Continual adaption: What general counsel expect from law firms

"The world, as we have created it, is a process of our thinking. It cannot be changed without changing our thinking" - Albert Einstein

General counsel have in recent years altered the balance of the legal world by profoundly changing the way they think. Driven by the market forces shaping their organisations, they have been compelled to pursue improved efficiencies, seek greater value and adopt a total business focus. This new world view has, in turn, transformed what they need and expect of law firms.

It has not only been the nature of the changes but their speed that has made it difficult for many law firms to keep pace with clients' new requirements. However, this slow rate of response has allowed a new breed of nimble and forward-thinking competitors/ alternatives to move in and steal significant market share within a short space of time. Appointments based largely on longstanding relationships have rapidly given way to hypercompetitive tendering, with contracts mainly awarded on the basis of cost and commerciality.

In such a crowded and competitive marketplace, what can law firms do to capture clients' attention, win their favour, gain their loyalty and grow their business? The following pointers are based on our Sharplegal research involving more than 2,000 general counsel in multinational corporations across 55 countries. The topics covered include the drivers of in-house counsel's buying behaviour, the challenges they face and the characteristics they most value in legal service providers.

Think differently

Persuading a client of your competence is an essential first step in the race to win business and will keep you in the running. However, it is your ability to convince in-house counsel that your particular approach will solve their problems more successfully than your competitors that will ultimately win the race.

Developing a distinctive offering is therefore crucial, and the most effective way of achieving true market differentiation is to change your thinking.

Many firms still think of what they do in terms of a process - the application of legal expertise - rather than an outcome. The moment a law firm alters its mindset and starts to focus on solving clients' problems using legal expertise, the stakes change completely.

Knowledge is power

A crucial part of making the leap from process to outcome-oriented thinking is to become much more inquisitive.

Many firms feel that they already know where they stand in the market without the need for any formal research. However, a firm's view of itself is unlikely to be shared by its clients. More often than not, they will have formed a quite independent view, shaped by their own needs. As for prospects, their opinion, if they have one,
is probably quite different again.

It is only by asking detailed questions - of your clients, your prospects and your own people - that you will be able to fully understand what clients want, to see where growth opportunities lie, to identify your firm's strengths and to discover what truly differentiates you from the competition.

Understanding clients

It is all too easy to assume that you know what clients and prospects want and think. You may have a good understanding of your client's industry and a proven track record of offering them sound advice. You may take comfort in the fact that they appointed you over competitors and have given no indication that they are dissatisfied.

In a booming market, this level of
client knowledge may well be sufficient. However, when competition toughens, a new and much more sophisticated degree of client understanding is required to merely retain clients' business. To grow existing relationships, win new work and maintain a differentiated position demands much deeper insight and forethought.

There are many effective ways to gather client insight. Ideally, a variety of methods that suit your time and budget should be employed.

The immediate view

A much-underused opportunity for information gathering is the client meeting. Some of the most successful firms use
this valuable face-to-face time as an opportunity to not only cover ongoing matters but also to find out about wider issues affecting clients.

Questions which should be asked include:

• What internal issues are they facing?

• What are their biggest challenges?

• Have the organisation's goals altered?

• What budgetary pressures are
  they under?

Delving deeper in this way can reveal a host of potential areas for growth and new business, as well as flag any issues arising. The process also serves the important purpose of helping you to gauge your competitive position and demonstrates keen interest in the client's business, thereby building rapport.

Firms which make the effort to find out about clients' priorities in this way are still very much in the minority, yet in-house counsel very much value this level of law firm interest.

The long view

Even where regular contact and good client relationships exist, it is important
to seek opinions via a formal client feedback programme too.

This type of research, particularly when conducted by a third party, can reveal a great deal about market perceptions and service quality, as experienced by the client. It can also uncover huge untapped potential new business and flag up areas of strength and weakness in the firm's offering and positioning.

Clients place great value on being asked for feedback. The very act of seeking clients' opinions can make you stand out from the competition. This effect is further enhanced when action is taken in direct response to the feedback given.

The wide-angle view

Insight into the needs of your existing clients is extremely valuable, but it provides only one part of the picture. To be truly ahead of the game and ready to not only meet but anticipate clients' needs, legal market insight is crucial.

Business intelligence can offer a
much more holistic view of the way the market is changing. It can reveal the differences that exist between clients operating in separate markets and sectors and give firms the opportunity to learn about competitors, fine-tune their offering and grow their appeal among potential
new clients.

Understanding yourself

The final piece of the puzzle involves combining all of the client, prospect and market data compiled and comparing it
to your own beliefs about your firm
as well as your employees' views of it.

This is an extremely effective way of identifying where differences between internal and external perceptions lie, pinpointing the unique attributes that only your firm can claim and helps to create
a 'true picture'.

This realistic and rounded view is essential for any firm wishing to develop
a strongly differentiated law firm brand
that is aligned to clients' requirements.

Once the firm's leadership has assimilated the research data, it can begin the process of agreeing a positioning statement that encapsulates its point of difference and which will both guide and accelerate the success of its overall strategic plan.

To be effective, the statement needs
to tick two important boxes:

1. Credibility - does the statement reflect the firm's core strengths? Is it believable in the context of the firm's lawyers and clients?

2. Relevance to the target market - does the statement promise the target something of importance to them?

Value of differentiation

Law firms with well-defined and clearly-communicated points of difference that offer solutions to clients' needs are at an immediate advantage. In-house counsel naturally gravitate toward practices that have built a reputation for excellence in the areas in which they need support.

Promises fulfilled command premium prices which satisfied clients are willing to pay. As the general counsel in a large public sector organisation says, "I think it's the combination of deep knowledge of what we do plus great customer service which allows me to pay a little more than I normally would. So I think they're worth what they charge…they are more expensive than most firms but I find that I get so much from them I can justify it."

Differentiation strategies

There are many routes to achieving this exalted position among clients but all, naturally, revolve around their new set of requirements. In-house counsel want their law firms to think and act in a manner that aligns much more closely with their own ways of working.

When asked how they felt external counsel could improve their skills, the most common answers given include:

• business understanding;

• commercial nous;

• business pragmatism; and

• industry understanding.

Breadth of expertise, business acumen and quality of service are required to impress clients in the current climate. This is reflected in the following comments of the general counsel of a pharmaceuticals company with US$1 billion to US$6 billion in revenues: "Quality of service. Just their advice is always on point, it's business-focused, so not too risk averse. They're just very good at letting us know what we should be thinking about - things that we're not even thinking about. And they have a good breadth of services; they always have the people that we need to help us with various issues."

As the general counsel of a similarly-sized public sector organisation put it: "They think in business terms; they are commercial solution-oriented. They give the impression that you are the only
client with every mandate - in so far as you are looked after individually. The law firm knows the company well, which is also important."

The evident demands on in-house counsel to adopt a much more commercial mindset within their organisations are also reflected in the answers they gave to questions about value. Thirty-nine per cent said they require greater certainty in pricing from external counsel; 41 per cent said they want to see a reduction in hours through improved efficiencies. Also on the subject of billing, a number of respondents noted the degree to which external counsel are willing/able to put themselves in their clients' shoes as being a driver of their favourability towards particular firms.

Commented a general counsel in a US$1 billion to US$6 billion investment company: "They are very sensitive to client requirements; they have good quality lawyers and are flexible in billing arrangements…they are willing to consider alternative billing arrangements, so, deal discounts combined with deal premiums and the like."

Favourability data reveals other areas of particular importance to clients when choosing which firms to deal with. The ability to adapt to and get close to individual clients in order to deliver effective solutions arose several times.

These factors are encapsulated in the comments of the general counsel of a US$1 billion to US$6 billion revenue manufacturing business: "They match my [personal] style which is results-oriented. I am very focused on the final result. They provide better solutions. They do not only provide advice, they also provide solutions."

Another example of this perspective comes from the general counsel of a US$1 billion to US$6 billion revenue transport company: "They are very innovative, they are very close to their clients, they are very entrepreneurial. They listen to their client and they propose tailor-made solutions, and they also go beyond the legal work, they are also involved in other topics."

A further pivotal area for clients in determining which firm they will instruct
is evidence of relevant expertise. Pursuing a 'boutique' differentiation approach
has proven extremely successful for
several firms.

"They are a smaller firm so they are exceptionally experienced in the areas they practice and because they are small, they are very nimble and able to modify to your needs," comments the general counsel of a US$50 million to US$1 billion revenue hospitality business.

Adapting to change

Whether your firm chooses to differentiate on price, practice area, service quality or another attribute valued by clients, success depends on the ability of your members to remain true to the agreed positioning, while adapting aspects of their service to satisfy clients' and prospects' individual needs.

It is tempting to think that, having developed a differentiated offering and created a positioning statement that reflects this, your work is done. Not so in the complex and relationship-driven world of legal services, where sustaining a unique market position that has value to clients requires careful thought and constant adjustment. But, isn't a change in thinking
a small price to pay for survival in a changing world?

Lisa Hart Shepherd is CEO of Acritas (www.acritas.com)