Gathering and using regular client feedback and insight is an essential component of running a corporate law firm, and it’s something that some firms are quite good at doing. But with a recession now a reality - how should firms prioritise the use of client feedback and the utilisation of resources?
In this article, based upon conversations with clients of Acuigen and staff at Acuigen who served them during the 2008 recession, we discuss some of the learnings. So what can we learn from looking back?
The current recession has been substantively triggered by a lack of supply due to coronavirus (businesses cannot produce goods/services), whereas the 2008 recession was triggered by a lack of demand (people did not have money). We have yet to see if the recovery from this recession may also become a demand based recession as consumers try to protect their savings.
During the 2008 recession, when there was a widespread drop in consumer and corporate spending, law firms took actions to mitigate costs and sought to protect fee income ... some did this better than others. Concurrently the buyers of legal services gained more purchasing power, new technologies were adopted and alternative service providers threatened to snap up clients’ legal budget. There was feverish talk about ‘alternative fee arrangements’, which few people really understood how to define or make work in practice. Some elite brand law firms rode the recession because of their brand cachet and ability to provide services that other firms could not compete against, but for most firms, it was a different challenge.
Driving performance during a recession
Substantive economic changes (e.g. Brexit) or economic shocks (e.g. a pandemic) can have major impacts on some firms. Whilst fees in some practice groups will rapidly diminish, new opportunities and business challenges will emerge, so how do leaders spot these emerging trends and use them to protect revenue and earnings?
The simple answer is – listen to your clients more and remain agile. Well planned client feedback should provide a clear and early indication of future legal demand, and ways to service this demand.
Engage with your clients
It is essential for firms to understand ‘where and how’ clients’ observe high levels of perceived value being created –the last thing that is needed is the loss or reduction of ‘client perceived value’. The good news is that during the coronavirus pandemic, we observed many law firm clients being more open to providing such feedback, particularly where law firm clients were working from home.
Utilising this newfound openness is an opportunity to understand how clients’ business priorities are changing or have changed. Clients’ opinions offer a window into emerging trends and assist firms to be agile and innovate. Once feedback is analysed, firms should use their feedback to shape future business priorities, planning and operational agility. Being agile and innovative does not mean avoiding tough decisions – indeed some decisions in 2008 were painful, particularly where firms had to reduce headcount, realign teams, retrain and relocate staff.
Differentiate your firm from your competition
A trawl through any website of a corporate law firm confirms that most corporate firms employ extremely talented and capable lawyers, have the best offices in the best locations, and also deliver the best service. So how can firms compete in a recession without dropping fees too much? Speaking with the chairman of a very successful global legal brand who oversaw his firm during the 2008 recession – the answer was simple: “differentiation”.
A good client feedback programme should help a firm understand client opinion, and that of immediate competitors and what is different. It was this differentiation that drove our client’s reputation for their client centric approach focused on efficiency, proactivity and collaboration aimed at delivering greater value to clients.
Show leadership and embed client listening within your firm’s culture, whilst creating bottom-up ownerships of clients’ needs
It is the culture of a firm that supports the brand, and the differentiation that creates a reason for clients to buy and have confidence that they can continue to place their high value work with firms, for which they are willing to pay premium prices for the best advice or service.
It is important that when client feedback is being gathered that senior leaders of firms demonstrate they too are consistently listening to it – this has a ripple effect throughout the firm. Being seen to act upon client feedback influences a firm’s culture, particularly if responsive change is celebrated by senior leaders.
During the 2008 recession, we observed several of our client’s Managing Partners demonstrating that they were actively reading all available client feedback, and were in particular, passing lots of thanks to partners and fee earners when good feedback was received (and similarly sharing learning points with leadership teams). This created a subtle shift in the culture of their firms. Where staff were encouraged and empowered to use client insight to inform regular client service discussions, they developed a better understanding of key messages from clients and how to respond accordingly.
This also has an indirect effect of encouraging a firm to manage itself ‘bottom up’ making fee earners and teams agile to client’ needs and responding to opportunities. This is particularly effective when staff can facilitate or have responsibility for the management of opportunities and risk mitigation.
Responding to the insight gained is crucial
‘Feedback without action is an overhead’ – combining feedback with actions creates opportunities and mitigates risk.
It is important to engage with clients after feedback is provided; and whilst it may be either unwise or impractical to always agree to every client suggestion, systematically gathered client feedback provides evidence of themes and advanced warning of upcoming opportunities and risks. Firms can therefore decide where to move to gain competitive advantage if this knowledge is used wisely.
A firm should also proactively consider responses to ensure that the insights gained are actioned. This is the difference between simply collecting client feedback as something your firm has historically done, and using it to create the successful law firm of the future.
What type of feedback should be collected?
Collecting ‘one size fits all’ client feedback will probably not give you the returns that you and your firm want. Instead, you need to think in terms of specificity. What particular information does your firm need, what will help to improve service delivery, or showcase an emerging practice area your firm could focus on? These questions are crucial, but asking too many at the same time could give you too much information to digest. Choosing questions that focus on 1 or 2 key topic areas should give you enough information to analyse your findings and work on the opportunities presented, and mitigate risk.
There are many ways to speak with clients to get their feedback – whilst it helps to have a formalised programme it does not all have to be through formal client feedback programmes; the essential issue is to ensure that it is documented and acted upon.
When assessing or forecasting the way that markets or sectors will move, rather than individual clients, higher numbers of interviews are needed as the work uses the techniques of traditional market research where statistical techniques (outside the scope of this article) can be used to assess the reliability of the feedback.
Understand where the feedback is coming from
It is essential to understand where client feedback comes from – the opinion of a senior decision maker and a key client is very important, whereas another opinion from a smaller client who is unlikely to buy is probably less important. Having a clear understanding of who has given the feedback and how important their opinion is to your firm assists you to dial in on the key themes and identify the most pertinent opportunities for your firm.
Furthermore, the themes in feedback from different roles may have different significances. In times of economic uncertainty, it may be expected to hear a client’s in-house legal team suggest that they are aiming to spend less on external support, are going to try and do more in-house, and are looking for support to provide more training to their internal teams, because they too are targeted to provide value to the business. If the client’s CEO provides similar feedback, the interpretation and the proposed response may be different.
Speaking with your clients and listening will not only add value to your clients' experience by showing that you care but should also give your firm the competitive advantage to stay ahead. In a period of uncertainty, having early indicators of your clients’ evolving needs and the demands of their marketplace provides you with the insight you need to adapt and innovate, identify service delivery optimisations, crystalise opportunities and address risk.
A constant drive to deliver tailored service improvements which are being requested by clients will enable the firm to remain agile to clients’ needs and protect your brand from competitors who are less able to respond in a disrupted market place.
Law firms are seen by many clients as better at talking than listening. Becoming known as a law firm that differentiates itself by listening will give your firm a head start in competitive markets.
As we assess if the 2020 recession starts to replicate the demand led characteristics of 2008, during which considerable constraints are placed on professional services firms, the skills of leaders in managing and using client feedback within their firm will differentiate those who provide the best lawyers, best offices and best service.
Continue the discussion
If you’re interested in understanding the process of client feedback to a greater extent or are interested in initiating or scaling up a client feedback programme in your firm, get in touch with our team who will be happy to talk further to assist you and to share our experiences.