A shift in focus

Clients' attitudes and behaviours are changing. They are flexing their buying muscles and unequivocally shifting the balance of power in their favour, as the gap in perception of service levels between lawyers and clients takes hold.

Eighty per cent of lawyers think they deliver 'above average' service, but only 40 per cent of private clients believe they receive this - an overwhelming finding of the latest research by Lexis Nexis, The Bellwether Report 2015: The Age of the Client.

 

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Key points

• 80 per cent of lawyers think they deliver ‘above average’ service but only 40 per cent of private clients believe they receive this

• People who use legal services are no longer ‘clients’; they are ‘customers’ and the power in the lawyer-client relationship has shifted firmly in their hands

• Take special care when explaining your fees and costs, as you do not want your clients to be stung by fees that they did not expect

• Make an effort to understand what your client considers an important part of the service – clients ranked regular updates as number two in their list of priorities, while lawyers ranked this as number 10

• Flexible working is not limited to an improved work-life balance, but can play a huge role in helping to meet the 24/7 expectations of clients

• Underinvesting in technology comes with a risk of jeopardising efficiency 

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Lawyer-client disconnect

One wonders about the reason for this extensive disconnect in perception between clients and lawyers; clients aren't demanding anything out the ordinary. For instance, clients are looking for a clear indication of costs/fees, regular progress updates, clarity on firms' charging system at the outset, an appreciation of their needs, personal and timely response to correspondence, for lawyers to be good at listening, keeping to timetable and to demystify the law.

These represent the fundamentals of any business relationship, regardless of business sector or industry.

It's apparent that the traditional client service values of lawyers and independent firms are out of sync with current requirements. Clients are simply no longer beholden to law firms. There is no dearth of legal professional service providers, information is easily accessible due to the ubiquity of the internet and, a wide variety of DIY style legal tools are widely available. Clients can effortlessly exercise choice.

Perhaps more pertinent is that there has been a structural change in the way people consume services. Herein lies the crux; they've typically been referred to as 'clients', but they are in fact 'customers' of legal service providers. The power resides squarely with these agile customers who will spontaneously take their custom elsewhere, if a law firm doesn't deliver against expectation.

To win the client service battle, firms must identify with client priorities and proactively adapt their working practices to suit the needs of this new breed of informed, cost and value conscious and, legally-aware customer. And lawyers know this.

For example, in the research, 71 per cent of respondents said that they are noticing increased cost consciousness among clients; 61 per cent recognise that their clients expect quicker answers from them; and 53 per cent observe that their clients are reading up in advance of meetings with them.

Five components of a 'smart'
law firm

Fundamentally law firms need to become smarter in the way they operate and deliver the excellence that clients expect. Client service is of course critical to this, but it requires firms to deliver a broader range of expertise across all areas of the business, from marketing to IT. There are five core components that make a 'smart' law firm:

1. Smart servicing

There are two key things to bear in mind here. The first is above average client service levels. Eight out of 10 lawyers believe they are delivering 'very well' or quite well on client priorities, but one in three clients feel that the service delivered for their priorities is 'average' or 'below average'.

Furthermore, by lawyers' own acknowledgement (97 per cent), transparency is very important. However the problem appears to be that clients and lawyers mean different things when they refer to 'transparency'.

Fees and costs illustrate this paradox well. For lawyers, transparency potentially means quoting their hourly rate, but clients want to know what the deliverable for the hourly rate is and what the 'extras/additional value' might be. With transparency, there should be no element of surprise for clients as they are stung by unexpected costs, which is a big bug bear for many.

It is no wonder that they are leading the charge for fixed fees (successfully) in a sector that has survived on this pricing model, for practically its entire existence. Today clients need to be able to monitor overall costs in real-time, even if fixed or capped costs are not feasible options in their individual cases.

Firms need to look at how they can better align their service with clients' needs and implement a clear client service policy. They must also invest in new software tools and give clients greater clarity about what's included in quoted rates.

2. Smart support

This is about guaranteeing quality of advice across each stage of the client journey. For instance, clients rank regular updates on progress as number two in their list of priorities, but lawyers rank it as number 10 in their list. Similarly clients want their law firms to 'listen' to them and rank this as sixth, but on lawyers' priority lists, this ranks far down at number 12.

Recruiting the right people and continually investing in their development, as well as adopting the best research and guidance tools are important. Lawyers will do well to back-up this internal support with their own informal network of external experts. It is all too easy to become isolated when working in smaller firms.

3. Smart thinking

There's no room for 'business as usual'. Firms must continually question traditional working practices and devise new and innovative ways of working. This has to be in tune with the way that today's 'smart' and technology savvy clients operate in their personal and professional lives.

The problem of course is that most lawyers maintain the view that they, as professionals, offer a legal service that their clients will use to overcome their problems.

They don't see themselves as commercial entities, which is perhaps one of the key reasons for this huge disconnect between lawyers and clients.

Legal services are now a transferable commodity, just like many other services. Think of how we buy holidays, insurance, medical services and so on. Gone are the days when people went to a single garage for car maintenance; now you might buy tyres from one outlet, annual MOT from another and, an engine from yet another.

The law firm business model must be in harmony with this approach. It requires an entrepreneurial spirit and a willingness to go that extra mile to develop solutions for customers of their offering.

Firms must implement clear strategies for both business development and marketing. A distinct positioning of the firm's proposition is necessary to protect existing revenues from new entrants and cut-price competitors.

Specialist firms are already taking measures it appears - 38 per cent are redefining their niche in light of current demand. Generalists must follow suit and think about their future income streams. Things like customised and tailored services, branding to differentiate themselves and outsourcing of non-legal work must all be part of the mix.

4. Smart processes

In the current personal and business environments, harnessing technology is a no-brainer, but the research finds that many firms are underinvesting in technology. The risk of jeopardising efficiency looms. Aside from cost,
one of the biggest reasons for this is that there often isn't a senior sponsor within the business for this activity.

This does come as a surprise though, as more than half of the lawyers in the sample have worked in large law firms (who are well disposed to technology), and one in five has top tier experience. Additionally instead of looking at the efficiency gains to be made, firms tend to focus on potential disruption to the business from a new system; a short-sighted view indeed.

But in a world where up-to-date information and tailored support are expected at every stage of the client journey, it makes sense to invest in the tools that enable firms to deliver this. Technology enables processes that improve operational efficiency and client service and in doing so, can in fact end up being self-financing in many cases too.

5. Smart working

Flexible working has a role to play here, but it is rated as important only by 68 per cent of lawyers. The concept appears to be misunderstood. Flexible working isn't simply about helping staff achieve a better work-life balance. It's also about enabling the firm to be better equipped to meet the 24/7 expectations of clients.

The ability to work remotely and while on the move is critical to support this attribute. Again technology has a major role to play in facilitating anytime-anywhere working. It is very likely that the adoption of flexible working will increase once there is clarity from the Solicitors' Regulation Authority, about the use of cloud-based technology to support this way of working.

Smart people make smart firms

In the current business environment, staying one step ahead and continuously honing a competitive edge is essential. There are some interesting differences in approach between entrepreneurial and non-entrepreneurial lawyers.

More than half of the report's sample claims to have an 'entrepreneurial spirit.' Foremost, 67 per cent of 'entrepreneurs' say they get a real buzz out of practicing law, compared to 27 per cent of the non-entrepreneurs. 72 per cent of entrepreneurs said that they are in a growing businesses, 34 per cent said their driver to practice law is profit and, 84 per cent are early adopters of technology.

Delving a bit deeper, it appears that there are three reasons why entrepreneurial lawyers may be more successful than their non-entrepreneurial counterparts. Entrepreneurs are continually looking forward.

They don't allow their firm to stand still; they constantly question every aspect of their business operation, shape and future direction.

As entrepreneurs are always looking for ways to improve the business, it comes as no surprise that they understand the benefits that technology delivers. 93 per cent of entrepreneurs see it as important to be technologically advanced, compared to 75 per cent of non-entrepreneurs.

It is worth noting that aside from efficiency, technology can help law firms overcome some of the challenges that commoditisation of legal services presents to small and medium legal service providers.

The threat of computerisation is real. Nearly 48 per cent of lawyers see increasing client access to internet and automated legal services as a significant business challenge. Similarly, 93 per cent of entrepreneurs implement a well-honed marketing strategy, as opposed to 71 per cent of non-entrepreneurs.

All of this suggests that entrepreneurial lawyers better understand the needs of their clients and are much more client-centric in their approach to doing business. It's imperative that all firms identify and nurture this entrepreneurial spirit, as it will play an instrumental role in their success.

The verdict

It is heartening that after a period of upheaval, lawyers are becoming confident about the future in an improving economy. Two-thirds anticipate practice growth over the next five years. But the traditional client-lawyer relationship is being turned on its head as clients have become more demanding, and competition has relentlessly increased.

Retaining clients is a challenge for almost six out of 10 lawyers, mainly due to low-cost competitors rapidly entering the legal market and dwindling loyalty. There's no place for complacency in dealing with this new breed of smart client.

Although lawyers have woken up to the increased importance of client service, efforts to become more client-focused may be hampered by the profession's traditionalist mentality.

Private clients are now 'consumers' of legal services, readily equipped with online information, while the spectre of internet-based solutions will increasingly demand evolving service cultures with continuously changing business priorities.

The naive view that lawyers hold of their service levels and the outdated standards that performance is measured against must be reassessed. What's needed is an overhaul of the traditional lawyer-client relationship, in favour of proactively addressing customer priorities at every stage of the client journey.

Unlike before, clients are entering into relationships with lawyers on a much more even footing. Lawyers need to earn the trust of clients, who will pay a premium price, but only for a premium service.

It's up to lawyers to bring into their arsenal a broader range of expertise across all areas of the business to deliver the kind of flexible, commercial and, value-added service that clients are demanding.

Jon Whittle is a market development director at LexisNexis UK