For several years now, law firms have found a benefit to outsourcing specific administrative and operational functions including some IT and finance tasks. Firms are now looking at ways to minimise marketing expenses through outsourcing. Some of these areas include intelligence – competitive, market, client, and industry – and database management, public relations and event management.
Most firms know we are in a mature legal industry. While the past few years have certainly been interesting and challenging, the tipping point has yet to come. Most law firms have focused on carefully managing growth and enhancing overall profitability. Are we there yet? Not exactly, but fortunately there is more that firms can do.
Clients continue to be more demanding and sophisticated. Initiatives geared towards lowering overall legal costs (eg, rate “push back” and consolidation of the number of firms being worked with) are putting extra pressure on incumbent law firms. This pressure is expected to continue for the foreseeable future, and will be particularly prevalent on more commoditised services.
Firm leadership has no choice but to aggressively deal with this reality. One of the best strategies to deploy is a firm-wide client planning strategy. Unless it comes from the top, its sustainability is quickly diminished. Most firms have embarked on this process, but while there are client team initiatives in place, we suggest that client teams need to become a key part of the firm’s overall strategy for driving talent acquisition and retention, revenue generation, succession planning, and new service development.
What would be the impact if your firm’s top client cut their billings to you by 40percent? What if they were acquired by a company that has a relationship with your top competitor? What if they issued an RFP designed to consolidate the number of firms they work with?
The ability to take advantage of these situations is dependent upon anticipation and planning. We all know that time is money, particularly in a law firm. If lawyers aren’t spending their time billing, there may be a palpable impact on revenue. Enter the new client relationship manager model: the Strategic Account Manager.
Most firms will state that they engage in key client planning, but our research has found that most efforts are token at best, with the primary benefits being an increased awareness of keeping key clients happy, and a focus on the firm’s goals (eg, grow revenue, pitch new opportunities) versus aligning with the client’s goals. Additionally, many client teams are run by partners who have little or no training in managing an account team, and not a lot of time for doing so. Ongoing execution of the plan, something lawyers also historically struggle with, is what makes client planning work. If firm leadership is leading the client retention and planning effort, and part of that strategy is hiring experienced professionals trained at managing clients and growing revenue, then firm leadership is directly impacting firm revenue in a positive way.
What should your client planning strategy look like? Who drives it?
Our research in client-planning best practices – utilised by leading professional services firms and corporations – has made one thing perfectly clear: the most successful approaches include hiring Strategic Account Managers (“SAMs”) who have years of experience driving retention and growth of important clients. While the thought of even having a salesperson in a law firm still makes some shudder, market leaders are now hiring experienced SAMs to manage the relationship aspect of one or more of the firm’s strategic accounts.
Jim Cranston, one of the first business development executives at Pillsbury Winthrop Shaw Pittman LLP, a former strategic account executive from PwC and Andersen, and now a Principal Consultant at LawVision Group, commented on his experience:
“Key client managers/BDMs have proven to be invaluable in solidifying relationships with firm clients. In some cases partners have said that the account manager has made a significant difference in growing the client relationship by:
- representing the firm and coordinating a global relationship;
- meeting and talking to dozens of key executives;
- strategising opportunities; and then
- coordinating the right firm resources at the right time.
It’s an enormous amount of work but adds significant value to the firm’s top clients.”
Here are some suggestions of key focus areas for SAMs:
Treat the client-planning program as a major piece of the firm’s strategic architectural structure. Make sure there is high visibility throughout the firm and broad communication about SAM professionals’ areas of responsibility. Measure the results on a monthly basis. Include a financial analyst (or Chief Financial Officer), Chief Marketing Officer, and Information Resource Director (Library) as part of their planning team. There is no more room in law firms for these various team members to act as silos. The impact each will have on helping SAM leaders retain the firm’s most valuable revenue sources will be critical and obvious as soon as they begin to work with the firm.
Instead of creating a mission to maximise revenue from the client, focus on developing a “trusted advisor” relationship with the client. Reaching trusted advisor status typically means:
- more single-sourced opportunities, less competition (lower cost of sales);
- less emphasis on price (higher margins); and
- long-term commitments (visibility into future revenue streams).
Create a client-planning program playbook that includes:
- a client plan template;
- team structures with defined roles, ownership, and expectations (from both firm and client side);
- communication plans that define when and how internal and external (client) communications will happen; and
- account team governance (rules of engagement).
Realise that unique skill sets are required to develop high-impact client relationships. Sometimes the attorney with the origination credit lacks the skills to grow the relationship. The successful SAMs will be key to optimising lawyer time and potential client opportunities. SAMs’ roles should include building client profiles for the strategic accounts they manage, to include:
- What are the client’s strategies, objectives, and plans, for this year, as well as two and three years out?
- How does their business model work?
- Do they plan to expand to new locations?
- Are they developing any new products/services?
- How does R&D fit into their plans?
- What is happening in their industry and with their primary competitors?
- Who are their key customers?
- What does their financial future look?
- What type of employee relations concerns do they have?
- What are their top three priorities right now? Why?
- How is their legal department organised?
- How do they use outside counsel? How will that change over time?
- Who are the key stakeholders for legal services?
- How do they make decisions?
- How profitable is our relationship with this client?
Information-gathering must also focus on how the client views the relationship with your firm. Client loyalty surveys are efficient tools for gathering this information. The best person to conduct these surveys is either the SAM or an outside consultant, or a combination with the firm Chair. Armed with feedback from both a survey and meetings to answer the above questions, a SAM professional will build a strong account plan for implementation.
Will this really work in a law firm?
Our view is resoundingly “YES!” Other executives now more closely connected to firms with strong client account backgrounds and experience share the same view. For instance, Dean Whiteford, a client development executive with more than 20 years of experience working with professional services firms (including Big 4 firms PwC and Deloitte) in developing and driving key client programmes and teams, adds his perspective about SAMs (aka client development executive; sales executive; etc.)
“The key to systematically developing client relationships and delivering services is the commitment to a well-developed, client-focused strategic plan, and then the focus and persistence to ensure that priorities and goals are met. One of the big challenges for professional services firms in implementing client targeting and growth strategies is time, and the conflicting priorities for partners and their teams. Folks get busy, and certain priorities get dropped, or focus gets unavoidably lost in the mix. This is where a team of professional client account managers play a key and strategic role. Their responsibility is keep the ‘big picture’ in mind, and work to help partners meet time, efficient deployment of resources, and other commitments to keep the focus on developing new relationships with clients, and growing and cross-selling new services.
My experience across my years with PwC and Deloitte has been has been very, very, consistent – if the firm, or practice, makes the necessary commitment to clearly define and articulate the firm’s client development strategy, the firm commits the necessary resources (both partners and key staff, supported by talented key account management professionals), and results follow. Time and again, I have seen spectacular growth results across teams.”
Rick Davis, First Choice Advisory Team at RSM and a former Director of Strategic Accounts at E&Y believes that “client lead or account manager, whatever the title, their role is like a free safety on a football team – they see the whole playing field and have a nose for getting to the ball! The role of an effective account leader, for their team members, is a firm hand in the back and a flashlight out front!”
It will be a big step for law firms to take. When consideration is given to managing some of the most important strategic client accounts a firm has with a salaried, highly-experienced sales professional – whose only responsibility is to retain and grow client “share of wallet” for the firm – most firm leaders will say, “Why didn’t we do this long before now?” Once again, leaders out in front will be wise to hold their lead. It will work; the firm will see the rewards.
This article originally appeared in Practice Innovations, a newsletter published by Thomson Reuters that communicates best practices and innovations in law firm information and knowledge management to legal professionals. To subscribe, please visit http://info.legalsolutions.thomsonreuters.com/signup/newsletters/practice-innovations/default.aspx.