Legal Management — July_August_2013
Change Language:
The Clients’ Business is King
Simmons I. Patrick Jr.

How business development and client value are only about your clients’ business and why your firm’s agenda needs to stay in the background

Is the key to business development how effectively a firm promotes and pitches its business or understands its clients’ business?

THE HISTORICAL BUSINESS DEVELOPMENT INFOMERCIAL Business development for law firms is clearly a means to an end – increasing or maintaining the firm’s client base and growing its revenue. Attorneys have historically approached business development by “pitching” and touting their firm’s expertise, accomplishments and accolades to prospects and clients. They have developed firm values and responses to requests for proposals (RFPs) that attempt to highlight the firm’s prowess – yet provide little differentiation between themselves and their competitors.

This approach to business development can be a source of frustration and discomfort for attorneys who despise the idea of “selling” their knowledge and expertise. Sooner or later, any client meeting using this approach will lose the client’s attention and leave the attorney in a quandary: “What do I say to the client after I complete the firm ‘infomercial?’ What happens if the client or prospect asks me a question about an issue outside my area of expertise? Should I abandon my pitch?” Few attorneys are trained and equipped to artfully negotiate these situations. Consequently, they resist business development all together or often overlook potential new business because they are too busy promoting the firm and working through a list of canned questions for the client (i.e., “What keeps you awake at night?”).

LISTEN TO YOUR CLIENTS – “LEARN OUR BUSINESS” Outside counsel who attempt to utilize the traditional business development approach of promoting their firm and themselves simply cannot do so and listen to their clients at the same time. By not listening, they effectively prevent themselves from gaining the key to unlocking their business development potential, winning new business and providing greater differentiating client value. The key: understand the client’s business.

Clients have declared in numerous ways the importance of their outside counsel understanding the company’s business:

• Outside counsel’s first promise of the ACC Value Challenge – To “learn [their client’s] business and strategic objectives and apply that understanding to [its] matters.” (ACC Value Challenge Briefing Package – Covenant with Counsel, July 2009)

• Law firm selection influencers – Participants in the 2012 Altman Weil Chief Legal Officer Survey reported that “demonstrated understanding of [their] business/industry” is the most effective factor influencing their selection of outside counsel – rating 9.6 on 10-point scale with 10 being most effective.

• Clients surveyed for the 2013 BTI Client Service A-Team – survey of Law firm Client Service Performance report that client service is consistently driven by client focus, exceptional understanding of the client’s business …

The importance of understanding a client’s business can also be seen if one considers the responsibilities of a firm’s primary client, who may be the general counsel, a senior executive or other department leader. Each of those individuals must focus on helping the company achieve its strategic goals and increasing shareholder value.

Notwithstanding his or her role as the chief legal officer, the general counsel is becoming more involved in formulating company’s business strategy. He or she is expected to better understand the company’s business in order to provide legal counsel in the context of its commercial operations. (See: Beyond the Law - KPMG’s Global Study of How General Counsel Are Turning Risk to Advantage, 2012.) Clearly, if the general counsel has to be more knowledgeable about the company’s business, it is only logical that a successful business development approach must start with understanding the client’s business. (See sidebar on next page.)

Armed with even a high level understanding of the key components of a client’s business, outside counsel can engage a client or prospect in a discussion of the business and its strategic objectives. After reviewing the client’s business, competitive environment and strategic objectives, for example, a general counsel might be asked the following probing question: Given the business environment and the company’s business strategy, where must your legal team focus its efforts in order to best help the company achieve its strategic objectives?

This type of probing, strategic and business-oriented question in most cases will prompt the general counsel to Reveal the list of his/her team’s priorities, i.e., also revealing where the new business opportunities exist for the firm. From there, the conversation should be directed toward the legal department’s highest priorities and those with the greatest impact on the company’s success, even if outside the attorney’s area of expertise. The entire discussion can take place without outside counsel ever having to pitch or sell his/her qualifications or those of the firm.

From this type of business-oriented conversation, the general counsel will see that outside counsel is making an effort to understand the company’s business, desires to learn more about the business, empathizes with the client’s challenges, and is more interested in listening and learning – rather than pitching and selling. Importantly, outside counsel will learn considerably more about the client, understand what are the key business and legal issues, and have a wealth of information to share with other attorneys in the firm to identify cross-practice initiatives for the client. Moreover, when given the opportunity to introduce attorneys from other practices to discuss the client’s priorities, those attorneys will be significantly more knowledgeable about the client’s issues. Subsequent meeting time can then be spent on substantive business and legal issues without the need to revisit basic background information about the client.

FOCUSING ON THE CLIENT’S BUSINESS LEADS TO GREATER CLIENT VALUE

Understanding a client’s business is also central to delivering differentiated client service and value. Recently, there has been significant discussion in legal circles regarding the definition of “client value.” First, when viewed from the client’s overall corporate perspective, the value a firm delivers to a client is how effectively it helps the client achieve its strategic objectives and overcome the challenges and hurdles to achieving those objectives. This “client value” obviously cannot be conveyed without first understanding the client’s business and strategic objectives.

Second, client value must also be delivered on an individual level. The firm’s client contact has departmental and individual performance objectives that are tied to the company’s overall business objectives. Achievement of these goals (or not) can impact the contact’s reputation as an operations or functional leader, their career advancement and compensation. Thus, in the eyes of the client contact, “value” also means how effectively the firm helps the client contact meet his or her department goals and individual performance objectives.

A significant amount of client loyalty can be gained from being mindful of what is personally at stake for the client contact and by helping them be successful. If the client is a publicly traded company, a quick review of the compensation discussion and analysis in the proxy will reveal the primary performance metrics of executive performance. Even if the client contact is not a named executive officer, their performance will be similarly measured. Inquiring about how the contact’s department and individual performance Is measured will provide additional insight into the client’s business and further the attorney’s relationship with the client contact.

Similarly, outside counsel can deliver value and enhance the client relationship by helping the client contact see the broader implications of a legal issue and how it might impact other parts of the business. For example, a simple question regarding an environmental issue could have significantly broader consequences than just EPA sanctions. Depending on the magnitude of a potential violation, it could require an SEC disclosure and filing, booking a reserve for the potential liability, a plant shutdown during remediation, disruption of operations and the supply chain, delayed deliveries to customers, communications to manage damage to the company’s reputation, diversion of revenue from new product development or technology investments and a host of other issues. These are potential consequences that should be quickly recognized by outside counsel if they understand the company’s business and strategy.

BUSINESS INSIGHTS AS A COMPETITIVE ADVANTAGE

Developing this type of client business understanding and loyalty can provide a competitive advantage for a firm. In some cases, a client may be willing to break apart matters into smaller projects or expand the scope of an existing project to avoid the procurement department’s vendor contracting restrictions. Even if the client must issue an RFP, the firm that has taken the time to learn the client’s business may be able to influence and help shape the RFP in their favor. They can also utilize those insights to differentiate their response from the competition.

A NEW MINDSET HELPS CREATE A BUSINESS DEVELOPMENT ORIENTED CULTURE

This client-centric, business-oriented approach can be the unifying focal point in creating a business development oriented culture for the firm and other firm business development initiatives. In both the 2012 and 2013 Legal Marketing Effectiveness Surveys conducted by Waverly Partners, LLC, one of the top three business priorities for firms was the creation or enhancement of a business development oriented culture. As firms insist that more attorneys engage in new business development efforts, it is imperative that they train attorneys (and the marketing/ business development team) to shift their mindset from a firm outward perspective (i.e., promoting their particular practice without fully understanding the client’s priorities) to a client inward focus (i.e., what is the client’s business strategy, and which practice areas can help them achieve their objectives?).

Training attorneys on a common approach that focuses on the client’s business provides a single “go-to-market” perspective for attorneys and can lead to more consistent client discussions regardless of which attorneys are in the meeting. This can help avoid disjointed meetings where discussions jump between issues or practice areas depending on the personalities in the room.

THE WINNERS WILL UNDERSTAND THEIR CLIENT’S BUSINESS

Clients and prospects have sent a clear message: “We will do business with and seek advice from outside counsel who understands our business.” The firms that can persuade their attorneys to reorient their business development approach in response to this mandate will be the winners in the fight over a shrinking legal industry pie.

About the author

Simmons I. Patrick Jr. Is an executive search consultant with Waverly Partners, LLC in Atlanta, where his search practice focuses on securing senior administrative leaders for professional service firms. He is a former practicing attorney and HR consultant with major firms where he held key account management and business development roles. He also authored the first-ever Legal Marketing Effectiveness Survey in order to assess the differences in perception between firm leaders and their firm’s CMO/CBDO with regard to the importance, effectiveness, capabilities and future roles/ responsibilities of marketing and business development functions. For more details, see www.waverly-partners.com or email him at ppatrick@waverly-partners.com.

Key Elements to Understand about a CLIENT’S BUSINESS

At a minimum, understanding a client’s business requires understanding of the following:

• The products and services the client sells and how it is organized to produce and sell those products and services

• The client’s industry and the geo-political aspects of the business environment in which the client operates

• The client’s strategy for competing in that business environment

• How the client intends to deploy its financial and human capital to execute its business strategy

• What challenges or hurdles (i.e., company specific or industry-wide risks) the company must negotiate in order to achieve its strategic objectives

A significant amount of client loyalty can be gained from being mindful of what is personally at stake for the client contact and by helping them be successful.
VIEW ALL ARTICLES
Message
SEND