Can Technology Make Your Firm More Client-Centric?aderantuser
Several years ago, an article in the ABA’s Law Practice Today asked us to imagine a global industry managed by “part-time leaders with minimal business training.”
The business ran for decades on the same model, with few coherent strategies for growth, marketing or pricing. Executives were asked to wear many hats in their enterprises, including professional expertise, sales, marketing, human resources and management. Customer demand never wavered and profits continued to grow at a healthy pace.
But, what if steady customer demand suddenly changed?
That’s exactly what happened after the 2008 financial crisis. Although demand has rebounded somewhat in the past few years, the balance of power has shifted to the client side. While lawyers retain the critical knowledge base that commands high fees, clients no longer accept being excluded from the process.
The pressures on the legal industry are now forcing many firms to rethink their relationship with their clients, and with technology. Former lawyer John Kirk, for example, recently presented his Egg Theory: What Clients Really Want From Their Lawyers. He argued that clients don’t ‘use’ a firm’s services, but rather ‘hire’ them to do a job. A lawyer’s focus should therefore be outward – towards the client and their needs – rather than inward.
Mr. Kirk also recognized that value of technology for firms making this transition, noting that “We should not look for simple solutions to our problems, but rather for methods and techniques—no matter how difficult or complex—that provide simple solutions for our clients’ problems. Steve Jobs was fond of saying, ‘Simple solutions require sophisticated technology.’ Similarly, simple solutions to your clients’ problems require sophisticated systems and extraordinary expertise from you.”
There is now a clear trend towards law firms becoming more client-centric thanks to new business methodologies and technology designed to increase transparency. Clients can see real-time data about their cases and firms can likewise monitor the profitability of a matter in real-time thanks to integrated software applications. Clients need to be able to monitor how effectively the overall caseload of a firm is being handled; the client must feel confident that the firm isn’t settling too many cases, spending too much on settlements and most importantly that the work product meets their standards.
New legal project management technology enables firms to manage client engagements throughout the life cycle. The benefits to firms are clear and compelling:
- Increased efficiency
- Flexibility to meet client expectations
- Improved visibility to matter profitability
To make this model work, however, the client also needs tools to monitor how effectively the overall caseload is being handled.
In an ideal project management scenario, clients can see the status of any matter—cost and fee charge data, case documents and attorney work product—and see the status of all matters at a macro level. They can view real-time key performance indicators showing the number of cases being settled versus defended, average settlement amount and the time it takes to resolve cases.
Firms can closely monitor actual-vs-estimate time spent on tasks, ensuring that a potentially profitable engagement does not turn into a loss. Software applications facilitate this by recording time by phase and task. They also provide insight on where and when more expensive resources have been used, tracking revenue against estimates to ensure there are no surprises for clients.
Monitoring projects in this manner is useful only if corrective actions are taken based on the data. For example, too many hours being logged on a matter could indicate scope creep, with fee-earners doing more than originally contemplated. Dealing with the issue immediately instead of after the project is more likely to have a positive outcome. Likewise, when an anticipated profit margin is suffering because the leverage is not where it should be, proactive firms can act quickly to bring the leverage back within acceptable boundaries, rescuing the expected profitability of a matter.
Firms also need the best data available to make important hiring decisions, particularly when making lateral hires at the partner level. Much of the legal technology designed to enhance the firm-client relationship could also be used to analyze the relative strength of a partner’s book. The same can be said for existing partners. If a firm fears that a partner might leave, transparency applications can determine the value of that partner to the firm. Better data will translate into smarter decisions in partner transitions.
Thanks to advances in legal technology, firms now can increase their efficiency and profitability while engendering a more productive and transparent relationship with their clients. While these new options can be complex, the most productive first step involves examining firm processes and increasing data flow to clients.
It is amazing to think that almost none of the technological capabilities discussed here were widely available just five years ago. Technology is truly altering the way law is practiced, and the focus on profitability and efficiency is bringing the global legal industry much closer to the “best practices” standard of the business world.
While the transition to improved business practices and advanced technology can be challenging, both firms and clients benefit from better information transparency. Decisions made with the best available data will always trump those made on hunches or false assumptions, and strengthening the bond of trust between firm and client will lead to a better long-term working relationship.
Interested in learning more? Check out our recent Aderant white paper on how technology is changing the attorney-client relationship for the better. Click here to access the free white paper.