Law firms should be reimagining their businesses in a future that may be very different from today. Now is the right time for firms to implement a structured, intentional innovation process.
North American law firms have truly stepped up to the plate in their immediate responses to the COVID-19 crisis. What’s less clear, however, is the profession’s preparedness for the long tail of the pandemic.
And as we look at the knock-on effects of a lengthy COVID-triggered reduction in economic activity, it seems quite possible that there will be no quick return to business as usual. When law firms do get back to work, it may be on a completely different basis than in the past.
Strategy consultants McKinsey are encouraging their clients to expand their horizons on COVID-19, and have created a five-phase model showing the scope of a complete response to the crisis.
Source: COVID-19: Implications for Business, McKinsey, March 2020
Our perspective is that most law firms have already done great work in McKinsey’s initial “Resolve” phase—communicating openly with their people, providing flexible work arrangements, introducing technology-based work-from-home setups, delivering informed, relevant commentary to clients, and visibly supporting their communities.
Now, firms are moving into the “Resilience” phase, where they implement measures to conserve cash and reduce operating costs. Furloughs, hiring freezes, reductions in partner draws, cash calls, and across-the-board pay cuts are being announced daily across the profession.
The risk is that firms will stop there, and not address the fundamental business changes that may affect their client base and result in permanent shifts in the legal services market.
Our advice to law firms is to move quickly past Resilience, and start to reimagine their businesses in a future that may be very different from today. Now is the right time for firms to implement a structured, intentional innovation process.
But where to start?
Focus on the Client Experience
When we consider opportunities for innovation in a law firm context, it’s natural to gravitate to the services the firm offers. Firms may ask questions like “how can we identify and monetize profitable new services?” or “how can we restructure and streamline our existing services to deliver them more cost-effectively?”
However, innovating at this level is a difficult road for a law firm. While some firms have done this successfully, it requires large investments of time, money and leadership capital to make fundamental changes in legal services. Also, tremendous discipline and cultural change management techniques are required to make these changes stick across a firm. Companywide “innovation jams” and similar events may work well for technology startups and other sectors that have innovation in their DNA, but may be difficult to apply in a law firm culture.
That’s why we encourage law firms to focus first on innovation at the level of the client experience. In other words, establishing priorities around things that will matter most to individual clients. This is where innovation is getting the most traction in firms today.
By differentiating on the basis of how their clients experience their services, firms can realize major benefits quickly, without the need for turbulence-inducing changes in business processes and culture.
The Six Pillars
“At heart, there are six things law firms need to consider when innovating through the client’s lens,” says Deborah Knupp, managing director of consulting firm GrowthPlay. “Legal innovators need to think carefully about how they can look at these ‘Six Pillars of the Client Experience’ with fresh eyes.”
Knupp advocates focused attention to these six known interfaces with clients. Firms should aim to do something distinct or different with each one.
A crisis like COVID-19 gives lawyers the opportunity to innovate in how they approach client relationships. With traditional relationship-building tactics like sports events and dinners off the table, firms should focus on deepening relationships through intimacy and human connection. An uncomfortable truth of this business is that it’s innovative for a law firm to care deeply about things that don’t simply include legal billable work. That said, firms can challenge their teams to consider tactics like thought leadership around mental health, or highlighting their clients’ community efforts on social media platforms. In relationship building, small, authentic gestures can go a long way. When a client is dealing with the stress of social isolation while maintaining business continuity, an empathetic note or phone call from can make a huge difference to their day. Smart firms will look to institutionalize these gestures as part of each lawyer’s day.
A client’s experience of a law firm is highly influenced by lawyers’ knowledge of and interest in their business. When a lawyer comes to the client with a business-centric mindset, it’s a win-win situation for both. And again, the current pandemic gives firms a significant opportunity: deepen relationships by elevating their lawyers’ business acumen and client-centric thinking. COVID-19 has legal implications for virtually every client in every industry. Firms can institutionalize business-centric behavior by challenging lawyers to think through these implications for each of their clients. Lawyers should consider the client’s customers, the employee perspective, finance, operations, compliance, supply chain, and other critical areas of the client’s business. Equipped with this knowledge, they can have deeper, more relevant conversations with clients, and tailor their offers to match the client’s needs.
Many firms have historically relied on in-person communication to nurture client relationships, but the pandemic demands a shift to the virtual world. This starts with the use of technology, including video conferencing tools for face-to-face communication and client portals for online collaboration. These tools have new capabilities but also limitations, so it’s essential for firms to manage their adoption carefully and educate lawyers and staff on beat practices. Again, the client’s perspective and preferences are critical to this. A discussion with a client about their preferred communication channels and styles can help set expectations and deepen the relationship.
There’s huge scope for law firms to innovate in the ways they show appreciation to clients. At the individual level, this can be as simple as reminding lawyers to thank clients for their business. At the client level, a partner or team can align themselves with social and community causes that are important to a particular client. At the firmwide level, it may be useful to think outside the box and look at some precedents from other industries. For example, TD Bank recently created a “Thank You Account” for each of their North American customers that provided personalized messages of thanks and gifts at ATMs, online and in branches. And AT&T recently thanked their clients on Facebook by making over 2,000 personalized “thank you” videos. What similar opportunities might be available to a law firm?
A crisis situation like this current pandemic should motivate law firms to innovate in how they are gathering and analyzing client feedback. Firms that are currently relying on informal feedback processes may wish to consider institutionalizing Net Promoter Score or other structured feedback methodology. Some firms are introducing a program of independent, third-party feedback interviews with key clients to uncover service issues, and ensure service successes are recognized.
Client by client, firms have the opportunity to innovate in their billing/pricing approaches. It’s important to appreciate that each client faces their own pandemic-induced cashflow challenges. Rather than waiting for clients to take the lead in demanding billing reductions, law firms need to be proactive in proposing alternative fee arrangements. Client teams should be empowered to innovate win-win financial solutions that work for both the client and the firm.
To get real results from client experience innovation, firms need to be intentional and focused, and provide leadership for their people.
Firm leaders should be prepared to treat client service innovation as a major change project, with a clearly communicated purpose and vision of success, quantifiable business goals, individual accountabilities, timelines, and horizon-based metrics (e.g. six months, one year, two years) for the outcomes the firm wants to achieve.
“Too many innovation programs result in only illusory success,” says Knupp. “Before starting on an innovation path, leaders need to be rigorous in defining what innovation success looks like from a business perspective. And they need to hold people accountable—not just for innovating, but for the expected business results the innovation should bring.”
Author Jennifer Johnson is the founder and CEO of Calibrate.