Big Law Firm Hires Client Relations Expert

March 27, 2008

By Gina Passarella

New York Lawyer

After testing out the benefits of client interviews through a consulting firm, Ballard Spahr Andrews & Ingersoll has hired a full-time client interviewer. Debra Nussbaum, a former reporter, started in the firm's Philadelphia office six weeks ago and has been working with a consultant to receive training on how best to talk with clients about their needs and concerns, firm Chairman Arthur Makadon said.

Ballard Spahr had an outside company handle some client relations work about a year and a half ago as part of a broader strategic initiative for the firm and found the information gathered to be invaluable, he said. In looking over the data compiled from previous interviews, Makadon said he realized this might be something the firm could benefit from doing on a regular basis. The department may grow beyond Nussbaum, he said.

"Too often we were just not aware of what our clients were thinking," he said. "That can lead over time to an erosion of the client relationship."

The idea of bringing on a full-time client relations manager is a hot topic that many of the country's largest firms are just now testing out. One consultant said the use of these positions could really bolster the number of times clients refer the firm and could ultimately reduce or eliminate the need for law firm marketing.

Nussbaum is just now starting to meet with clients in what Makadon calls candid interviews in which the clients can talk about what type of service they are getting, any problems that have arisen and what needs to be done better. While Nussbaum, who is not a lawyer, may be accompanied to some of the meetings by lawyers in the firm, Makadon said it would never be with any lawyers who work with the client being interviewed.

He said the firm is just interested in hearing how the client perceives the relationship, whether the firm agrees or not. He said it is important that the firm not try to defend itself in these meetings but just listen to the feedback.

"A key is, though, that once you commit yourself to doing it, you have to do it on a fairly regular basis without making a pest of yourself," Makadon said.

The firm will probably look to schedule these interviews about every year and a half, he said.

Ballard Spahr will initially focus on the firm's 300 or so top clients for the first-round of interviews. Makadon said they are the clients in which multiple firm lawyers are involved in several different practice areas so that the firm gets feedback from several different people within the client organization. While there have been no interviews under the new system to allow for client feedback on the program, Makadon said clients interviewed by the consultant a year and a half ago "loved it." Charles A. "Biff" Maddock of Altman Weil said the new trend on the business development side of the legal profession is to enhance lawyer service by creating the client interviewer position.

The first component of the business side of the profession came years ago in the form of marketing, he said. About five or six years ago, firms started adding the second component by bringing on sales people - an area Maddock said lawyers aren't all that comfortable handling. The third component, which is service, has always been something lawyers are great at, he said. It is just now being augmented by the new trend of hiring client relationship managers, Maddock said.

"This service component is terribly, terribly important," he said.

He said it's a huge selling point for law firms with clients as well as in their recruiting efforts.

When doing client interviews on behalf of his own clients, Maddock said it is unusual that cost would make its way into the top three complaints clients have about their outside law firms. He said the top three issues are usually service-based. While Maddock said marketers don't like to hear this, if the sales function of law firms do their jobs and bring in new clients and the client relationship manager along with the attorneys satisfy those clients to the degree the clients market the firm on their own, then firms don't need marketers.

Many law firms talk a big game when it comes to client satisfaction, but few actually have programs like the one instituted by Ballard Spahr, he said. It is unclear, he said, how many of the AmLaw 200 firms have positions like this. Those that do might be waiting to advertise the fact until they find out how well the position works, Maddock said. He did mention one firm, Orrick Herrington & Sutcliffe, as having this type of position. Not only does Orrick have a client interviewer, but he said the position also acts as an ombudsman for the firm, handling all third-party issues and complaints.

Reed Smith has been in the client relations game for a few years now. The firm hired its first director of general counsel relations in 2005, but one of the clients hired her away the following year. The firm filled the position in December 2006 with Martha E. "Marti" Candiello, a former general counsel who spent more than 25 years in various in-house positions, including time at Sunoco Chemicals and Rohm & Haas.

Makadon said the client interview role is not an area where a firm can make any mistakes. He said the interviewer needs to have a lot of information about the client and the firm's relationship with the client before even setting up a meeting. Nussbaum is familiar with the interview process. Her background is mainly in journalism with some recruiting experience. She has more than 30 years of newspaper reporting experience, beginning her career at The Minneapolis Star. She has also written for The Philadelphia Inquirer and The New York Times. She spent some time recruiting for The New York Times as well. She is an adjunct professor of journalism at Rowan University, where she teaches news writing and feature writing.

Reprinted with permission from the March 27, 2008 edition of the New York Lawyer © 2008 ALM Properties, Inc. All rights reserved.  Further duplication without permission is prohibited.

Technology in Marketing: Competitive Intelligence in Law Firms

ALM Law Journal Letters

Gathering intelligence on competitors, industries, and marketplaces is becoming increasingly popular in law firms. Intelligence is being used to support and guide business development efforts, while market research has long been a cornerstone of marketing. Yet, few firms evaluate the long-term growth of competitive intelligence (CI) in firm business development, and even fewer have sought to build systematically on current efforts to create an intelligence function that can predict opportunities. This article seeks to illustrate how a law firm can build a robust intelligence function - gathering both competitive and business intelligence - that will provide the greatest strategic benefit over the short and long terms.

The One-Off Report

The most common bit of CI done in professional service firms is the one-off report. In its simplest form, it may be a pre-packaged report from a vendor, such as one of the various litigation reports available or a Dun & Bradstreet report for a smaller company. These tend to give a narrowly focused, one-dimensional view of a client, market or industry, based on a specific practice area and in response to a business opportunity. They are reactive and can be classified more as information (informative in nature) than intelligence (a catalyst).

At their most complex, one-off reports are templated and include data from multiple sources. Intelligence pertaining to several practice areas, time periods, and subjects has been included as it relates to a specific inquiry. The most important element of these richer reports is the analysis: A research professional has responded to a question by collating and analyzing research derived from various sources and paradigms to support a conclusion. Competitive intelligence - intelligence concerning competitors - has been combined with business intelligence - firm-internal information, such as financial data - to give a holistic picture of the industry, market, client, firm, competitors and their interrelationship. The report is the summation of the answer to the research question, and is intended to motivate its audience to act. To this end, an executive summary usually includes recommendations for strategies and tactics.

Another common CI function in law firms is using the intranet as a platform for disseminating information and intelligence, especially to key clients. Some go so far as to authenticate users; a user profile will automatically determine what information is presented on the page. In this way, the technology ensures the right information reaches the right people and thus solves the problem of widely broadcasting sensitive data.

Most pages consist of:

• Client/industry/market report;
• Analyst reports;
• SEC filings, including 10Ks, 10Qs, and pertinent 8Ks;
• Patents (if applicable) and trademark information;
• RSS feeds for: press releases, news items, blog posts;
• Legal department biographies;
• Links: Client Web site, competitor law firms, and competitor attorneys' biographies; and
• Business intelligence: Fee and practice group information, client team roster and biographies

Some also include wikis, or user-edited content displayed according to subject. When updated regularly, wikis are an excellent way to capture internal knowledge.

Problems with Current CI Efforts

Reports and intranet pages are highly valuable and represent an excellent beginning to a competitive intelligence function. However, the information and intelligence presented through these vehicles has several major pitfalls. First, the information becomes dated quickly. For one thing, companies can change radically in less than a quarter, and, unfortunately, quarterly earnings are not always accurate. Secondly, the information is static. Limited information can be displayed on an intranet page, so that historical information must be archived regularly. The information represents a snapshot, rather than a deep understanding of a client/market/industry. Third, the information cannot truly be considered intelligence unless a human has analyzed it and pulled out the salient bits. Resources would have to be realigned in order to provide analysis across the firm's revenue board. Finally, the resources required to continually refresh the data are substantial and costly. The richer the information sources, the more time it takes to collect, sort, and collate, and synthesize data.

A more sophisticated approach to the CI process, and one that answers these shortcomings, is to use the products of CI - the reports and information presented on the intranet page - as a process. CI is often discussed as either a product or a process; but rarely is it looked at as both simultaneously. Through the creation of a database, it can be.

Early Warning Systems

Dr. Benjamin Gilad, a noted leader in the CI field, has written and spoken extensively on the subject of strategic early warning systems in his book, Early Warning (2004). When used primarily as a risk-management tool, it is more applicable to products-oriented corporations than law firms. However, a strategic early warning system would serve the CI needs of law firms very well, when customized to look at threats and opportunities.

An EWOS, or Early Warning/ Opportunity System, is a database of all information gathered and products created within the CI function. The beauty of an EWOS is that, while it certainly includes information on clients, markets, and industries, it is built around business indicators. Because business indicators affect clients, industries, and markets, the EWOS is better able to provide dynamic intelligence that will show histories, highlight changes and trends, and, over time, predict trends and changes.

A robust EWOS would involve:

1. Formulating broad and deep questions key to profitability and competitive advantage;
2. Determining the information and intelligence necessary to answer those questions;
3. Allocating the resources to collect, collate, and analyze that information, and
4. Employing technology to store, manipulate and mine, and report on the intelligence gathered.

Formulating the Questions Key to Profitability and Competitive Advantage

Profitability and competitive advantage should be defined broadly and include elements of both threats and opportunities. As an illustration, take a look at a public company's risk factors (in its 10K). Each of these items represents a scenario or issue that could negatively affect their earnings. Those stated by key clients, industry gurus, and economic analyses of markets (including geographic markets) should be included along with indicators that will alert key CI practitioners that trends may be emerging.

For example, one issue affecting law firms today is diversity. Ten years ago, the issue was not on the radar of any law firm professional - marketer, CEO, or partner, despite the fact that most Fortune 500 corporations had already had supplier diversity programs in place for many years. Still, no one thought it would affect the choice of outside counsel. However, had supplier policies been considered a business indicator and monitored accordingly, the EWOS would have highlighted the growing importance of a diverse workforce. A savvy law firm would have been able to address the issue as an opportunity much earlier.

Determining the Information And Intelligence

There is a lot of information out there. Determining the right information and intelligence will make or break the EWOS. At a baseline, the information typically found on an intranet page should be included. Where possible, the information in each document should be broken down into data elements that can be referenced individually and cross-referenced across the EWOS. For example, a key client's 10K should be included as a complete document. The individual sections - such as risk factors - should also be itemized and included as separate items.

A Note on Technology and Resources

An EWOS database does not have to be expensive to create or administer. The technology department will certainly have opinions on the correct software and structure of the database, while departments such as marketing and finance will provide valuable insight into the contents. The more (relevant) information stored in the EWOS, the better, yet, that does not have to translate into breaking the CI budget. Once the data elements have been determined, consider off-shoring the data collection and input. Firms such as Baker & McKenzie and Deloitte & Touche have centers in the Philippines and India, respectively. Following their lead and engaging an off-shoring company that specializes in data collection can be a reasonable and cost-efficient strategy. With the use of a little PERL programming, RSS feeds, and offshore data entry specialists, information gathering becomes a piece of cake - a really cheap piece of cake.

"Reprinted with permission © 2008"

Legal Sales & Service: The Most Important Trend in Legal Business Development

By Jim Hassett

ALM Law Journal Newsletters

Recently, I spoke with the general counsel at a Fortune 500 firm about some of his best, and worst, experiences with law firms. His central message was that "Social events and personal relationships just don't matter like they used to. These days, if a firm wants a steady flow of new business, [it] must deliver value."

In a transparent world where every GC is held accountable for results, and you're only as good as what you accomplished last week, golf outings and tickets to sports events just don't have the power that they used to. This GC's best relationships were with firms that delivered value, that were open and honest about anticipating cost, and that sought his advice on tactics, so that he could choose the best course based not just on legal strategy but also on financial implications.

For each new matter, his company selects a law firm based on its expertise, their history working together, the amount at risk, and its billing rates. Several times, he returned to the idea that there are a number of firms that do excellent work, but their prices are too high for routine work. So he relies on the high-priced firms strictly for cases with a great deal at risk, and "bet the company" matters.

I was not surprised that his stories kept coming back to money, and discussions of the potential return on investment. But I was surprised at how many firms he had worked with who did not seem to understand this very fundamental point. They just wanted to maximize revenue in the short term or win the case at all costs. They did not seem to consider how much better they could do in the long term if they paid more attention to giving clients what they want and need.

Part of a Larger Trend

Law firms are not the only ones that are feeling the pressures of an increasingly competitive global economy. In fact, in the last 20 years, most other businesses have already felt it far more.

Last summer, Jack and Suzy Welch (of GE fame) discussed this trend when a reader of their Business Week column (Aug 13, 2007, p. 92) asked, "Is customer loyalty dead?" Their answer: "Not dead, but different. Time was you could 'earn' a customer's loyalty with tickets to a big game [and] a few nice dinners." Those days are over, according to the Welches. In "today's fierce economy" there is a greater emphasis on price and on a "two-way approach" in which sellers are "fervently committed... to making your customers win big in the long haul, rather than just meeting their immediate demands."

Sales gurus have been preaching the benefits of this approach for more than 20 years.

Are the harsh trends have been transforming other businesses for the last 20 years really coming to law firms? Consider the evidence regarding five overlapping issues: loyalty, relationships, process, price, and value.

Loyalty

For lawyers, the reduced importance of client loyalty first became apparent with the rise of the DuPont legal model. In 1992, DuPont established a "convergence process" to increase efficiency, reduce the number of law firms it used, and to work only with firms that treated DuPont as a strategic partner. Within a few years, DuPont had reduced the number of law firms it used from 350 to 42. To put it another way, DuPont stopped working with 308 firms. For each firm where loyalty might have been a factor (the 42), there were more than seven firms (the 308) where prior relationships were not enough to hold on to business.

By 2006, Business Week (9/18/06, p. 42) estimated that this approach had saved DuPont "$100 million through automation, outsourcing, and reducing the number of outside law firms it uses."

DuPont has publicized its success, and even set up a Web page with everything a company needs to get started on this process, including a five-page downloadable RFP template (at www.dupontlegalmodel. com). Variations on the DuPont model have spread widely, and RFPs and competitive bids have become standard operating procedure at large law firms. Some competitions have been even tougher than DuPont's. A few years ago, when Tyco applied the DuPont model, they started out with 167 law firms handling product liability cases. By the time they were done, they were using just one firm: Shook Hardy Bacon. And we know loyalty was not a factor in the decision, because they had never worked with the winner before. They won by proposing an approach that Tyco judged as the best price and the best value.

Relationships

Even in an age of convergence and RFPs, some rainmakers swear by the personal relationships they have been cultivating for many years with sports tickets and steakhouse dinners. There is no doubt that in the past social relationships have made a big difference in keeping clients happy and in getting new business. But there is also no doubt that in the future, the importance of social relationships will continue to decline.

One of the most interesting trends in the legal marketplace is the growing influence of procurement professionals. Over the last ten years, procurement professionals have substantially increased their influence at large corporations, by becoming extraordinarily skilled at reducing costs throughout the supply chain. The good news for lawyers is that they were among the last to get squeezed. The bad news is that the squeezing has just begun.

Procurement managers tend to look at legal service purchases as commodities, and to force suppliers to compete more directly by issuing RFPs. Anyone who has worked in legal marketing for the last few years will attest to the radical growth in the number of RFPs, and in their importance.

Are social relationships still relevant to new business? Of course. They always will be. It's human nature to want to work with people you know and trust, especially in a sensitive and critical profession like the law. But every time a large client professionalizes the buying process, the value of social relationships goes down a bit more.

Process

Very simply, general counsel are being held accountable by their management, and their management is being held accountable by shareholders. As a result, clients demand to be much more involved in decision making. There is greater emphasis on responsibility, accountability and transparency and corporate counsel's decisions and budgets are being scrutinized like never before.

Price

Sooner or later, this discussion must turn to price, since that is so often at the heart of the matter.

What should law firms do to control costs and meet client needs? The key is to manage budgets to assure that there are no surprises. Of course, there are still the matters of rates, and of hourly billing. Consider this quote from the RFP template on the DuPont legal model Web page: "DuPont is interested in results, not effort. Our long-range goal is to move away from hourly billing where feasible. We believe hourly billing is a disincentive to efficient service, and we welcome opportunities to structure fee agreements that provide for incentives and that reward results rather than time devoted to a matter." While progress on this has been slower than some predicted, there is no question that more firms are using project pricing, fixed fees, blended rates and/or flat rates than ever before. The billable hour isn't going away any time soon, but any firm that can offer alternatives is likely to benefit in the long run.

Value

At one level, everything comes back to price. But at a more fundamental level, the price that clients think is fair is based on their perception of value. Lawyers typically believe that the quality of their legal work is a competitive differentiator. But surveys have repeatedly shown that clients do not share this view. Client perceptions of value are related to meeting business needs. To protect and expand their business with current clients, law firms must consistently deliver excellent client service. They also must be willing to pay for unbilled products and services that will lead to stronger relationships.

Predicting the Future

These are hard pills for law firms to swallow, since what is free for the client comes straight out of the partners' profits. Why give away something for free, if you don't have to?

As Nobel prize winner Nils Bohr famously put it, "It is very hard to predict, especially the future." It is human nature to deny that there is a need to change. The experts may be wrong about the future payoff from free services, but you can be 100% certain that you can increase profits per partner in the present by avoiding free giveaways.

Over the next few years, we'll see who's right. I side with the many observers who think that these critical trends will continue to transform the legal profession:

What about the present? Where do law firms stand today on these issues? There is no simple answer, because we are living in a time of transition. The emphasis varies from client to client, from firm to firm, and from one practice group to another. Some lawyers will refuse to accept this argument until it is too late. Who wants to believe that firms should spend much more on client satisfaction? And maybe spend less on season tickets, expensive dinners, and golf junkets?

So some lawyers will continue to operate as they always have, until the day that they lose the large clients who have been paying the rent. Then there will be weeping, gnashing of teeth, and calls to the marketing and business development departments. But it will be too late. Because once you lose a client, it can take a very long time to win back his or her business.

Past	Future
Clients are loyal	Clients look for the best deal
Social relationships are critical	Value relationships are critical
Process can be hidden	Process must be transparent
Price is a given	Price is constantly re-negotiated
Value is assumed	Value must be proven

Reprinted with permission © 2008