Walker Clark Worldview

A partner from a law firm in a small legal market (under 500,000 people) in the United States asked me this question a few days ago.

The answer is really one of definition. While the term  “general practice” is relatively benign, claiming to be “full service” can be toxic for a small law firm.

Business clients, even in smaller communities, are rightfully skeptical of small firms (which, for purposes of this discussion, includes firms of up to 20 lawyers) that advertise  expertise or significant experience in dozens of practice specialties.  When probed, many of these claims are based on one case or one transaction that might have happened years ago.

Our firm works with smaller law firms, both in the United States and worldwide, to develop and execute marketing strategies that work in smaller legal markets.  Our experience and observations suggest three points that a small law firm should consider:

• Avoid the temptation to tout yourselves as a “full service law firm.” Not only does such a claim lack credibility among sophisticated business clients and high net-worth personal clients; it can also unnecessarily raise their skepticism among the things that you really do well. And no news travels faster in a small market than the experience of a client who has been disappointed by mediocre performance or poor client service.
• Focus on the client sectors in which you are already strong.  If some of your best clients are, for example, in the construction industry, be sure that you understand their businesses better than any of your competitors.
• Don’t be afraid to refer a client to a competitor for work that is outside your area of expertise. Of course, there is a risk that the competitor might “steal” you client. If that happens, it probably was likely to happen even without the referral. The much higher probability is that sending a client to another firm, when you cannot give the client the best possible service, will actually increase the loyalty of that client to your firm, as well as make the client more likely to refer you to others.

The risk to small law firms that try to do it all is that you usually end up doing nothing particularly well. This is a sure formula for invisibility in the competition for the types of potential clients that your firm needs the most.

Norman Clark

“Never ask a question to which you do not already know the answer.”

This is one of the cardinal rules of trial advocacy.

Unfortunately, this rule is foolish in law firm management.

My colleagues and I frequently hear statements such as these from otherwise intelligent lawyers and business managers:

• We can’t ask those questions of our associates or staff. That would only stir things up and make the situation worse.
• We can’t ask those questions of our clients. We must not raise their expectations.

One of the most important skills for leaders in law firms is to ask courageous that produce answers that the firm needs to succeed. Sometimes the answers are ones that we would rather not hear, but we must hear and heed them nonetheless. This is usually the only way to get the accurate and reliable information needed to make wise, fully-informed decisions.

Sometimes there is no act more courageous than asking a question.

Good leaders stir things up.

There are few, if any businesses, that are as heavily dependent on people as are law firms. People, along with their knowledge and skills, make up at least 90% of the assets of a law firm. The other stuff — some furniture, books, and perhaps a leasehold — are comparatively worth almost nothing, because without its people, a law firm has no real value at all.

Leaders of law firms need to know how junior fee earners and staff perceive the firm and its internal issues. Relying on hunches, group-think by partners (a favorite but usually worthless pastime at partner retreats), or “what it was like when I was an associate” are deadly problem-solving strategies.

To be sure, asking for opinions about sensitive issues might “stir things up;” but that is usually the only way to see and to understand the perceptions, misunderstandings, and grievances that sometimes lurk at the bottom.

And the best way to get to the bottom of an issue is simply to ask about it.

Good law firms want to raise client expectations.

Some law firms seem to have a phobia about client feedback. In some instances the refusal to ask clients for performance feedback is the result of a deep-seated condescension — or even contempt — about the client.

For example:

• “Why ask the clients? They really don’t know what they need. That’s why they hired us.”

In healthier law firms, however, I often hear this excuse for not soliciting client feedback:

• “We can’t ask anything that might raise the clients’ expectations.”

Raising client expectations is exactly what law firms should be doing in today’s highly competitive legal markets.

You should set standards of client care and service delivery that are above current levels demonstrated by your competitors. The best way to do this is to ask clients to describe what “quality” means to them. What indicators, such as responsiveness and understanding of the client’s business, are most important? Even if you believe that you are performing as well as you possibly can, ask the client how you can perform even better. You might be surprised by the answer. You might wonder why you are not already doing what the client suggests.

By asking these questions and responding to them in ways that the clients can observe and measure, your law firm can raise market expectations to levels at which few, if any, of your competitors will be able to perform right now. Some of your competitors will catch up to you eventually, but during that period when you alone are performing above market expectations, you will have an almost unchallenged opportunity to win new clients and new instructions from current clients.

Simple but sophisticated tools

The art of asking questions involves much more than asking questions.

Asking a junior staff member, “How do you like the firm?” is more likely to produce a cautious, positive response than meaningful data. Most staff members are not fools. Even the best-intentioned open-ended question often will look like a trap.

Asking a client, “How did you like our firm’s performance on that matter?”  will seldom produce the specific information that is the key to understanding a possible competitive advantage or disadvantage for your firm. Many clients have never articulated their key quality indictors. Sometimes you need to lead them there.

To produce worthwhile information, the questions need to probe specific issues and potential issues. The questions should be asked in a systematic and consistent way. This is why my colleagues and I recommend three tools above all others:

• Surveys – A well-designed survey can produce substantial volumes of data, compiled in a consistent manner, that can be very useful in understanding the seriousness and priority of an issue.  A survey is also an excellent tool for identifying potential obstacles to the implementation of a new strategy or a proposed solution to a difficult problem. Click here for more information.

• Interviews - We usually recommend that confidential interviews be used as a follow-up to a survey. However, confidential interviews can also provide detailed and sophisticated information that cannot be produced easily within the structural limits of a survey. Therefore the confidential interview is especially powerful to identify and understand opportunities or issues in relationships with major clients.

• Monitoring – Surveys and interviews are usually one-time activities.  They can produce useful baseline results, but cannot detect changes in opinions over time or in changing circumstances. For example, our firm’s Client Service Monitor is an outsourced service by which we assume responsibility for ongoing monitoring of client satisfaction and early detection of client service issues. This can help law firms to identify issues before they become crises and to minimize loss of clients due to dissatisfaction with the firm’s performance.

The important point is this:  regardless of which tools you use, a key tool in successful law firm management today is asking courageous questions. Ask them frequently. Ask them of your own colleagues and staff and of clients.  Ask them even when you do not know — or do not want to hear — the answer. To be sure, sometimes a courageous question might involve risk; but that risk is no greater than the underlying risk that already lurks, undetected and out of sight of your current knowledge and understanding.

Norman Clark

This is the final posting in a series about the characteristics of successful quality assurance programs in law firms.

How does one measure the success of a quality assurance program? When Walker Clark advises a law firm, we tell the partners to look for these indicators:

• Improved productivity by fee earners — because they can spend more time on billable work and less time fixing mistakes and responding to client complaints
• Higher collections realization rates — because the firm now manages the major reasons for fee write-downs and write-offs
• Higher levels of client satisfaction – because the firm meets or exceeds client expectations and gets things done right the first time
• Competitive advantage – because the firm can demonstrate quality, rather than just mumble slogans about it

As the previous parts of this series suggest, serious quality management is a challenge for most law firms.  People have to discard bad habits.  They have to sharpen their thinking about the routine work that they do every day.  In some instances, lawyers need to change some of their long-held, fundamental ideas about what constitutes quality in a legal service.

Quality management often involves a set of discrete journeys that a law firm must make…

• From considering errors and mistakes as failures to be hidden — to viewing them as data-rich opportunities to reduce or eliminate them in the future
• From assigning blame — to finding solutions
• From viewing quality in legal services as something that only a lawyer can define — to understanding quality in terms of the client’s needs, expectations, and perceptions

Each of these requires a profound cultural change for most law firms. It is a necessary change, as well; because law firms that are unable to manage serious cultural change are doomed to declining competitive performance and, eventually, irrelevance in the fast-changing, highly competitive legal markets of the 2010s.

The “quality assurance” culture also requires a seriousness of purpose and an ongoing commitment to the procedures and methods. Partners must be highly visible in their support for, and compliance, with the quality assurance program. They must reinforce among junior members of the firm that quality assurance is everyone’s job and is important to the business success of the firm.

Like most worthwhile investments, quality assurance sometimes is not easy, especially because of the cultural changes that it sometimes requires. But that effort produces profound and positive results that are:

• Long-term and sustainable
• Beneficial to almost every aspect of law firm operations
• Measurable in terms of dramatic improvements to profitability and financial performance.

Norman Clark

This is the fifth in a series of posts about the characteristics of successful quality assurance systems in law firms.

Previous posts outlined three important points that distinguish quality assurance from crisis-to-crisis after-the-fact improvisation:

1. Quality assurance is a firm-wide issue and everybody’s job.
2. The people who are best able to improve the work are the people who perform it everyday.
3. Quality assurance focuses first on stopping the pain — reducing or eliminating the problems that are weakening productivity and undermining profitability.

Today’s post points out a necessary element that is common to all three of these principles: data.

The accurate diagnosis of quality assurance problems and their causes requires accurate and timely data about the functioning of the processes that produce and deliver services to clients and internal customers.  What are the mistakes that are being made? What are the nature and causes of the rework needed to fix errors that we actually observe?  What are their practical results? Simple, but highly effective, reports such as missed deadlines, document errors, and service standards discrepancies, are critical.

The actual experiences of law firms with credible quality assurance systems have been quite consistent. Collecting data on the nature and causes of quality problems is not complicated, time-consuming, or burdensome. In legal service organizations in which I have actually measured the time required to complete and submit reports, the amount of time per fee earner has always averaged less than 10 minutes per day.  Over time this average investment of time usually decreases.

This is due to two reasons

1. People become more alert to problems and more efficient in reporting them.
2. As the firm collects this information, it begins to correct quality problems, thereby reducing the frequency and number of error reports.

Without this information, however, you are only guessing at quality, rather than managing it.

Norman Clark

This is the fourth of a series of posts about the compelling business case for quality assurance in law firms.

The third characteristic of successful quality assurance programs in law firms is that they focus on the greatest risks and attack the biggest quality problems.

We favor a practical approach.  The best methods do not seek to perfect each and ever task, function, and process in the firm.  Unlike methods such as ISO 9001, we do not recommend detailed documentation of each and every process.  However, we do recommend intense focus on the ones with the greatest risks. In law firms, most quality assurance issues can be isolated to one or two critical weaknesses. Our approach focuses on these “significant few” issues, rather than every possible one. In particular, we recommend that a firm start by improving the processes that are currently causing the greatest problems. Focus on problems that annoy the clients the most, such as missed deadlines, errors in documents, and untimely or inaccurate bills. In our experience, most of these problems can be mitigated substantially, and sometimes even solved entirely, with relatively simple, low-cost improvements.

Norman Clark

It only takes one hole to sink a ship, not a hole in every compartment.  If one practice group — or even one lawyer — has a vulnerability, the same or similar weaknesses probably exist elsewhere in the firm. A firm-wide approach to quality assurance therefore usually produces the best return on the investment of time, resources, and attention.

To carry the maritime analogy forward, we observe two principal types of “leaks” in law firms with poor quality assurance. Like many leaks, each one can go unnoticed for months or years while it does major damage to a law firm’s financial seaworthiness.

Reduced productivity

“We can always find time to fix our mistakes, but we can never find time to prevent them.”

Most law firms rely primarily on after-the-fact inspection to catch and correct mistakes, particularly in documents. Such rework can consume as much as 40% of the time of fee earners and staff. Since most clients are unwilling to pay the law firm to correct its own mistakes, every hour spent in rework represents a revenue-producing opportunity that is lost forever.

Law firms that have introduced serious, systematic quality assurance systems and procedures have found that the resulting improvements in productivity can produce substantially increased fee revenue without proportional increases in staff. This results in dramatic improvements in profitability.

Loss of clients

“We get only once chance to get it right.”

This comment by one of our firm’s clients, a practice group head in a mid-size firm in the United Kingdom, summarizes what law firms everywhere are experiencing.  Clients today have decreased tolerance for poor quality. By the time the client actually complains, it might be too late to save the firm’s credibility with the client.

This leak is more subtle than the client who fires the law firm midway through a case or matter. One of the most important diagnostic indicators of a systemic quality assurance problem is the relatively low percentage of clients who return to the firm for subsequent legal services.

Interestingly, there also appears to be a correlation between poor quality assurance and poor recovery. Firms that lack a quality assurance system also tend to be inept at responding promptly to client complaints. At best they tend to placate the unhappy client for the moment, but do little if anything to prevent the problem from arising again.

Norman Clark

Once upon a time, only 15 years ago, law firms could learn many valuable lessons from all aspects of the Toyota management model. Toyota showed us how to identify and focus on our core business, understand how internal business systems operated, and — above all — the importance of quality management. Law firms that adapted principles of total quality management from Toyota and other leading Japanese companies saw remarkable improvements in client satisfaction and long-term profitability.

Now Toyota has another important lesson for law firms everywhere — the importance of not sacrificing quality to profitability and growth. To do so is a fool’s choice, as the recent Toyota debacles demonstrate. For every thousand dollars saved by cutting corners on quality assurance, a business can ultimately lose millions of dollars in customer goodwill and market reputation.

An article in this morning’s Washington Post provides interesting insights about what happened inside Toyota to produce the recent quality fiascos. As Blaine Harden points out in his article “‘Toyota Way’ was lost on road to phenomenal worldwide growth,” the blunders were not isolated mistakes, but the natural result of a long-term deterioration in the quality mind-set that accounts for much of Toyota’s success in the 1980s and 1990s.

But now, as the company recalls millions of flawed cars around the world, there is an expert consensus that growth itself derailed the Toyota Way, blurring its focus on quality, thinning its stable of expert mentors and undermining its capacity to respond to consumer complaints.

This one paragraph presents an excellent checklist for law firms of any size:

• As your law firm has grown, have you blurred your focus on consistently delivering “best-in-market” levels of professional quality and client service? Quality assurance is not “nice to have” or a sideline. It should be at the core of your operations.
• Are you making a serious resource commitment to quality assurance? Quality assurance is more than having “spell check” on your computers. It requires probing into the operations of your firm to identify and prevent the causes of errors, rather than trying to catch them and fix them after they happen.
• How do you respond to client complaints? The real test of a law firm’s commitment to quality is not their slogans, but how they respond to client complaints. Unfortunately, most law firms do not have any systematic procedure to address client complaints, but instead rely on crisis-to-crisis damage control, which is much more expensive and usually much less effective.

Harden’s article also reminds me of something that a senior partner in a large, international law firm in London told me about 12 years ago, as his firm was embarking on a campaign of dramatic international expansion:

No matter how big we get, we still get only one chance to get it right with our client.

Norman Clark

I had two interesting conversations at the International Bar Association conference in Madrid several months ago. They occurred within ten minutes of each other.

The first conversation was with a partner from a midsize law firm in the United Kingdom.  We were discussing the issue of client satisfaction, based on some comments that I had made as a panelist at one of the conference sessions that day.

“I don’t really see a need for client surveys and interviews and all that,” he said.  I have a pretty good idea of what my clients expect from me.  If there’s a problem, they will tell me.”

The second discussion was an in-house lawyer from a European bank.

“You would not believe it,”  she said.  ”Most of the law firms that work for us do not have the first idea of what is important to us; and they do not bother to find out.”

“If you are unhappy with them,” I responded, “why don’t you sack them?”

“That is what we are considering,” she said. “There are some firms that are going to be receiving an unpleasant shock at the end of the year.”

Neither of these comments are offered as being representative of the prevailing opinions in law firms and in-house law departments.  But they are typical of a substantial risk that many law firm partners overlook.

In today’s legal markets, what you don’t know can hurt you.  When someone boasts — and it usually is a boast — that they know what their clients need and expect, I always ask, “How do you know?” In most instances, my question is met with silence.

If you don’t know what is on your client’s mind today — as well as what is likely to be on the client’s mind tomorrow — there is one reliable way to find out:  Ask.

Some law firm partners will tell me, “We did a survey and it turns out that we already knew 80% or 90% of what the clients told us.”

This is usually true.  But it is that unknown 10% or 20% that can strike your firm like a cobra.  It is usually the unknown problem or the unspoken dissatisfaction that costs law firms even their oldest and best clients.  You may also discover that somewhere in that unknown 10% or 20% lies an untapped competitive advantage for your firm.

So, how do you know?

Norman Clark

Yesterday’s post discussed an interesting but disappointing year-end list. Today I want to invite your attention to a more instructive one.

Allan Dinkoff, who is a senior litigation counsel at Weil, Gotshal & Manges, has posted, in the Corporate Counsel section of Law.com, a valuable and entertaining list of  the top ten things that law firm clients want.

Here is his list, but be sure to read his post for his commentary:

1. They want a lawyer who is commercial and who understands their business.
2. They want a lawyer who thinks about them and their problems … all the time, not just when they get called.
3. They want a lawyer who can talk to them in a straightforward way, without jargon and without talking down to them.
4. They want a lawyer who is empathetic.
5. They want a lawyer who has a point of view, but also is interactive.
6. They want a lawyer who likes clients.
7. They want a lawyer who thinks about issues and the relationship from their point of view, not the attorneys’.
8. They want a lawyer who is always hungry for their business, not accepting it as a given.
9. They want a lawyer who charges a fair price.
10. They want a lawyer who wins.

Do you and you partners deliver each of these ten things? Do you do it consistently? How would your clients rate you on each of Allan Dinkoff’s ten points?

Do you even know for sure?

The absence of a complaint is not the same thing as client satisfaction.

Walker Clark, LLC, provides a low-cost service, the Client Service Monitor, that will give your firm up-to-date, reliable information about how well you are meeting the needs and service expectations of your clients. It is critical that every partner in your firm understand how your clients perceive your firm’s performance. This understanding must be based on reliable data — not impressions, “experience,” or hopeful thinking.

It is worthwhile to note that the title of Allan Dinkoff’s post is “Avoid Getting Dumped by Your Client.” The Client Service Monitor can be the core of your firm’s “anti-dumping policy.”

Norman Clark