The Am Law 200 has reportedly increased headcount and at the expense of the top tier law firms. Headcount was up 885 or about a 3% increase, versus a 0.8% increase in top tier firms. There’s a business case for lateral hires: often they come with a book of clients.
Under the current economic conditions, law firms have had two broad approaches for business: a) keep existing clients retained and b) earn a greater share of the work from current clients.
Whether on the gaining or losing side, lateral moves are a wakeup call for a law firm customer relationship management (CRM) strategy.
Everyone Wears a Customer Service Hat
A recent UK-based research study on law firms and CRM is telling. According to a report in The Lawyer titled Law firms “losing market share” due to inefficient CRM, despite sizable CRM investments, six out of seven firms aren’t gaining the expected benefits from these initiatives.
We’d venture to say the findings would be similar if the study was also conducted in the U.S. market and the problem, as the report says, can be summed up in a sentence:
The research highlights concerns that firms are failing to get the most out of their investment in CRM, often because of a lack of strong management.
CRM strategies certainly require strong leadership, but success also demands input from the entire team. Everyone in the law firm, from executive assistants to attorneys, wears a customer service hat. Leadership defines and enforces customer relationship policy and documentation processes; the system for managing customer relationships is the vehicle supporting the execution of that policy.
This year’s survey gives a very clear message: that a strategic, firm-wide approach must be employed to ensure that everyone in an organisation takes ownership of client relationships. Staff should not view them as the responsibility or preserve of only a few individuals, and senior managers must lead culture change on this matter, integrating CRM with overall business strategies to ensure that future investment is not wasted.
Properly implemented CRM Strategies are Rainmaking Initiatives
The survey also found that “43 per cent strongly believe that in their firms, CRM is regarded as the responsibility of business development and marketing staff and 41 per cent believe this to some extent.” However when the entire firm, including attorneys, take an active role, the results can be compelling.
Consider these two examples from LexisNexis customer interviews:
- Partner involvement impacts customer retention. One law firm found that when only one partner is involved in a client’s business, the rate of attrition is almost 40%. However, when 5 or more partners are involved in the business, that rate drops to 5%.
- CRM collaboration helps identify opportunities. Another law firm examined the extent of the connections between their current attorneys and prospects to identify “who knows who.” The result? Twenty-three new client matters valued at $5 million in revenue.
These two examples speak to the results a sound CRM strategy can help achieve – client retention and a greater share of business from existing clients. These also demonstrate the advantages of managing partners are actively involved in facilitating a CRM strategy and technology implementation.
If you enjoyed this post, you might also like:
The Lateral Dilemma: Part 1
The Lateral Dilemma: Part 2 – Stay Away From The Shiny Object
The Lateral Dilemma: Part 3 – Common Sense Recruitment