Originally published in The Legal Intelligencer
A Cautionary Tale:
The year is 2002. Corporate clients are not happy. A new market research report shows dismal levels of client satisfaction with law firms. Key findings highlight law firms’ lack of responsiveness, failure to keep up with clients’ changing needs and poor value. The rising adoption of e-billing gives clients greater access to data and quickly they, led by insurance companies, begin to wield newfound knowledge to usurp power from law firms. Clients start calling the shots.
This shift in power dynamics, compounded by a financial crisis in 2009, lays bare those firms unprepared or unwilling to adapt. Dissolutions and mergers run rampant. Law firms slow to make the transition find themselves underwater, struggling to maintain client relationships and unable to keep the ship afloat. The giant wave, propelled by clients shifting work to firms they deem more responsive to their needs and more attuned to delivering value, capsizes firm after firm.
Fast forward 20 years. An entire cottage industry has blossomed around elevating and expanding client relationships. Client feedback programs, client service standards, industry teams and key client programs are increasingly common. Business development skills and training are essential to the budding lawyer and considered, at long last, critical to the promotion and long-term success of equity partners. Client service is both a differentiator and competitive advantage. And...a new entrant to the power game promises to shift the dynamics yet again.
Talent Reigns Supreme
The Georgetown/Thomson Reuters Institute’s 2022 State of the Legal Market, reports nearly 1 in 4 Associates left their firms in 2021, a notable uptick from 18.9% in 2019. Lateral moves are up too – a whopping 111% increase across all levels according NALP. The war for talent is in full force and many law firms are responding in the best way they know how – to throw money at the problem. If we learned nothing from the last major shift in the industry’s power dynamics, it was that money isn’t enough in the long-run. Slashing rates to deliver greater value to clients is a short-lived approach that puts survival at risk. So too is hiking compensation without investing in more lasting change.
Fortunately, law firms have the benefit of learning from past mistakes and can glean valuable lessons from the last major turn in industry power dynamics to ensure they don’t fall prey to the shifting winds. Taking a cue from what worked when clients took the reins, 10 strategies rise to the top as effective steps to shore up talent engagement and satisfaction:
Conduct talent feedback
Perhaps the single greatest piece of wisdom to help law firms improve client focus is “ask the client.” The same goes for talent. To enhance employee satisfaction, inquire of people – lawyers AND professionals – about their expectations, what they see as the firm’s unique characteristics and how the firm can better serve them and their needs.Act on talent feedback
Equally important, don’t stop there. Just as the solicitation of client feedback can be detrimental to a firm who fails to act on said feedback, so too can asking your people how the firm can improve with no commitment to change. Be courageous in asking the questions. Then, be committed to doing the work in response. Conducting feedback without this commitment, unfortunately, typically results in more harm than good. (Note: the response does not need to align one-for-one with recommendations. There is a place for strategy and judgment. It does, however, demand incremental improvements directly tied to the feedback.)Perform engagement surveys
Often lauded as the only way to achieve a goal – measure it. Employee engagement surveys work similarly to post-matter surveys. The insights provide a sense of the temperature at a given moment. From the talent side, these surveys measure what is referred to as climate – sentiment at a single moment in time. These touchpoints provide valuable input into day-to-day decision-making and programmatic investments such as return to office, hybrid work models, parental support and more.Conduct a cultural assessment
A culture assessment, like a measure of client satisfaction and service, happens less frequently and provides deeper insight into the fundamentals or building blocks determining longer-term success. It explores the underlying behavioral norms of the organization, answering the question “how does one need to behave/think in order to be successful in this place.” While engagement can (and often does) vary quarter to quarter and be influenced by external factors, culture tends to be deep-seated and less mutable. Cultural assessments deliver perspective on the essence of a firm – what may help it to differentiate in the war for talent and what may be preventing the firm from accomplishing key goals such as increased inclusivity, more collaborative business development or profitable growth.Deploy effective intake and onboarding
A good approach in onboarding clients includes gathering insight about their preferences and expectations and setting the stage for mutual success. Best practice includes capturing and sharing this information with all team members. Law firms can model talent onboarding similarly. Meet with new employees establish expectations, detail evaluation processes, identify individual strengths and determine how best they can contribute. Some firms engage in this process extremely well for lateral hires. Expand those programs to all talent to capture greater value.Focus on talent retention
In 2016, DLA Piper analyzed internal data to determine the four factors driving client retention for their firm then doubled down investments in those areas to generate more profitable revenue with clients. Law firms can approach talent retention with a similarly analytical method. Objectively evaluate retention rates and analyze data for patterns (e.g., do certain practices, offices, roles have higher retention than others). Use this analysis and the insights gleaned to troubleshoot, refine practices and replicate highly effective models. Keep a keen eye on the intangibles – such as leadership styles, empathetic managers and role clarity – that have an outsized influence on retention.Improve performance management
Regular check-ins with clients are opportunities for law firms to highlight with themselves and clients what is going well, what is going poorly and how both sides can improve. The most useful briefings include a scorecard. Currently, clients are prompting ongoing performance reviews more frequently than firms themselves. Lessons can learn from them, all the same. Scorecards rate a firm against an agreed upon set of expectations. These expectations vary from client to client; there is no one-size-fits-all. Law firms can mirror this approach with talent. Develop performance models to encourage a) clear, tailored expectations for each team member; b) ongoing dialogue with respect to progress against these goals; and c) a structured list of development opportunities for each individual. Performance management is perhaps one of the greatest opportunities for improvement in law firms today.Define the firm’s value proposition
What differentiates a law firm in the eyes of clients is gold, as far as information goes. Knowing what it is clients value enables a law firm to make strategic investments where it matters. It also allows the firm to leverage this knowledge into powerful messages to attract other clients. Value propositions for talent look quite similar. Why do professionals come to your firm? What keeps them there? The answers to these two questions can set a firm on the right path to knowing where to start building on strengths. Laterals are a particularly valuable source as they recently compared the firm to others much as clients compare the firm to competitors.Target the right talent
A more advanced approach, targeting ideal clients demands understanding who the firm most wants to attract. While defining an ideal client may involve an exploration of company size, legal needs, industry sector or investment strategy, defining ideal talent is a touch more nuanced. It involves an exploration of what traits are most impactful to a given role, how to objectively evaluate these characteristics and where to find candidates best-suited to an opportunity. Already, law firms are exploring new and different sources for recruitment to promote diversity. What other objectives could the firm advance with a more strategic approach?Key talent accounts
Key client accounts are a similarly sophisticated model used by only a handful of law firms today. Key client programs identify a small number of highly valued clients, whether by virtue of current stature or potential for growth, and devise a strategy of “care and feeding” to retain and often expand the relationship. From a talent perspective, an equivalent strategy involves identifying and investing in top performers, rising stars and emerging leaders. A word of caution: Only after a law firm has effectively made strides with broader talent programs, including the evaluation of satisfaction levels, investment in development and creation of a solid foundation for growth and opportunity across the platform, should a key talent model be deployed. To overlook broader demands and invest in those of a select few can backfire if fundamental levels of development and satisfaction are not met.
The legal industry is at a tipping point. Talent holds the cards and will for some time as law firms sort out how best to reimagine their structure, recruitment efforts, retention and professional development. Just as client service and relations has dictated winners and losers for decades, now too will how law firms respond to the changing needs and objectives of talent. How law firms respond to the changing power dynamics has the potential to determine who will rise to the top and who may cease to exist before the next major shift.