Preventing client leakage

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Preventing client leakage

• Peter Scott
• Peter Scott Consulting
• www.peterscottconsult.co.uk

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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?

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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.

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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.

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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?

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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?

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Strategic forward planning

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

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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

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What is added value?
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Value Clients Care About

• Our clients perspective
• Not our own perspective
• Is there a gap?

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The value gap

• It is the clients perception of value that
  matters
• Professionals often put too much emphasis on
  service attributes
• Not enough on helping clients achieve results

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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

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Understanding the clients needs and requirements

• So what do clients want?

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Price on its own is rarely a determining factor

• However, value for money is key

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The clients 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

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



(Brown and Faulkner 1994, Long Range
Planning)
High
Client Perceived Added Value
X
Ave
Suicide Zone
Low
High
Low
Ave
Client Perceived Cost
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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

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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

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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.

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

• The following factors can all influence a
  clients choice of law firm

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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

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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 dont use them for complex work
•  
• (They) may not be able to do complex
  transactions

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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

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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 notI would think of one or two
  others first it may be that I dont 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 dont think they have anyone in
  litigation...but if (the client partner) told me
  they did, I would trust him...Id be interested
  in talking to them
•  
• Maybe not so good at telling people what they
  do

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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 clients business

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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 didnt communicate enough, or didnt seem
  to be on top of things
•  
• I dont believe they have the resources

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Relationship and understanding of needs

• If a law firm is unaware of a clients 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

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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

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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

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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

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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

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To be unaware of or to ignore client and referrer
perceptions is to put at risk a firms very
existence
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Any questions?