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The article below has been republished in full courtesy of Law360, written by Melissa Maleske
Twenty percent of large law firms report they lose four of their top 10 clients every year, and bringing in new clients can cost eight to 12 times more than getting business from a current one, according to a new report. Here’s how law firms can set themselves ahead of the pack and keep the clients they have. According to the BTI Business Development Opportunity Zones report from BTI Consulting Group, industrywide client satisfaction levels just had their second-biggest drop in 15 years, and client retention rates are expected to follow. As it stands, 60 percent of legal department leaders have replaced a primary law firm in the past 18 months. “Clients keep expecting more because they’re under more pressure: They’re under pressure to help companies improve revenue, they’re under pressure to deal with compliance issues that are fast and furious, they’re under pressure to handle huge issues that haven’t been there before, like same-sex marriage benefits and transgender issues,” says BTI founder and president Michael Rynowecer. “When law firms don't talk about these issues or anticipate these needs, that becomes something that makes you just another law firm instead of one that clients want to rely on." On the other side of things, a small number among the law firms BTI surveyed have retention rates of 95 percent or higher. What do they have in common? Their business strategies put an acute focus on the client experience. Here’s how you can catch up to them. Get Meaningful Client Feedback Asking clients for feedback goes far beyond circulating surveys or interviewing clients about what they want, Rynowecer says. You need to drill down for their real feelings about how you’re doing as a law firm and use it to inform how you serve them. “If you’re an important law firm to your client, they will tell you how you’re performing, even if you’re not performing well,” Rynowecer says. “But if you don’t ask, they’re unlikely to ever tell you. “ If you don’t have a formal client feedback program, reevaluate that choice, advises Rose Ors, CEO and founder of the legal consultancy ClientSmart. But even more important, she says, are informal conversations with clients to ask how they’re doing, how you’re doing, what their metrics of success are at work, what goals their legal department has been setting and even what other firms they’re working with. The worst way a law firm can be fired is silently, she says: Suddenly a client’s work dries up, never to be seen again. “The only reason you get caught off-guard is because you haven’t checked in,” Ors says. “In a nonbusiness setting, you ask your child or your significant other, ‘What are you thinking? How are you feeling?’ And that’s sometimes hard [in business], but you can make it less structured and part of being a better communicator with this person — and you’re always doing business with a person, not just a company.” Another tip from Ors is to have these conversations face to face. “There’s so much that’s nonverbal,” she says. Look and Act Ahead Rynowecer says the firms most successful at retaining clients deliver superior client service, which often comes down to being proactive and helping their clients stay ahead of the curve when it comes to legal and regulatory developments. “The biggest advice I’d offer anyone is just being actively involved, not just in providing services but in providing advice without being asked,” Ors says. Proactive attorneys stay on top of what’s going on in their clients’ industries and hold regular meetings with clients to discuss coming trends and how they’ll be affected. They engage in planning sessions with clients to present, for example, the top 10 concerns in their industry and how to mitigate future risks. They might even provide clients with customized diagnostic tools to assess their risk factors. “We don’t see a lot of it but we see it, and that’s the whole point,” Rynowecer says. “There are law firms that do this on a regular basis and they’re leaving everyone else behind.” Tailor Your Approach Finally, Rynowecer advises law firms to create targeted client development plans that treat clients like individuals. One overarching business development plan per practice area will never be as effective as customized plans. If you know your client and you’ve gotten client feedback so you know what they’ll be facing in the upcoming year, you can devise a plan to meet their needs before they arise. “The best rainmakers and the best client service-oriented firms will go out and not just devise these plans but they’ll discuss the plans with clients,” Rynowecer says. “What you’ve just done is guaranteed that you can be one step ahead because you can’t get better than talking in real time about what your client’s going to be doing next year.” Because law firms have limited resources, they should also prioritize protecting high-value clients first to hold onto the ones that make up a disproportionately large amount of your revenue. They can also funnel more resources into the industries that market trends tell you are poised to have banner years. However, that doesn’t mean neglecting the little guy — they’re a huge opportunity. Rynowecer stresses that today's small client may tomorrow grow larger or be acquired by a large organization, and your point of contact at one company may move to another and bring you along. “There is no reason why any client would want to sacrifice their standards and demands because they need to meet their own objectives and be happy with themselves,” Rynowecer says. “There are many reasons why everyone loves the giant corporations, but the smaller clients make up a bigger portion of the marketplace.”
The above article has been republished in full and is courtesy of Law360. For the latest breaking news and analysis, visit Law360 today.
Great post Amanda. Really very informative.