolve any attorney “credit” disputes

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Budgeting Conflicts

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Perspective

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Billing & E-Billing

• Clients expect bills to be accurate and on time • Need a well-trained,

dedicated group tasked with creating, distributing, and following up on billing

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Budgeting Conflicts

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Perspective

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“True Ups” & Client Satisfaction

• Create an well-defined processes for closing out matters – discussion of the end results, meeting

expectations, total service experience

• Understand how these meetings tie into further Business Development, rate discussions

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Summary

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Law Firms

1. A satisfactory client relationship is more than simply negotiating a good price

2. Handoffs across departments creates service delivery issues

3. Desire for better metrics, but still struggling to find / implement the right tools*

4. Frustration with billing lags / inaccuracy and poor communication*

Conclusion: Although pricing is important, various aspects of service delivery impact client satisfaction

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Success

Factors

New Approaches, Cross Functional Cooperation

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Success Factors

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People, Process, Technology

• Are you considering the entire lifecycle and how it

impacts client relationships?

• How are you identifying and managing cross functional

issues when there are factors outside your span of

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Success Factors

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Actions to Drive Change

1. Increase focus on understanding all your clients’

expectations

• Use a continuous process

• Understand the full range of client expectations – use as justification for change

2. Determine operational changes needed for improved

cross functional collaboration

• Maximize efficiencies in technology and as many support processes as possible (often easier than people changes)

• Not all law practices need to be structured / function the same (e.g., different processes use different levels of personnel)

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Success Factors

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Staffing Attorney Work

3. Modify operations to align with required level customization based on competitive nature of work

Level of Efficiency Level of Customization low _high high a b c

d “Bet the Farm” work

Your Attorneys

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Summary

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Efficiency & Service Delivery

• PEOPLE: Balance choice of resources to ensure the

right people perform the right tasks at the right cost

• PROCESS: Implement operational structures and

workflows that acknowledge cross-functional handoffs

and monitoring

• TECHNOLOGY: Use new tools to better manage /

monitor cross functional transitions

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Conclusion

Objectives Summary

1. Reviewed HBR survey results with focus on five key areas

2. Covered criteria law departments often use for categorizing types for high value work

3. Provided examples of elements of the lifecycle that can improve

customer satisfaction

4. Outlined three examples for improvements using people, process, technology choices

1. Define five law department trends in managing legal matters

2. Review the criteria used by several law departments to determine critical / high value matters

3. Explain a client-focused matter lifecycle approach to enhance service delivery

4. Identify three success factors for improving client satisfaction and efficient service delivery

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See http://www.stus.com/index.html for additional use of cartoons

Sharon Quaintance squaintance@hbrconsulting.com David Cambria david.cambria@adm.com