Preventing client leakage
Peter Scott
Peter Scott Consulting
www.peterscottconsult.co.uk
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?
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.
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.
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?
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?
Strategic forward planning
What services are your clients going to need in
the future?
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’
What is ‘added value’?
Value Clients Care About
• Our clients’ perspective
• Not our own perspective
• Is there a gap?
The value gap
• It is the client’s perception of value that
matters
• Professionals often put too much emphasis on
service attributes
• Not enough on helping clients achieve results
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
Understanding the client’s needs and
requirements
So what do clients want?
Price on its own is rarely a determining factor
However, value for money is key
The client’s 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
Positioning your practice to be competitive by adding value more than your
competitors
(Brown and Faulkner 1994, Long Range Planning)
High
Client
Perceived
Added
X
Ave
Value
Suicide
Zone
Low
Low
Ave
Client Perceived Cost
PETER SCOTT CONSULTING
High
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
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
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”.
However, it is not enough just to be a good
lawyer
The following factors can all influence a client’s
choice of law firm
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
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 don’t use them for complex work”
• “(They) may not be able to do complex transactions”
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
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 not…I would think
of one or two others first… it may be that I don’t 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 don’t think they have anyone in litigation...but if (the client partner) told
me they did, I would trust him...I’d be interested in talking to them”
• “Maybe not so good at telling people what they do”
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 client’s business
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 didn’t communicate enough, or didn’t seem to be
on top of things”
• “I don’t believe they have the resources”
Relationship and understanding of needs
If a law firm is unaware of a client’s 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
“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
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
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
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
To be unaware of or to ignore
client and referrer perceptions is to
put at risk a firm’s very existence
Any questions?