Posted by: johnocunningham | June 30, 2015

Law Firm Communications: The Greatest Danger May Come From Within

A recent article published by Bloomberg BNA, entitled “The Data Threat Within Law Firms,” points out that law firms are increasingly the targets of hackers, who want to access sensitive and valuable information related to mergers, patents, finance and other matters.

Coincidentally, multiple published surveys have shown that cybercrime and cyber-theft are among the top 3 concerns of most board members on corporate boards of directors, as well as Chief Legal Officers.

Thus, you would think that any law firm with state-of-the-art security systems and processes would make that fact known to their clients, and make their prospects aware of it as evidence of the firm’s proactive sensitivity to client concerns.

Nonetheless, I have yet to notice any law firm that has advertised the taking of these steps, and I have yet to hear of any firm addressing this concern, even cursorily in RFPs or other pitch proposals.

That could prove to be an opportunity for any firm that actually has instituted security systems, processes and screening that exceeds current standards.

Posted by: johnocunningham | June 25, 2015

PR Leader to Law Firms: “Talk Amongst Yourselves”

An article caught my attention this past week on Bloomberg BNA, which was entitled “Law Firms Must Spend More Time Talking to Themselves.”

This piece by Kathy Cripps, the president of a trade association for public relations firms, hit on a few key points about the need for better internal communication within law firms:

  1. Poor internal communication – about culture, mission, values, strategy and people – leads to poor lateral integration, which may explain why so many lateral hires at law firms are failures.
  2. Poor internal communication often results in botched mergers with and acquisitions of other firms for similar reasons.
  3. To improve internal communications, you need a strategy that includes communication via firm meetings, department meetings, publications and social events.

I would add that internal communications, properly done, can enhance the productivity and the job satisfaction of every single person in the firm. Studies have shown that an employee who is told to perform a series of tasks without being told why is less productive than one who has a sense of how his or her task fits into a broader mission and purpose. As one of my former CEO bosses once said: “A stone cutter who is told to cut stones every day all day soon gets tired. But a stone cutter who is told that he is creating the building blocks for a glorious new church works with energy and purpose.”

When employees know the mission, purpose and strategy of the organization, they are generally more eager to contribute and more energized around the shared objectives of the larger team. When they are left in the dark, or told only what their task is for the day, they are disengaged from the start.

No sports team would dream of telling every player only his piece of a given play without sharing the roles of the other players, as well as the anticipated response of the competition, and the possible strategies of dealing with the opposition. In sports, in business and in law firms too, everyone has a role in team communication, and the larger organization must have a well-formulated set of communication objectives, methodologies and feedback loops.

Posted by: johnocunningham | June 22, 2015

Routine Client Interaction Is NOT Client Feedback

A recent edition of Today’s General Counsel magazine dealt with the subject of client feedback used by corporate law departments, and it highlighted a few key points that outside counsel would be wise to heed.

The key point, as made by General Counsel, is that routine interaction and client feedback are two different things. As the article suggests, “developing a structured process forces the gathering of real information about whether individual service providers are efficient, responsive and able to communicate.” Corporate law departments doing more formal assessments of outside counsel sometimes also measure “effectiveness, predictive accuracy, knowledge base… and how accurate the attorney’s judgment was” at the conclusion of a matter.

A key takeaway for outside counsel is this: Even if you are not taking serious steps to measure your output and your client satisfaction, your corporate client is likely doing it anyway. So don’t you want to be proactive and invite them to share their assessment of you?

High-performing commercial enterprises are generally obsessed with customer/client perceptions, preferences and feedback, and perpetual improvement to meet evolving customer/client preferences and demands. The “best in breed” law firms must do the same if they are to survive.

Posted by: johnocunningham | June 18, 2015

Can Lawyers Use Email for Confidential Communication?

Some legal communications are so important that they are covered in the Rules of Professional Responsibility by applicable state bar authorities, such as communications of confidential and privileged information.

Most rules of professional responsibility were sculpted prior to the digital age, and thus, digital forms of communication present interesting quandaries about how some rules apply to legal communications in the modern age.

The Texas State Bar was recently asked to give an ethics opinion on whether a lawyer can responsibly communicate confidential information by email.

The analysis they conducted to answer the query was focused primarily on the longstanding prohibition against knowingly revealing confidential information. But other state bars might also focus on newer rules (adopted only in some states) that require lawyers to be familiar with technology “to prevent inadvertent or unauthorized disclosure of confidential information” (e.g., see prior post on this blog: “New ABA Ethics Rules on Lawyers’ Use of Technology“).

By focusing solely on the well established but narrow rule prohibiting knowing disclosure of confidential information, the Texas Bar concluded that “a lawyer may generally communicate confidential information by email.” However, the state bar also noted that “some circumstances may cause a lawyer to have a duty to advise a client regarding risks incident to sending or receiving emails… and to consider whether it is prudent to use encrypted email or another form of communication.” The decision can be found in Texas Opinion no. 648 issued on April 15, 2015.

This query is a good illustration of the ways in which lawyers must reassess not only what they are communicating to clients, but the means of communication they are using.

Posted by: johnocunningham | June 16, 2015

What Influences Hiring of Counsel

A recent survey of more than 500 Canadian companies, which can be accessed at CanadianLegalDigitalSurvey.com , has revealed some interesting facts about what influences those who hire outside counsel for commercial matters. A majority of responding companies had annual revenues in excess of $1 billion.

Some of the interesting tidbits from the survey include the following statistics about the most effective influences on hiring:

  • 100 percent of respondents have considered “personal recommendations” to be important in hiring decisions;
  • 78 percent have looked at lawyer bios on the web;
  • articles and speeches by lawyers have influenced hiring decisions of 74 percent of respondents; and
  • relevant lawyer blogs have influenced more than half of all respondents.

Respondents also complained that very few lawyers seek feedback on their service, and only about two-thirds of them said that outside counsel have heard AND acted on their feedback.

Two of the big takeaways for me are as follows:

  1. shared content – on blogs or websites or in traditional publications – can be very effective; and
  2. paying attention to client concerns about service by developing a process to seek and act on client feedback can be a market differentiator.
Posted by: johnocunningham | June 12, 2015

Best Blogs in May: Pricing, Compensation and Other Hot Topics

This is my 30th post in a series of monthly features that I have dubbed “Best of My Blog Roll.” The concept is simple – at the end of a month I peruse my own blog roll (see that column on the right) for material created by other bloggers that I think is most worthy of sharing with others, and then I report on it here.

For the month of May 2015, I have chosen to highlight, first and foremost, a post at the “Patrick on Pricing” blog about ALM’s 2015 Law Firm Pricing Report.

The most useful takeaways I got from this were:

  1. 82 percent of firms with more than 1,000 lawyers and 77 percent of firms with more than 500 lawyers now have full-time pricing professionals to help them with fixed fee pricing, competitive bidding, client fee discussions, budgeting, process improvement, project management and right-pricing of projects;
  2. 69 percent of firms report that their pricing professionals have improved their profitability; and
  3. more than half of firms intend to grow their pricing teams this year.

These stats and other report data clearly indicate that law firms are no longer pricing their services based on what they want to earn, but are attempting to price themselves competitively but profitably in a scientific way.

It is also interesting to note that many firms have focused on process improvement and project management training as a part of the “right pricing” movement. These firms are doing what their most prized commercial clients have done for a long time – improving efficiencies to lower costs while maintaining profitability.

Two other blog posts I liked in May were:

  1. A post on Tim Corcoran’s “Business of Law” blog, which delved into the tricky business of setting up lawyer compensation structures that reward efficient client service, responsible client development and collaborative behaviors that help firms grow; and
  2. A post by Steven J. Harper on his “Belly of the Beast” blog, which looked at the case of one well-known lateral hire as an illustration of what can go wrong in lateral hiring.
Posted by: johnocunningham | May 24, 2015

Alternative Fee Arrangements: Still Growing

According to a recent report from legal service management consultants at Altman Weil, the use of alternative fee arrangements or AFAs is still growing. More than 90 percent of firms now use fixed fees or some other form of non-hourly billing at least some of the time, and 82 percent of firm leaders envision this form of billing as “a permanent trend going forward.”

Interestingly, close to 75 percent of firms that proactively offer AFAs report that AFA work is as profitable or more profitable than hourly work. Thus, most law firms have figured out how to answer the client clamor for non-hourly arrangements without hurting their own profitability.

In my experience, sophisticated corporate clients report that they still favor hourly billing on most projects, but they also say that law firms must be receptive to AFAs in appropriate circumstances to keep their business. They also love it when a law firm proactively figures out and offers up a way that some form of non-hourly billing can be made to work for both sides.

Thus, communication about AFA capabilities should be a part of many law firm pitches and marketing communications.

Posted by: johnocunningham | May 20, 2015

Law Departments Grow While Shrinking Outside Counsel Budgets

The 2014 HBR Law Department Survey, as cited in the March issue of Today’s General Counsel, reports that 55 percent of law departments surveyed globally increased their internal staff of lawyers in the prior year. Also, 61 percent increased their total legal staff. Furthermore, a growing minority of law departments are jacking up their in-house litigation staff (28 percent vs. 21 percent in the prior year). Other in-house specialists are also on the rise in a minority of departments.

This affirms the trend reported in other surveys (including one cited on this blog just days ago) providing law firms with one more bit of evidence that they have to improve the perceived value of the services they deliver at the rates currently being charged.

Of course, there are still plenty of outside counsel delivering great value and being rewarded for doing so.

But these news items show that there is a growing value perception problem for law firms generally. In some cases, outside counsel might be delivering value, but not doing a good job of measuring it or communicating it. In others, they are just not delivering what the client perceives to be valuable. In both situations, law firm counsel needs to improve their communication with clients about what they really want and truly value.

That is part of the reason that I created a program on what GCs and C-Suiters want from outside counsel, examining what they value and what they disdain. Call if you are interested in hearing more about it.

 

Altman Weil, the global legal management consulting group, recently released the results of its 2015 Law Firms in Transition Survey, and there are at least a few nuggets of information that law firms might want to heed. Respondents to Altman Weil’s 7th annual survey included managing partners and chair-persons at 320 U.S. law firms.

Consistent with reports from other surveys, this one notes that non-traditional competitors present a growing threat to the share of work parceled out to law firms by clients. The fastest growing threat comes from in-house legal professionals, who are steadily increasing in number, but accounting firms, compliance consultants, tech providers and legal process outsourcers are also cutting into law firm work. As a result, 61 percent of firms say that overcapacity is now diluting their profitability.

What I find particularly interesting is that 63 percent of law firm leaders say they are not charting strategies for significant changes in legal service delivery, staffing, efficiency or pricing in the face of this increased competition because “Clients are not asking for it.”

HELLO?

When the client does NOT call you, but calls your non-law-firm competitor or just does the work themselves, that IS them asking for change.

Customers (aka “clients” by another name) don’t walk into a failing business and tell the management why they are not coming back anymore. They don’t ASK failing service or product providers for improvements or changes.

As I was taught long ago in the ultra-competitive retail and restaurant industries, customers vote with their feet and not with their voices. When their feet take them elsewhere, they have just told you that you flunked.

Interestingly, the survey reportedly found a strong correlation between strong financial performance by a firm and delegation of authority to firm leaders to make significant necessary changes.

Successful firms – those that will claim market share in the increasingly competitive environment of the future – must have strong and empowered leadership to be able to:

  1. Identify strategic ways of improving efficiency to increase value delivered;
  2. Identify the products and services clients really want; and
  3. Communicate to clients and prospects the ability to deliver those desired services and products in an efficient, value-driven way.

The process of identifying what clients want and telling them how you can deliver is necessarily a function of one’s ability to communicate with those clients, and many law firms clearly can use some help with that task.

Posted by: johnocunningham | May 11, 2015

Best Blogs of April: LawVision INSIGHTS

This is my 29th post in a series of monthly features that I have dubbed “Best of My Blog Roll.” The concept is simple – at the end of a month I peruse my own blog roll (see that column on the right) for material created by other bloggers that I think is most worthy of sharing with others, and then I report on it here.

For the month of April 2015, I have chosen to highlight, first and foremost, a clump of blog posts on the LawVision INSIGHTS blog, which has recently featured several posts per month of with a practical application.

The posts last month that I found particularly interesting were about:

  1. How you can change the outcome by changing the language in your professional services firm;
  2. The four W’s of business development – who, what, when and why; and
  3. Why it might be better to be “superfast” than “super-rich” as a law firm.

Another April post that I liked was one by Stephen Fairley on the Rainmaker Blog about “True Tales from Law Firm Intake Calls.” What I liked about this short post was that it highlighted the critical importance of the first step in law firm communications with a client. It also showed how a stumble on this first step is one from which you might not recover. As the post demonstrates, it is also a stumble that occurs too often for mere lack of attention to the client gateway into your professional services house, and it should not happen because it is so easy to prevent.

Finally, I would like to call attention to a thought-provoking post by Steven J. Harper at the Belly of the Beast. This post was entitled “Thinking Beyond the AmLaw 100 Rankings” and it examined five recently “stylish” trends among law firms that might not have worked out so well in practice.

 

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