Guest post by Chris Green and Megan Jenkins, DLA Piper
As law firms increasingly recognize that what their clients buy is their firm’s knowledge, legal knowledge management (KM) is becoming more client-facing. Firms now see a very close link between the knowledge the firm relies on and their clients’ desire for value added services (VAS). Since clients tend to have fewer internal legal resources to draw on, sharing the firm’s know-how with clients can be a big win for a firm. For many years, savvy firms have given clients extras in the form of legal updates and training programs; today firms are becoming more creative and generous with the services they give for free to the extent that clients have come to expect these perks as standard. Evidence of the growing trend for bigger and better VAS abounds in the legal press, conferences, and the range and sophistication of client requests in RFPs and relationship reviews.
Understanding What Gives
In an industry built on selling knowledge, giving knowledge away for free may seem counter-intuitive. So, how did this notion of VAS arise and take root? It likely started with business clients’ need for their legal advisers to be more like business partners who can help with strategic as well as legal decisions. Law firms quickly realized that to do this well, they would need a rich and deep understanding of their clients’ business needs, an understanding richer than possible in relationships where clients are instructing different lawyers on each transaction with the firm. Clients are more likely to share key strategic information with advisers they trust and building trust takes time and investment. Clients play their part through panel appointments that give firms access to the broader context that fosters solid relationships. Likewise, law firms must grasp every opportunity to learn more about their clients’ businesses and VAS create opportunities to sit and talk without the meter running; they encourage clients to share their wider business focus and plans without fear of racking up a hefty bill.
Timing Is Everything
Typically, clients bring work to a firm when faced with a legal problem. Unfortunately, by that point, it may be too late to craft the best outcome for the longer-term business strategy. To be effective business advisers, firms need to keep their clients’ business goals top of mind and proactively pre-empt legal problems to help the business progress. More often than not, this requires taking action well before legal issues crystalize. Business decisions are made for commercial reasons by directors and executives concerned about whether a change or investment is right for their business at that time. VAS, such as access to a law firm’s online tools, can help clients analyse their business options before they even think of involving lawyers directly. Clients have long recognised value in being able to pick their lawyers brains on small issues free-of-charge; being able to similarly discuss longer term, strategic issues with their lawyers could prove vital to the clients’ business health.
Getting an Edge
Law firms constantly struggle with how to best differentiate themselves from other firms. Lawyers who understand their clients’ businesses in depth are better equipped to ask the right questions and demonstrate how their services fill gaps in ways competitors cannot. Marketing efforts tailored to the client’s individual or business sector priorities speak volumes. A firm’s long list of services and sheer size no longer impress today’s sophisticated clients; rather, they want to see how the firm’s services are built on knowledge and experience with the client’s business and industry.
Most firms offer a range of VAS, some of which have existed for decades (legal updates, training, and secondments, for instance) and some more recent additions (online tools, blogs, apps, and consultancy, to name a few). New ideas crop up frequently, especially with technology making it easier to deliver free legal and commercial services to both potential and existing clients. All of these extra services open new opportunities for law firms to start a dialogue with clients and help them solve more business problems. By filling a know-how, resource, or service gap in this way, firms demonstrate their broader expertise and differentiate themselves.
A good range of VAS includes a mix of legal information and tools designed to help clients make business decisions and solve practical issues. These services also help law firms meet their clients’ challenge to streamline and enhance our interactions with them. For example, clients who first complete a structured online checklist are more likely to better instruct the lawyers working on a new deal for them, thereby increasing efficiency, effectiveness, and profitability.
Benefits far exceed cost
Tailoring the kinds of VAS offered to each client’s particular circumstances creates a bespoke offering for the client and ensures that the law firm spends its own resources on services that genuinely benefit each client. Developing and sharing VAS also helps colleagues understand each other’s business and expertise, which in turn increases cross-selling as colleagues gain confidence in introducing each other to the firm’s clients. Vital to any firm’s business, active cross-selling is harder to achieve the larger a firm grows.
These benefits are critical in today’s challenging legal market where firms are competing to increase market share and create lasting client relationships in the face of shrinking demand. All firms wants repeat clients who seek their services on a full range of legal issues. A good roster of VAS helps firms continually demonstrate their business acumen and commerciality to business clients.
In part two, we will look at how one firm has used a VAS strategy to differentiate itself in the market for legal services. A variation on these two posts originally appeared in Legal Knowledge Management: Insight and Practice, Ark Group/Managing Partner, 2013).