What Corporate Clients Really Want: Five Top Insights
Across the spectrum of legal clients, there are very few truly universal requests. But the one desire most in the profession can likely agree on is “more for less.” Cost pressures and new legal tech are rapidly reshaping client expectations. In a world where computers, AI, and machine learning seem to make every task faster and easier, corporate clients expect most of their matters to cost less and less over time.
As law firms work to meet these kinds of demands while safeguarding profitability and client satisfaction, it can be difficult to know exactly what clients want. Thankfully, Altman Weil’s 2018 Chief Legal Officer Survey offers some helpful insights that can enable firms to make smart decisions about pricing and client management. Below are five of the most useful takeaways from the survey.
- AFAs are about improving firm performance, not just saving money.
It often seems like clients requesting alternative fee arrangements (AFAs) are only trying to squeeze more savings from their firms – that the AFA is simply a new name for the age-old dance of rate discounting. But for the more than 63 percent of corporate clients who negotiate AFAs, the truth is more complicated than that. In fact, these fee arrangements have as much to do with outcomes as cost.
Of those who use them, nearly 75 percent report that AFAs result in a “significant improvement” in outside counsel performance. That’s higher than any other tactic, including required budgets and outside counsel performance evaluation. Smart firms can use AFA requests as a catalyst to examine which improvements clients would like to see most.
- The gap between budget requests and budget enforcement is your opportunity to differentiate.
There is a significant gap between those corporate clients who require budgets for their matters and those who actually enforce them. Nearly half, (48 percent) of clients require budgets from outside counsel, with 83 percent requiring them for major matters. But of those groups, only 38 percent report they enforce their budgets.
While some firms may be tempted to see this information as an opportunity to reclaim some lost margin, forward-thinking firms can use this as an opportunity to differentiate. It’s clear that clients want their firms to meet their budgets, but many firms don’t seem to deliver. Firms who can proactively meet budget requirements will stand out as valuable partners.
- Behind direct cost-related requests (AFAs, budgets), better project management is the most requested outside counsel improvement.
When asked what they would most like to see from outside counsel, clients gave typical cost-focused answers — cost reduction, more AFAs, budgeting and forecasting. Notably, the most popular request beyond these was for improved project management.
This request should be a call-to-arms for firms to make serious investments in legal project management (LPM). While many firms are still evolving their legal project management functions, this is clear evidence that these kinds of investments will bear fruit. LPM is a powerful tool for reducing costs, protecting profitability, and increasing efficiency.
- Seeking out post-matter feedback is key to continued growth.
Even though clients report it improves performance 71 percent of the time, only 32 percent of clients routinely provide post-matter feedback. This minority offers a glimpse at a powerful client management and business development tool.
Imagine the impact of proactively soliciting feedback from the 68 percent who aren’t yet providing it. Not only can firms uncover potential issues and unmet expectations, but they can learn what their clients most appreciate. These insights are critical in evolving service offerings and attracting new business.
- Clients are hungry for data and analysis.
Nearly 75 percent of clients surveyed report that none of their firms report useful data analysis. It’s unclear whether firms are aware that their clients want this kind of analysis, but the survey reveals that clients have very specific categories of data analysis they would like to receive. The top three requested are
- Analysis by time keeper and experience level
- Analysis by matter type and task
- Analysis of firm cost control and efficiency tactics
Assuming that firms know about these requests, the challenge is likely whether they have the tools to track these metrics, not whether they provide them to clients. Without robust technology platforms and intuitive reporting, most firms will struggle to produce these metrics for their own use, much less for clients. Investments in matter management and LPM tools offer a way to meet this underserved client request while driving firm cost and efficiency improvements.
Keeping corporate clients happy is difficult. With multiple influencers, needs and priorities, it can sometimes feel like the relationship between client and firm comes down to a matter of leverage and control. But the CLO survey reveals a group of clients who are as concerned about efficiency and value creation as they are about the bottom line. These insights, along with others from the survey, offer clear instructions for firms looking for opportunities to separate themselves from their competitors.