Posted by: johnocunningham | October 28, 2016

Managing Partner Nightmares From a Client’s Perspective

I came up with the idea for this blog post after I ran across a recent publication by Ward Bower from the reputable legal consulting firm, Altman Weil. The publication is entitled, “What Keeps Managing Partners Awake?”

The top 10 list of managing partner nightmares is an excellent summary of trending issues that law firm management groups must solve in order to keep their firms competitive, not just with other firms but with fast-growing legal service  contenders found among accounting and consulting firms, in-house legal departments, online and outsourced technology solutions, and contract staffing agencies.

In order to chart a successful course for the future, what law firm management groups will need to consider most carefully is the client’s view of these top 10 trending issues.

Based on my experiences interviewing executives, general counsel, and other in-house lawyers, here are some of the prototypical client perspectives on these issues:

  • With regard to the criteria for becoming partner, it should be about the service and the client satisfaction, and there should be some measurement of how well candidates for partner have served clients to their satisfaction and how well they have performed in retaining clients rather than causing their defection to other firms (these metrics would be supplemental to but very different from gross billable hours or claimed client originations).
  • With regard to law firm culture, the operative question-should be, “How do we create a culture of obsession with client satisfaction and constant improvement?”
  • With respect to eroding client loyalty, law firms must figure out how to inspire more lawyers to become “trusted partners and advisers” to their clients rather than just good service providers because trusted partners enjoy a different level of loyalty based on extraordinary mutual commitment.
  • With regard to price competition, law firms must stop thinking about hourly rates, and start thinking the way the client does – the client wants to know the gross cost per matter, which is often less when you procure the most experienced and highest priced lawyer by the hour. Firms that can train more lawyers to be “experts” and “trusted advisers” can charge higher hourly rates AND be lower cost providers.
  • With respect to new competitors and their growing share of the legal services pie, law firms must start to think about investing in more radical game-changing and disruptive innovations because that is what their competitors are doing, and those competitors are starting to steal legal talent and client matters from many firms.
  • With regard to marketing expense, law firms will need to do what their best clients have long done to survive – collect and analyze a lot of data about marketing activities, client perceptions and decision-making in order to invest marketing dollars where they will produce the best return on investment. Firms will also have to hire and trust marketing experts rather than putting someone in charge of marketing who will just take orders.
  • With respect to cyber-security, it is simply something clients assume you are handling well, and they will get very nervous or even flee the first time you have to tell them about a breach.
  • Finally, with regard to “partner denial of economic realities,” this is a problem that should provide a sine qua non factor in making partner or continuing to be a partner – the reality is that NO client would allow a management level person to last long in their position in a state of ignorance with respect to the marketplace.

Also, as I learned soon after arriving at my first in-house counsel job with an international retailer, the cold, harsh reality is that the client (or customer/buyer ) does not care whether you can solve your management problems. The buyer has lots of options in the marketplace, and they will simply vote with their feet, moving quickly and unexpectedly to the provider who has figured out how to serve them with the quickest, most effective and least costly answers to their needs.

Whether you adapt to change is optional, whether you survive is not.

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