After speaking to some innovative law firms and attending some interesting legal industry events recently, I think some common trends are now emerging in the more innovative legal service providers. Before looking at these trends, let’s start with a quick reminder of client need. As many people have pointed out, clients are the real winners in the new legal services market. So what do clients want?
Peppermint Technology have for the second year in succession conducted a research survey about this very topic. According to the Peppermint survey (a video summary of which can be found here), in the consumer market clients choose a legal service provider ‘for price, but stay for the service’. The likely total cost is the most commonly cited factor (37%) by consumers when considering whether to instruct a law firm. Moreover 61% of consumer respondents said that fixed prices were either ‘important’ or ‘extremely important’ to them. The Peppermint survey also noted that the key to retaining consumers is a ‘blend of relevant and accurate advice which is communicated well and provided at a fair (preferably fixed) price’
The Peppermint survey confirmed other surveys by finding that, with regards the business legal market ‘price remains a secondary factor for most clients when it comes to purchasing legal services compared with both the quality of the advice they are provided with and the customer service they receive’.
Although there are differences between consumer and business sectors regarding price sensitivity, there is convergence around the preference for fixed pricing and recognition of good service. Non-lawyers may not always be able to appreciate how good legal advice is technically, but everyone knows good service when they see and experience it. Interestingly, in both sectors personal communications and continued professional relationships remain a very important factor for retaining (and in the business sector, acquiring) clients. Generally therefore, legal service providers need to adopt a twin track approach: create processes which deliver good technical legal services cost effectively, while at the same time make sure there is plenty of personal interaction and clear communication with clients throughout the matter duration.
Before going further it should be pointed out that during her talk at the recent Legal Futures conference Arlene Adams, CEO of Peppermint, issued a caveat around the survey results. Arlene referred to the famous quote of Henry Ford: ‘If I had asked people what they wanted, they would have said faster horses.’
People tend to want more of the same, an improvement upon what is already known. This way of thinking precludes innovation, and every market, including the automobile market, has experienced some innovative products and services. The legal services industry is no different.
So, having a broad understanding of what consumers and businesses want from legal service providers, what are the common factors and themes emerging among the more innovative suppliers of legal services?
- They approach legal service delivery as a business, servicing a market in similar ways to many other markets. This sounds painfully obvious, but most ‘new’ techniques and methods now starting to be applied to the legal sector have in fact been applied successfully in other sectors for quite some time. This is might be characterised as low risk innovation. Low risk, because the methods are known, innovative because the methods are being adapted to a different market sector. Often what is innovative in one market or industry is essentially an adaptation from another (as is well known, Henry Ford’s motor car assembly production lines were inspired after observing meat processing production facilities).
- The client is put at the centre of the organisational ethos and effort. This goes way beyond mission statements and web site tag lines. An increasing number of legal service providers really do live and breathe client service and try to understand what constitutes good service from the clients point of view. Although this approach appears more common among new market entrants than traditional law firms (according to the Peppermint survey, fewer than half law firms attempt to collect feedback from clients though post-matter surveys) it is not solely confined to new market entrants.
- They have strong senior leadership, and a clear strategy which is known and understood throughout the organisation. The strategy is then implemented by good management teams who trust their frontline staff. As Simon McCrum, Senior Partner of Derbys solicitors explained at the recent Law Society Law Management Section conference, there are three ingredients for a successful law firm: good people, more good people and yet more good people.
- Of course every organisation will claim to have good people. Perhaps it is more worthwhile to have a look at what the people do or, at least, the type of roles they occupy. Senior positions such as operations directors (Derbys have one) and pricing directors are becoming much more common in the legal sector and they are now more likely to be supported by people in roles such as legal workflow and process analysts, legal project managers and legal client managers to name but a few. Generally, there is increasing recognition that operations and business development skills are important – if not essential – if legal service providers are to succeed. These skills are put to use devising efficient delivery processes supported by creative business development and pricing strategies.
- There is a lot of interest in process mapping and analysis of all key processes. This is an essential first step in order to decompose work-streams to assess, for example, which parts of the work should stay in-house and which should be outsourced. More detailed understanding of delivery processes is then used to determine the most appropriate skills needed to complete individual work packages cost effectively. Routing the work packages and production of documents of all kinds is now much more often done by workflow software, and this kind of process automation is no longer seen as being confined to the high volume / low margin practice areas.
- More of the larger law firms now employ client facing legal project managers to assist with service delivery and build closer client relationships. This has not gone unnoticed elsewhere and smaller firms, especially those with a significant business practice, are now also starting to incorporate project based techniques as part of their legal service delivery.
- Business development activity is no longer viewed as a necessary evil but something positively welcomed by more legal service providers and they seem to enjoy this at least as much as practising law.
- Fixed pricing is of course now very common. In the Peppermint survey 90% of law firms said they offer some form of alternative fee arrangement (AFA), usually a fixed fee per matter. I would also suggest that more firms are now alive to the possibilities of pricing based on value delivered rather than simply offering fixed prices which are in reality no more than conversions of hourly rate calculations / estimates into a fixed price point. However there is a long way to go yet before AFA’s become so widespread that we can all safely drop the ‘alternative’ prefix. It seems the billable hour will be with us for quite some time yet.
- Management by metrics appears to be increasing in popularity, which means that business development decisions are now much more likely to be based on performance data rather than perception.
- Last but by no means least, the influence and importance of IT cannot be understated. Whether its analysing data in PMS systems, improving efficiencies by workflow, generating documents automatically by document assembly or, perhaps, using technologies and techniques associated with Artificial Intelligence (AI) to help solve legal problems or predict outcomes, there is no escaping the presence of IT. Moreover there is little doubt that the influence of IT on legal service delivery is set to increase even further as the new legal service market develops.
These are the main trends I see regarding legal service delivery. What do you see? If you think I have missed something important or misplaced emphasis somewhere, please let me know.