Strategy in a networked world for professional service firms
The genesis of the article is that I will be delivering the keynote to a group of Managing Partners of major law firms in London in late February 2008 for an event organized by LexisNexis. As a prelude to the event, I wrote this article in collaboration with Josh.
The article is available on the Legal Week website, and also below.
Managing a Law Firm: A networked world
Five key factors are driving today’s economy:
- client sophistication;
- governance; and
These forces are steering the professional services sector towards commoditisation, where clients perceive minimal differences between most offerings and often squeeze their suppliers on fees. Only legal services suppliers that actively engage their clients in deep, collaborative relationships are able to differentiate themselves.
We suggest four approaches to improve management, customer service and ultimately profitability.
1. Build knowledge-based relationships
Knowledge-based relationships enable professionals to move beyond ‘black-box’ services of simply delivering an outcome and towards sharing far-reaching mutual knowledge with their clients. By matching capabilities with the diverse needs of their clients, firms are able to create unique and valuable client relationships.
A law firm’s most valuable assets are the relationships it nurtures with clients and contacts. Centralising collective knowledge, wisdom and experience about clients and contacts and making it available across the firm — from lawyers and marketing professionals to administrators and secretaries — enables law firms to uncover, extend and leverage their relationship networks, transforming who and what they know into new revenue opportunities.
This relationship intelligence can be aligned with the firm’s overall strategic goals, involving a holistic, cross-functional integration of people, operations, processes and marketing capabilities.
Information and technology combined enable a firm to develop a better understanding of its clients so that it can work on appropriate long-term relationships with key customer segments to create win-win situations for clients and the firm.
2. Support sophisticated client teams
The majority of professional firms place established client teams at the core of their client-development initiatives. However, creating flexible, global, cross-disciplinary teams in a professional environment is challenging and there is always substantial scope for performance improvement. Firms that continually invest in enhancing the capabilities of their client teams will ultimately outperform their competitors.
The speed of change and the level of sophistication in the marketplace are both increasing. The use of technology, changes in professional services and the ever-increasing regulatory and compliance hurdles are placing huge demands on fee earners’ time.
Firms need to support customer client teams by providing the infrastructure, content and business insights. Teams need swift, efficient and comprehensive access to information.
With the right technology infrastructure and access to information, law firms can quickly understand what is happening in different jurisdictions and manage critical risk and compliance concerns. Technology and content solutions help simplify a complex task and ensure firms remain ahead. Online services enable teams to access accurate information faster and give more efficient support. Ultimately, the enhanced services allow teams to spend more time developing critical relationships with clients.
3. Create a networked firm
Clients seldom have the opportunity to access, or even view, the full capabilities of the service provider’s firm. More often than not, clients are only exposed to select representatives and miss out on the comprehensive services and capabilities offered by the service provider’s tightly-knit network of experts.
As the business landscape shifts, building a networked firm will become even more critical. High-end legal work is increasingly embedded within a network of services and activities between companies, investment banks, law firms, accountants and consultants. Effective management requires maintaining multiple ties that enable lawyers to be at the centre of these essential networks.
Services and content are rapidly moving online. For example, web 2.0 technology is driving change within the legal world in the areas of marketing, knowledge sharing and legal services procurement. Here are just two examples:
– Community forums are enabling users to share information and discuss the latest issues as they happen, for example, companylawforum.co.uk.
– According to a recent LexisNexis survey in the US, seven out of 10 corporate counsel use online tools to select outside counsel among preferred providers, and three in four corporate counsel are likely to use online technologies to validate the credentials of a referral.
Online technologies are driving purchasing decisions by enabling corporate counsel to rate and screen their choice of outside counsel like never before.
4. Manage clients as a portfolio
Achieving a profitable balance between time and resources is one of the key challenges for professional firms. Both for the individual relationship leader and at the firm level, structuring activity across a broad spectrum of clients to maximise current and future rewards is critical. Effective portfolio management in client development initiatives will distinguish the most successful firms.
The challenge for professional firms today is both to implement technologies that will give them great flexibility in their business operations, and to use this enabling platform to build the relationships, transparency, networks, business models and strategies that will create exceptional business success.
This seamless approach for improved intelligence, processes and productivity is underpinned by adopting integrated technologies across areas such as research, workflow and client relationship management.
Ross Dawson is the chairman of Future Exploration Network and Josh Bottomley is managing director of LexisNexis UK.