Beyond numbers: Strengthening law firm client value and relationships
Data is a vital part of business strategy and operations, but with so much being measured and so many possible metrics, it’s easy to get lost in the numbers and miss the big picture. How can law firms go beyond just collecting data and uncover meaningful insights?
The abundance of data and how it drives business decisions were the underlying topics at Sandpiper Partners’ 9th Annual Conference on Managing Law Firm Profitability, Pricing and Data Analytics, which brought together law firm leaders and industry experts, including Williams Lea’s CEO Clare Hart.
Here are the key takeaways from the event:
More than just graphs and reports
“Be careful when distinguishing data that drives decision-making from data for the sake of data,” one panelist advised. “Ask yourself: Where can data have a real impact? Where can we move the needle?”
The number of clients that ask for data around performance, productivity and staffing (especially around Diversity, Equity and Inclusion (DEI) metrics) have increased dramatically in the last few years. While data collection is becoming common and the desire to use data is getting stronger, the practice of cleaning, analyzing and synthesizing that data is yet to gain ground.
Law firms need to establish solid data architecture to govern how their data is gathered, stored, integrated and used in their firms. “We need to think about data accuracy and consistency,” one panelist said. “A lot of legacy systems have different measures for the same data point. You need a ‘one-truth platform’ in place to validate the data.”
How can you use data to create tangible change?
Make sure what’s being measured serves a purpose, whether it’s responding to a client demand or pricing a new engagement, then formalize the process of building business cases. “When it comes to supporting staffing for DEI initiatives, for instance, set up guidelines to formalize a selection process,” one panelist said.
Data is fast becoming the way to get ahead in the legal industry, as it helps firms anticipate volatile events and client behavior. Our CEO Clare Hart put it best: “Leading firms use data to guide their business. Average companies use data to understand their business. Laggards don’t use data well.”
Provide more than table stakes
Conversations around alternative fee arrangements remain prominent. With more data available, more and more law firm clients are thoroughly analyzing alternative fee arrangements and proposals. Some clients are asking for flat rates, which they find more predictable.
However, clients aren’t always looking for a bargain price. More and more are looking to understand how these fees are being developed and how their law firms are connecting the fees to the value they deliver.
What kind of value are clients looking for?
“Being excellent lawyers? That’s table stakes,” said one in-house counsel client panelist. “That won’t differentiate you. Law firms should go above and beyond to anticipate my needs and issues.”
Key metrics that go beyond rates or billable hours are harder to quantify, but that doesn’t make them any less important… or attractive to the client.
“Are you discovering unknown needs of your clients and bringing them to their attention? That’s value,” a client panelist said. “Anticipate the problem and provide a solution.”
Another client panelist added: “Bringing a diversity lens to things – that’s value. Seeing our law firm partners invested in things that are important to us – that’s value.”
When it comes to growth, act like a business
Most law firms see external growth, usually through mergers and acquisitions, as a risk-averse approach, but is it strategic?
“Law firms aren’t all that strategic,” one panelist said. “They don’t say ‘This is what success looks like,’ they just say: ‘We want to be bigger.’”
To survive and thrive in a rapidly changing industry, firms should act more like businesses. If a firm wants to expand, they should take a more strategic approach and look beyond scales, and consider market share. For instance, acquiring a large firm like yours may make you bigger in size, but it doesn’t always translate to a bump in profitability. It just gives you more of what you have.
One panelist advised: “Do an internal analysis of what you have and don’t have. Identify what you can cross-sell. Are there gaps in your practice areas? Are there smaller firms you can bring into the fold, whose expertise clients are looking for? This can all be leveraged across the firm.”
Any potential moves should be thoroughly examined, because the devil is in the details. And with the wealth of data available, law firms can employ data-driven decision-making to fuel growth.
The legal industry is continuously evolving, with new perspectives on DEI, data, digital transformation and workplace management. Law firms that learn from these trends will gain a competitive advantage and enhance client relationships.
To find out more about the future of the legal sector, particularly as it relates to workplace evolution, download The Future of Work, an in-depth report conducted by UnWork and commissioned by Williams Lea.