Managing the Sophisticated Client’s Expectations - Part II

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by Patrick J. McKenna and Ronald F. Pol

Read Part I of Managing the Sophisticated Client's Expectations

Identify What Adds Value

When you are first retained by corporate counsel, you are likely hired to resolve specific problems that the legal department does not have the skills, resources, time, or inclination to handle. In handing the matter over to you, corporate counsel is entrusting you to serve as the bridge between their legal team and those of your lawyers who will work the case. It is your job to ensure that your client's needs and expectations are met.

To truly understand your client's expectations, you must first have some empathy for the environment in which they work. For example, the average associate general counsel for litigation may be handling anywhere from 20 to 200 different matters in a number of different jurisdictions. This means that each matter is likely to get only about an hour's attention each week. Meanwhile, you may have forgotten that the single matter that you are working on is only one that your client is juggling at any given time.

The ramifications are obvious. We need to understand the workflow and the demands on the time of that in-house lawyer who is giving us the assignment if we are to have any hope of becoming their trusted business partner and a true asset.

It is important therefore, to identify and distill the key factors that add value to your client's organization and also explicitly to record those factors at the outset of the transaction.

Sitting down with corporate counsel allows you both to lay out the commercial objectives, develop strategies to advance those objectives, and then prepare an engagement understanding that can be reviewed and monitored as the matter progresses.

To determine those factors might be as simple as engaging in a discussion and asking your client:

As I hope you know, we really do value you as a client and want to deliver a level of service that not only meets, but exceeds your expectations with this particular matter. Can we take a few minutes for you to tell me specifically, what constitutes ‘value' for you in the way in which we will handle this particular matter? What I would like to do is understand completely how you measure value, what we need to do at every stage in this transaction to make your life easier, and then be able to sit down again at the conclusion of the case and assess how we did and what we might learn about how to perform even better in the future.

Listening skills are paramount. The key is not to approach collaboration on the basis of, “Here is how we want to do it,” but rather by asking your client, “How can we serve you best (or at least better)?”

Both corporate counsel as well as outside counsel have come to use the term “value-added” with such frequency that it is quickly in danger of becoming meaningless. Lawyers are suspicious that corporate counsel tend to invoke the term to support outrageous expectations, while corporate counsel believe that lawyers toss around the term in their marketing pitches without ever defining what the “value” they're “adding” really is, or worse still, use the term to justify ‘premiums,' yet otherwise bill at ‘time.' Indeed, the hourly billing mechanism appears to have conditioned many lawyers into thinking about ‘premiums' and ‘discounts' - from a firm management perspective - rather than about ‘value' from a client perspective.

In both cases, however, there is often a mismatch of expectations between the value perceived by the firm and the value perceived by the client. Oftentimes, this is not just because in-house and outside counsel have a different perspective, or perception of value, but because they failed explicitly to consider what would constitute value – before resources were committed and results achieved.

In some situations, you may need to probe deeper to help your client help you identify the factors that really matter to them. While the client may have carefully drafted guidelines that are presented to the law firm as conditions of retention, there is usually very little real guidance on the kind of client service it would like to get from outside counsel, the frequency of communication, how to provide more proactive preventative counseling, or other conditions that signify what the client might really value.

In those instances, we have found that thinking through the various steps involved (we call this the client's Value Chain) in completing the transaction, can allow you to explore specific client expectations at each “touch step” along the way.

Here is an example of the various steps involved in a typical legal matter and a sample question that you could ask to elicit what your client is hoping to achieve at each of these links:

The Client Value Chain

Instructions – Transaction – Deliverables – Billing – Assessment & AfterCare

Instructions: How does this matter fit within your company's overall business goals and how important is this case in comparison to others you are working on?

Transaction: When (hourly, daily, weekly) and how (voice-mail, email, meetings) do you want to hear from me?

Deliverables: How would you like me to make my reports and presentations more useful to you and easier to pass along or utilize within your organization?

Billings: What would you like to see on your invoices, and how could we simplify or improve our statements so that they provide the information you need in the format you need it in?

Assessment and Aftercare: How might we debrief at the conclusion of this case in order to determine what we've learned, to your future benefit - such as identifying ways to reduce future liability or develop ‘resource multipliers' enabling the legal department, demonstrably, to deliver more value to the business?

Commit Your Client's Objectives and Key Expectations To Writing

In order to be able to manage your client's expectations all the way through the particular matter it is important to identify key factors that enable you effectively to deliver value to the client organization. Our recommendation is that, in concert with your client, you develop a specific checklist of what their expectations are and what, for them, would constitute real value being delivered on this matter.

Now often, your client will be able to articulate broad concepts such as the following:

Well, I need you to be sensitive to the importance of this matter to our company, to be highly responsive when we need you, to provide excellent coordination and case management, and it would be highly valuable to our department if your team could provide us with some substantive training in this area.

While these concepts may be a good start, you then need to have the client define precisely what they need and how they will know when their expectations have been met – and indeed, exceeded (which should be your ultimate goal).

TIP: A particularly good technique for probing to better understand is the Five Whats:

Starting with a question like “What do you expect from us?” Answer: “To be responsive” You then follow with: “And what does that mean to you; what would some firm being extraordinarily responsive look like?”And then again “What does that mean . . . ?”

This stage is vital, yet often overlooked, as we all just assume what needs to be done. We've done it before, we know this client, we know this stuff, right? This stage is especially important for firms – when you truly know what the client values, then that's where you can focus resources, without spending lots of time (and trying to justify it later). And when you deliver, you know it and the client knows it – always a great time to have a billing conversation. So, get into some specifics early on. That doesn't necessarily mean screeds of paper, with detailed procedures and precisely defined micro-objectives. But what it does mean is truly to understand what the client values – it might mean just a couple of sentences.

So, yes, sometimes you'll need to ‘drill down' just a little more. For example:

You mentioned that you expect availability. In order for me to understand exactly what you mean by availability, as you might appreciate that different clients might define that term differently, can you please give me some examples of what you need so that together, we can develop a standard for how we will actually meet your expectations in a measurable way?

Determinants of Value

Indicator of Value We will both know that this has been accomplished to the client's satisfaction when (“what” happens)...?
1 Outcome/Importance for Company
2 Understanding the Business
3 Legal/Commercial Judgment?
4 Availability
5 Timeliness of Advice
6 Coordination (Project/Matter Mgmt)
7 Unprompted Communications
8 Staffing Levels/Balance
9 Manage Fee Level Expectations
10 Relationship - Helpful/Constructive/Useful
The 10 indicators identified above are of course not significant in themselves. They simply represent some of the possibilities – and some of the factors that corporate counsel seem regularly to complain about. What is important is that they reflect what is important to your client. After all, if you never find out what is important to your client, how can you expect to deliver great results? Or more importantly, how can you expect readily to demonstrate to the client the fact that you've delivered.

The other important consideration is that there are only a limited number of indicators, and that this process is fairly simple. A complicated process, with too many variables, may look great in theory but will seldom work in practice.

This process can also serve to protect your interests. Let's say you have agreed to take a litigation case on a fixed fee basis. Your client, because they are paying a fixed fee may have an incentive not to settle expediently and may simply veto early settlement opportunities. Your average cost per case now starts escalating. Then the client pressures you to lower your average cost per case. He says, “If you want to stay on our approved list, you'll need to discount your rates.”

It also serves to protect your client's interests. The relevant corporate counsel has a budget and other expectations to meet within their organization. If you are part of setting these expectations from the outset, and you meet or exceed agreed deliverables, corporate counsel will also meet or exceed internal expectations. This will help strengthen any relationship more than divergent expectations ever will.

This process channels everyone's attention into designing a real value-added path from the start and at each key stage – before work is done (and expense incurred) and reinforces teamwork between the lawyer and client.

Demonstrate That You Have Added Value

When your matter is completed, you can now utilize a simple checklist to both assess your client's satisfaction (on terms that were predetermined) and demonstrate the extent to which you have added value.

In practical terms, a simple checklist might list the key criteria, with a box for each, to be assigned grades from 1 (poor) to 5 (excellent), and a “comments” field. Such a checklist provides a useful basis for identifying whether lawyers meet key value and performance criteria for each transaction, and across a range of transactions.

You might want to invite your client to complete the form, return it to you, and then schedule a specific meeting to discuss your client's feedback.

In practice, you may find that your evaluation of your performance may be higher, and that you view your value contribution greater than your client did. Most importantly though, this process allows you to identify key areas for improvement and key areas in which you are doing well, in which both you and the client may increasingly be ‘on the same page.' For example, using the same factors as above:

Assessment of Value Delivered

Indicator 1(Poor) 2 (Fair) 3 (OK) 4 (Good) 5 (Exc) Comments
1 Outcome/Importance for Company
2 Understanding the
3 Legal/Commercial
4 Availability
5 Timeliness of Advice
6 Coordination (Project/Matter Mgmt)
7 Unprompted Communications
8 Staffing Levels/Balance
9 Manage Fee Level Expectations
10 Relationship - Helpful/Constructive/Useful

Many corporate counsel will agree that, mostly, lawyers do achieve results – yet the process by which this occurs is sometimes a difficult one, from the client's perspective. Maybe this is part of the reason for the ‘disconnect' between law firms and their corporate counsel clients – lawyers who have in the end ‘delivered the [legal] goods' might think that's what it's all about. For years, however, corporate counsel have been trying to tell them that that's only one part of the game.

Although the best lawyers actively seek to identify key commercial drivers, these sometimes translate into ‘legal' outcomes that, at least within the internal processes of the firm, seem in effect to become the de-facto determinant of value in the lawyer's mind.

Worse, some lawyers still seem to focus more readily on key legal tasks rather than commercial goals. For example, a claim may be met with a robust defense, discovery and interlocutory applications, before considering creative ways to resolve core commercial issues. For a time at least, the legal process itself effectively becomes the perceived goal.

When that happens, the lawyer almost invariably will not truly have identified what adds value to the client. Sure, the lawyer might ultimately do so, after several years of “working on the file.” Little wonder clients sometimes feel frustrated by the legal process. Even having ultimately achieved a great result, lawyers sometimes expect clients to warmly thank them, yet often the corporate client has moved on to focus on the next transaction. Worse still, even with a favorable result, the client might consider that it simply achieved what was rightly it's due, at what it might view as considerable cost – usually, the perceived cost and delays generated ‘by the lawyers.' It is easy to say that you understand your client's business, but the best lawyers also take the step beyond simply acting like a legal technician. They translate legal advice into business consequences and business actions. Corporate clients often consider that relatively few lawyers truly identify core objectives, genuinely from the client's perspective, and from the outset.

In essence, lawyers need do only three things: identify what adds value to the client; deliver that value; and demonstrate they've done so. These are in many respects communication skills rather than technical legal skills. The goal is clearly to identify value objectives from the outset, and effectively to demonstrate the value of your contribution in terms that relate directly to client objectives rather than simply ‘legal' outcomes.

Copyright 2004. Patrick J. McKenna and Ronald F. Pol

Patrick J. McKenna is a partner in Edge International where since 1983 he has worked exclusively serving law firms and has worked hands-on with at least one of the top ten largest law firms in each of over a dozen different countries on issues associated with developing competitive strategies, improving profitability, client service excellence, and systems for effective practice group governance. He is available at [email protected]

Formerly Corporate Counsel with Telecom, New Zealand's largest listed company, Ronald F Pol is President of the Corporate Lawyers' Association of New Zealand (CLANZ), general counsel of Simultext Limited, and a member of the governing Council of New Zealand's Law Society. He is available at [email protected].

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