Posted by: johnocunningham | May 17, 2015

Law Firm Leaders: “Clients Aren’t Asking Us for Change” (Huh?)

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.

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