How important is customer service to law firms?

Transactional business

Law firms are transactional businesses. Until the next matter “comes through the door” it is not known nor can it be forecast where the next fee income is coming from. One way of encouraging new clients is to adopt throughout the firm a Maître d’ Hotel approach. Every client who comes through the door is greeted as if he/she was an old friend and express how happy you are to see him/her even if through gritted teeth.

Marketing

Firms will often spend a great deal of money on marketing with a view to obtaining new clients, uncertain, while ignoring the data base of its existing clients, who they already know, because it does not recognise their loyalty. Why does it not recognise clients for whom they have worked before is a natural pool of potential new business? Probably because it does not know what its clients think of them. Providing the last impression was of a firm that cared as well as being knowledgeable in law, met the timescale and fee quotation or estimate, two different things, the possibility of new business from an old client is significant. Every few months, stay in touch, talk to a client about the last instruction you had and did it work well for them and think about allied possibilities e.g. an individual bought a property, is the will up to date? A company bought a new business, what about debt collection, HR problems etc. The fact you stay in touch creates loyalty.

First impressions

It is virtually impossible to overestimate the importance of the first contact. The old adage of never being able to make a first impression a second time comes to mind.

The profession is more competitive than ever before and the first contact is so important and this is where the importance of the receptionist becomes apparent. How do you think a possible new client feels if he/she is kept waiting for a number of minutes while the receptionist is discussing a matter with someone else on the phone? Just stop what you are doing and wait four minutes looking at your watch! It is a long time. A simple please hold for a moment to the caller followed by I will only keep you a few moments to the new client makes a world of difference.

Similarly with a telephonist who needs to answer the call promptly and here there is an added problem, the system. If there is no answer after three or four rings, blood pressure starts to rise and one of two things will happen, the potential client will hang up or will start a conversation in a bad mood putting the firm at a disadvantage especially if the client is comparing two or three firms. What I have found, which I hate, is the person you are being connected with does not answer and you just go to voicemail with no option to go back to the operator or the person transferring you to whom you have given a lengthy explanation of you requirements does not pass one word of that conversation to the person to whom the call is being transferred and you have to go through it all all over again. Frustration.

Lastly on this subject is the non-returned phone call or calls. What a bad impression!

Why consult a law firm

Please remember the individual or organisation is likely to be experiencing some level of anxiety which is why they are contacting a firm of Solicitors in the first place. If you are willing to invest time with your potential client at the start, in particular listening intently and showing interest, you may find that you are perceived as being more client friendly and client friendly=loyalty. Although this practice may seem more costly, it is likely to yield a better client retention rate in the long run. In addition, there are people with whom you will be unable to work because you are just not compatible. Better to find this out before you take on the work rather than later because you will be unhappy talking to the client and you will both become frustrated.

The knock on effect is if that person was referred the feedback to that introducer will not be good. Better to explain the matter is not one your firm has as a specialism or you will be unable to meet the deadline required because of pressure of other work etc. You will be respected more than if you had taken the work as outlined above.

Work in Progress

I will now deal with work in progress. When you accepted the instruction, you will have given a fee quote or estimate and a time frame. It is part of your role to keep the client advised of progress and if time expended to date is as expected no mention need be made, all that needs to be said is the matter is progressing as planned. If it is not, explain why not as this may have an impact on fees. Where an expected situation arises and this was not included in the fee estimate, by highlighting it as it arises gives the opportunity to revise the fee estimate at that moment in time and confirm the revision to the client who is less likely to object. However, leave it to the end of the matter and bill 20% more than estimated think of the consequences even with an explanation. Client reaction is possibly to say he/she will not pay the additional sum, you will have an argument and whether it is paid or not a bad impression is gained.

Finally on this topic, never respond to a client’s enquiry about progress by saying “I will find out” when the client was under the impression you were dealing with the matter or not be available and the client has to make two or three calls before speaking to you.

Customer Friendly equals greater profits

All of the matters referred to above will make your firm much more customer friendly and encourage loyalty amongst your clients and will not cost a great deal of money.

A significant effect of this policy will lead to a bigger income and increasing profits.

The key is to have this policy adopted by the whole firm not just one or two people.

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Eric Golding FCA

Stanley Davis Practice Support Services Ltd

41 Chalton Street, London, NW1 1JD.

Phone: 020 7554 2222; Mobile 07854 755935

Email: eric.golding@sdgpracticesupport.co.uk

Follow me on Twitter @sdg_41;

LinkedIn https://www.linkedin.com/pub/eric-golding/57/861/79b

Why Law Firms must have a Strategy

Would you take a trip on a luxurious Ocean Liner which was complete in all respects except for the steering equipment or the rudder? Of course not, too much of a risk yet many firms are prepared to risk their business lives by conducting their practices without one, no strategy!

Strategy

Why a strategy is so important is because it will define who you are, why you are in business and what your ambitions are. The partners will have confirmed their commitment to the strategy and the role of the managing partner (see below) before it is implemented. It is worthless exercise if all those concerned, who for the purposes of this note I will call partners, do not agree with it and give it whole hearted support.

Above all, it must be realistic and affordable.

Partners

The partners are a firm’s main asset and it is essential to know their likes and dislikes, personal strengths and weaknesses and ambitions and these have to be built into any strategic plan. For example, any governing document such as a partnership or shareholders agreement or similar should contain provisions dealing with retirement, goodwill and repayment of capital account as well as conduct of the business, profit sharing etc. all vital information.

The whole purpose of introducing the strategy will become pointless if partners are able to ignore or countermand the agreed policy and thus undermine or subvert the project for matters the partners have already discussed and agreed.

Managing Partner (MP)

A managing partner will be responsible for the devising and implementation of the strategy once it has been agreed? How will a managing partner be appointed? This will not be the partner who has been in the firm the longest nor the partner who has some time on his hands but the person most suited to the role. It is essential that the person appointed will be able to take tough decisions when necessary and have the time to manage the business. (Remember two of the ten mandatory principles of the SRA start with the words, “Run your business….”).

The MP will probably have to give up some client facing work, which may be a major issue when considering the appointment.

Senior Partner (Optional)

This role is suitable for a figurehead like a president or constitutional monarch and someone who is well known and respected in the profession.

The Strategic Plan

The strategy must not be overlong or too complex because if it is a number of partners will just not read it or if they do they will “file” it after reading 3 pages!

The strategy must be written in a way that reflects the fact that it has been carefully thought out, is realistic and has the approval of the partners. It must not be over ambitious, vague or unrealistic in any way and above all must be affordable.

A general practice can often include a collection of practice areas that make no sense strategically and are likely to be unprofitable. Therefore, concentrate on those areas where the partners have greatest expertise, where they have their best reputation and make the greatest profit. Seek a reciprocal arrangement with another firm which may be weak in areas where your firm is strong and vice versa.

SWOT Analysis

To aid in the formulation of the strategic plan, it will be important to know the strengths and weaknesses of the practice?

A good way to find out is to complete a SWOT analysis, Strengths, Weaknesses, Opportunities and Threats.

All relevant information about the firm must be referred to viz: partners, individual skills, ambitions, retirement strategy, clients, competition, support staff, fee earners, business development, marketing and any other matter a partner may wish to add. There should be no limits and this will help shape the firm for the future.

It will be noted, the list includes retirement strategy and therefore the general strategy must include succession planning. Often a firm’s clients will reflect the ages of the partners. A good strategy will include a business development programme and marketing.

Partners should feel they are members of a team and a climate of partners running their portfolio of clients of the practice their way, almost like a separate practice, will inevitably lead to problems. Ensure more than one partner is involved with a client, it will help maintain the client relationship and encourage the collegiate feeling.

Financial section

This is a very important section of the strategy as funding is key to the performance of any firm and the implementation of any strategy.

If the financial affairs of the business are not kept under control, the firm could find itself under pressure from its bankers and have difficulty paying its debts. This in turn will have an adverse effect on professional indemnity premiums let alone the SRA with its financial stability tests.

Being successful can still lead to collapse as cash flow is vital. The firm has to fund expansion which is why a regular, timely, supply of good quality financial informationis vital to the health of any practice to ensure there is enough cash in the business. Cash flow is not profit.

Reporting

As part of the overall review of the firm incorporated into the strategy, the MP will report to the partners on the structure of the firm and whether it reflects the current need. If necessary, outside expert advice should be taken on the advantages and disadvantages of partnership, LLP or limited company. The strategy may be to take the firm into other areas and so an Alternative Business Structure (ABS) may be on the agenda. Once again, outside advice may be necessary.

Conclusion

Managing a law practice today is much more like running a corporate business than ever before and it must be managed on similar lines.

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You can contact Eric Golding at eric.golding@sdgpracticesupport.co.uk

Connect with Eric Golding on;

LinkedIn uk.linkedin.com/in/ericgolding

and on twitter: @sdg_41

Eric Golding FCA

Stanley Davis Practice Support Services Ltd

41 Chalton Street, London, NW1 1JD.

Phone: 020 7554 2222; Mobile 07854 755935

 

To merge or not to merge that is the question. (With apologies to William Shakespeare)

Why do Law Firms consider merging their practices with another firm? There could be any number of reasons from desperation to implementing a well thought out plan and anything else in between.

What should be remembered is that mergers are rarely just that, in reality it is one firm taking over another, in which case the first question that needs to be answered is are you prepared to allow your firm to be absorbed by another and are you prepared to give up some or total independence? Or is your firm to be the dominant one?

The question that needs to be asked before contemplating a merger is to remember the purpose of any merger and that is to deliver strategic advantages for all concerned, partners and staff.

(For the purposes of this blog post, reference to partners is general and does not take into account the most appropriate structure for the particular firms or circumstances.)

Once the decision is made to seek a merger partner, it must be with the support of all partners, and sufficient time and resources must be devoted to the task. Depending on the size of the firm, a committee may need to be formed, led by one partner who may have to give up some client facing work, to carry out research, attend merger meetings, write reports to the partners and deal with other matters arising. Achieving a satisfactory merger is no easy task and will be time consuming.

Here are a few examples of some possible drivers behind the decision to look for a merger partner?

1. Disagreement between partners?
2. Having no clear strategy and future?
3. Falling fee income?
4. Pressure on profit margins leading to lower profits?
5. Falling drawings?
6. Financial instability and or rising debt?
7. Solving a succession problem?
8. Loss of incentives and interest in running the practice?
9. Additional and more specialised services requested by clients?
10. The expiry of lease(s) of office premises?
11. Compliance and complaints?

I put disagreement between partners as number 1 on the list as this for me is the most important consideration and unless resolved is a recipe for disaster. I know of firms where some of the partners hardly talk to each other as a result of which it is unlikely they will be pulling in the same direction! How can any business/practice work when the leaders do not communicate? This leads to number 2 on my list. Every firm needs to have a realistic and affordable strategy, agreed by all the partners and this is impossible to be achieved in the circumstances set out at the beginning of this paragraph. The majority of the other points referred to are nearly all as a consequence of numbers 1 and 2.

In my opinion it will be impossible for a successful merger plan to be completed unless there is total co-operation between the partners. The only way forward in these circumstances will be to appoint an outside consultant who will have to have a brief agreed (signed as confirmation) by all the partners and who will have been paid a substantial non-refundable fee in advance. There is no better way to obtain partners co-operation than by involving them in a personal cost.

I now wish to refer to one of the most important matters for consideration when thinking about a merger not yet referred to and that is, compatibility between the individuals concerned on both sides.

Whoever becomes the managing partner of the enlarged firm, will have to work with all concerned for the foreseeable future. Is this acceptable? At the first meeting or two everybody will be on their best behaviour but look for little traits, does someone always interrupt when you are in full flow, has somebody always been to the places you have been to and stayed at the most expensive hotel, whatever you have done they have done but before you and so on. Are you irritated at an early meeting by some or all of the negotiators on the other side? It is not going to get any better in fact it will probably get worse. You might say out of the frying pan into the fire because had you not foreseen a major problem or two you will not have been in any such negotiations. The message is no matter how good the match might look from a work point of view, you are dealing with people and everybody is different and may have a different agenda. Ensure everybody involved discloses their agenda so that their key issues may be incorporated. A simple example will be a partner wishing to retire on a certain date even if that is a few years hence.

I refer to a managing partner deliberately as this partner must be prepared to manage and be a leader. A senior partner should only be a figurehead with no power other than to represent the firm as an ambassador and must be able to undertake that role.

The thought of an unhappy uncooperative partner within the firm is not a good omen for success and may well lead to the merger not going ahead or if it does it will have a dissident within its midst who may be able to block the future success of the practice. This is the reason why I stated earlier, every firm needs to have a realistic and affordable strategy, agreed by all the partners.

Connect with Eric Golding on LinkedIn uk.linkedin.com/in/ericgolding and on twitter @sdg_41

Eric Golding FCA

Stanley Davis Practice Support Services Ltd

41 Chalton Street, London, NW1 1JD.

Phone: 020 7554 2222; Mobile 07854 755935

You can contact Eric at eric.golding@sdgpracticesupport.co.uk

New Year’s Resolutions for law firms

Resolution 1; Ensure financial affairs are organised and reports are understood and acted upon. In other words financial stability is assured.
Resolution 2; Ensure the firm’s structure is such that vital decisions are not blocked.
Resolution 3; Ensure there is a succession plan.
Resolution 4; Ensure there is a realistic strategy in place that is affordable and implemented.

Resolution 1; Financial stability

Business plan

This subject has been at the top of concerns of the SRA for many months now and I believe their concern will become even greater during 2014. How is uncertainty overcome?

By having a business plan, which will cover the near future so that you know your objectives and it will explain how these are achieved. In order to do that your objectives must be realistic, affordable and have the support of all the partners.

Include in the business plan sections on a summary of what is wanted to be achieved, a detailed financial plan including budgets, forecasts and cash flows, and don’t forget factors and assumptions explaining how the figures have been reached, what the targets are and how you are going to get there. Business plans set out the firm’s strategy and set the medium term actions to deliver it. Budgets focus on the short term of usually the next 12 months.

Each month, management accounts will be prepared to show how the firm is performing as compared to budget and any major variances investigated.

An organised financial department producing reliable management information, regularly, is one step towards a successful practice and the key is to understand what the reports mean and act as necessary. It is pointless to receive reports and just file them.

Profitability is most important but the most important is cash flow. A firm can be profitable yet in financial difficulty because too much of its resources are tied up in debtors and work in progress.

Cash flow

Cash flow forecasts are vitally important as the firm must maintain sufficient cash in order to be able to meet its obligations. Many firms have failed in the past not because of poor profitability but because they ran out of cash.

A cash flow forecast will help prevent this sort of situation arising, providing it is reliable, monitored and used as a tool in managing the business.

Resolution 2; Structure

There are two issues here. Should you be a sole practitioner, partnership, llp or limited company? Consider carefully these options and take independent advice. Do not act as one firm did, when I asked why it had been converted to an llp, the reply was, “isn’t everybody?”

Partners should feel they are members of a team and a climate of partners running their portfolio of clients of the practice their way, almost like a separate practice, will inevitably lead to problems. Ensure more than one partner is involved with a client, it will help maintain the client relationship and encourage the collegiate feeling.

A successful law firm will have a realistic, affordable strategy which will have the support of all the partners. The partners are a firm’s main asset and it is essential to know their likes and dislikes and personal desires.  Remember, the whole purpose of introducing the strategy will become pointless if the structure is such that a partner or two are able to ignore or countermand overall desires, and thus undermine or subvert the strategy.

Resolution 3; Succession Planning

Know what each partner’s ambitions are, otherwise there is a risk that a partner will become uncooperative because a matter proposed does not fit his personal agenda, which is unknown to others.

Talk to each other that is the only way you will find out who wants to do what. Consider the ages of the partners and review the governing document for relevant clauses on retirement and any negative effect on cash flow.

Think about how the practice will be affected if one partner (or more) suddenly says they want to retire. How do you cope? Even lawyers are not immortal and as older age approaches, the chances of illness, disability etc. rises.

Resolution 4; Strategy

The partners are a firm’s main asset and it is essential to know their likes and dislikes and personal strengths and weaknesses and ambitions and the strategy will be shaped around that information.

The whole purpose of introducing the strategy will become pointless if partners are able to ignore it and thus undermine or subvert the project for matters the partners have already discussed and agreed as part of the exercise referred to in the previous paragraph.

The strategy will define the areas in which the firm will specialise. The SRA handbook includes the following, “…you have the resources, skills and procedures to carry out your clients’ instructions” Do you?  I have seen web sites of two partner firms claiming to work in matters as diverse as child care, commercial property, professional negligence, probate, crime plus eleven more! It makes no sense to claim to be an expert in too many fields. Think of the risk and your professional indemnity insurance premiums. Before accepting all work, ensure it can be undertaken profitably.

These areas are complex and it is impossible to go into detail in a blog post. Therefore, please contact me if you wish to discuss any matters arising.

Eric Golding FCA

Stanley Davis Practice Support Services Ltd

41 Chalton Street, London, NW1 1JD.

Phone: 020 7554 2222; Mobile 07854 755935

Email: eric.golding@sdgpracticesupport.co.uk

Customer service? What has that got to do with me or my firm?

I can just imagine professionals like solicitors and accountants sitting in their offices reading Legal Futures or Economia and thinking about the statement at the head of this post.

A typical response is, I have been a partner at this firm for a number of years and never had a problem with my clients, so what are you on about?.

Note the reference to clients and not customers because many professionals, in their ivory towers, would not lower themselves to deal with customers as if they were a lesser class of person. In reality, of course, there is no difference – they are the people who provide professional firms with their life blood; work for which the firm will bill and turn time spent into cash and this enables the firm to pay salaries, expenses etc. and make a profit.

So why is customer service relevant to professionals? Firstly it is important to understand exactly what your client/customer wants from you. The word exactly is underlined because it is not up to the professional to interpret the client’s requirements, it is up to the professional to find out and then act accordingly. Your interpretation may not be entirely what the client is looking for but you conclude the task to be near enough what is wanted and so there are no real grounds for complaint. Nevertheless, the client is not entirely happy and you will probably not see him/her again.

How is this situation overcome? As I said before, find out exactly what the client wants and expects from you and deliver it within the time scale requested. In addition, keep the client informed as the matter progresses even if it is proceeding to the time scale you anticipated. How does the client know what is going on unless he/she is informed? There is nothing a practitioner can do worse than receive a phone call from the client asking how matters are progressing and to be told, “Hold on I will find out” or “we are running a little behind schedule and will finish soon”. Firstly, the client may have been under the misapprehension that you were handling the matter personally and secondly, what does ‘will finish soon’ mean? Not very professional from a professional.

When the matter is concluded ask the client if the service provided was up to their expectations and even if it was, are there any matters arising during the case the client perceives could have been done better. If the service was not as was expected, what could have been done better? After the client has recovered from the shock of his adviser showing such an interest, the question is, where can the firm improve because I can assure you there will have been other cases where satisfaction was not great and the practitioner did not know because the question was not asked!

It is important that the practitioner is transparent with the service offered in terms of requirement, timing and cost.

Breaking down this last sentence, I have already stressed how important it is to understand exactly what your client wants, not your interpretation of the same and the time you expect the job to take. If you believe it will take, say, six weeks and you know the client wants it done in two, this is a recipe for at best the loss of future work and at worst a complaint if you do not discuss, and note the discussion, relating to your timing estimate. Now the question of fees. The business of law has changed drastically in recent years and continues to change. One area which has become more sensitive and competitive is fees. The old days of booking time down on the ledger and sending a bill according to your work in progress records have long gone. Clients are looking for certainty and this means fixed fees. Do not believe this is not possible – it is, providing you know exactly what the client requires and you can, therefore, give a realistic quote not estimate. There is a world of difference.

Having the knowledge of the client’s wants and the information necessary to undertake the work, your quote should be fairly accurate. Another important feature is to keep the client advised on progress and should any unexpected matter arise during the project, advise the client immediately. In these circumstances, there is a very strong possibility you will be able to increase your fee, as everything was set out in your instructions and client engagement letter. Thus, any extras will need to be paid for but be sensitive to the client and his/her situation. The bull in a china shop approach is not appreciated.

Competition is not just about capability and price but added value. If the client receives good timely advice from a professional who takes an interest in the client, it makes a world of difference.

You can contact Eric at eric.golding@sdgpracticesupport.co.uk or 020 7554 2222. You can also follow him on twitter @sdg_41