Imagine that I am one of your clients.  If I looked at your firm’s website or promotional material, what are the odds that there would be a promise that you would endeavour to add value to my business in some way?  If I questioned what this meant, how many people in the firm would be able to explain?  Would this explanation cover things I and my business would be genuinely interested in, or would the ‘added value’ reflect what your firm thinks I should be interested in?

In a highly competitive world where law firms are trying to distinguish themselves, the term ‘added value’ has become very popular. Many firms, in their promotional material, do indeed promise to ‘add value’ in some way. But do people know what it really means and do clients believe they are truly getting it?  Has added value merely become a form of ‘spin’ that in practice is difficult to deliver or quantify?  In this article we will look at what added value is and is not. We will also suggest how law firms can deliver added value that really matters to clients.

So what does it mean?
So what does added value mean? From our work with a number of law firms, we would argue that is not just about doing a good job. All clients should receive an excellent service – they expect it and it is taken ‘as read’. 

Added value is also not necessarily about doing something for free.   Instead, added value is about doing something over and above the client’s expectations.  For it to be valuable to the client, it has to be delivered in a way that that is relevant and really makes a difference to them and their business.  Clients may be looking for value for money.  What that value looks like, however, will vary for each and every client.  So in delivering added value we have to understand our clients, their businesses and the challenges they are facing.  We can then determine how our expertise and resources can be best used to deliver a service that they value – over and above that of our competitors. 

Why bother?
But why should we bother trying to deliver a service over and above our client’s expectations?  Understanding what each of our clients wants, sounds very labour intensive.  It doesn’t appeal to the economies of scale firms may try and seek when managing their client portfolios and profitability margins.

From our work in professional services we have found that when a client perceives they are getting true added value from their legal advisers, the law firm concerned reaps a number of benefits.  These benefits have a positive impact on the firm’s bottom line. By focusing on how they can help the client’s business, these firms tend to experience greater long-term client loyalty.  This is largely because the client feels that the service they receive from the firm is difficult to replace.  The firm in question has effectively set up a barrier for its competition to have to overcome.

We have also found that those law firms more successful at delivering added value, experience greater client profitability. By taking time out to understand what their clients want, they establish a very strong position.  Firstly they are able to map out the different needs in their client base. Some use this to help them identify clusters of similar needs and tailor their service offerings accordingly.  Others put together unique ‘packages’ of services for each client. In both cases, not only can the firms ensure their resources are focused on the services and ways of doing things that matter to the clients, they can also stop wasting time and energy on the things that don’t. 

We have also found that when a client believes they are receiving added value from their legal advisers, the law firm concerned experiences more opportunities to win more work from them. The client trusts their involvement more and as a result involves them in their thinking when new challenges and opportunities arise. The ‘delighted’ client has also been known to be a key referrer of new clients to them.

What sort of things do client want from added value?
In their recent research Nisus Consulting looked at what FTSE-100 clients wanted from their legal advisers. Nisus found that what clients wanted, and in order of priority, was:

1. An understanding of their technical requirements in a commercial context
2. The ability to innovate & add value
3. A depth & breadth of expertise
4. Responsiveness
5. Price – value for money
6. An in-depth understanding of their needs
7. The willingness to invest in long term relationships
8. The ability to always meet deadlines
9. A knowledge & understanding of their culture
10. A knowledge of their industry sector
11. Actively delivering to budget

Some of these factors appear lower down the list than might be expected because they are taken ‘as read’.  Clients expect their advisers to always meet deadlines, have a knowledge & understanding of their culture and industry sector and also deliver to budget.  These are basic service components and aren’t factors that they use to distinguish one adviser from another.  The ability to innovate & add value, however, comes close to the top of the list and is a potential differentiating factor for law firms.

Notwithstanding the aggregate research findings listed above, ‘added value’ does mean different things to different people and organisations.  Whilst one client company may be seeking help with a basic compliance issue, another may want their law firm to act very closely with them as a strategic business partner.  Once we have an in-depth understanding of each client we can work out, not only what we need to deliver but also what we don’t need to provide and what would really add value to the client.

Finding out what clients want
This means asking clients what they want and value.  We can do this through a number of ways – through client research, our review meetings, feedback after each project or just plain ongoing dialogue with them. We came across one law firm that, after dialogue with a key client, instigated the following to add greater value to that relationship:

• Invested time in keeping up to date with developments in the client’s market, business and even personal situation
• Alerted the client to potential opportunities for their business when they spotted them
• Introduced the client to people in the firm’s network who would be of help to them now and in the future
• Ran complementary training and helped the client to educate his colleagues so that his job became more efficient

Communicating added value
Regular client review meetings also give us a chance to communicate to the client the extra value they have received from us over a period of time.  We shouldn’t assume the client automatically recognises the added value we’ve delivered.  The more successful law firms we’ve seen find ways to remind the client of the value they have generated.  One in particular has an ‘extra mile’ file, in which they recorded all the ‘extras’ they’d done for the client above and beyond the basic service components.  From time to time, they report back to the client on the contents of this log.  By doing this they pre-empt the questions: “Where’s the value in this relationship?” and “Where’s the evidence of that value?”

Marketing and added value
We have seen some law firms view ‘added value’ as just a marketing thing – sending newsletters, brochures and email updates to all contacts on a database.  However clients do not necessarily see (even) more information as added value!  They expect their advisers to understand them well enough to ensure that all information sent to them is relevant and adds value to them and their business.  In this case irrelevant information sent to a client can be potentially damaging to the client relationship.  The client questions why the firm has sent it to them and deduces that the firm doesn’t really understand them or care about them.  They may then start being receptive to advances from competitors who do demonstrate an understanding of their business and who send them information which helps or adds value in some way.

Figure 1 below tells the story of a relationship.  At point A a partner or associate in a law firm starts to work with the client on a significant piece of work and over the next few weeks manages to give the client a fantastic experience of their firm.  By point B the relationship between the client and the fee-earner is as strong as it could possibly be.  Everything has been delivered to time, the client has been delighted by the extra value they have received throughout the project and everyone on the client’s side has really enjoyed working with the firm.  At point B the piece of work is finished and the client has no further need of the law firm’s services for a number of months.  The partner/associate’s memory of the high esteem in which he/she is now held is, however, engraved on their soul! 

The fee-earner now goes off and does a similar super job for another client and then another and then another.  Meanwhile the first client’s life goes on.  Perhaps he reorganises his team, has to deal with a crisis in one of his factories, has to withstand a takeover bid, survives his PA leaving and suffers his wife running off with the milkman!  Whatever the details, his memory of the wonderful work the firm has done is rather less fresh.  The ‘enthusiasm curve’ declines to point C.

For the firms that do not manage client relationships or continue to add value between assignments the next contact might occur at point C, perhaps when the client is understood to need more advice.  In that case the partner/associate might be surprised by the lack of warmth in response to their phone call.  And yet from the client’s viewpoint there is a contrast between the fee-earner’s protestations of genuine interest in him and his business and the fact that the firm only seems to get in touch when he has work to give out.

Obviously none of us is money-grabbing by design, it is just that the partner/associate concerned has been too busy to demonstrate how much they care.  The problem is that clients cannot read their intentions, they can only judge them by their actions.  As the curve declines towards point C a client who would not have entertained the advances of rival firms at point B may start to become more interested in seeing “what else is available in the marketplace”.

Yet another danger now looms.  The fee-earner knows the need to keep in touch, they know their firm needs to communicate with its clients when they are not fully involved with them, but they are busy and it is difficult for them to invest time in this on a regular basis.  So they make sure the client’s name is on a marketing database and ask the marketing department to ensure they receive “all relevant mailings”.  This, however, often leads to a situation pictured in Figure 2 below.

Rather than stop the decline the fee-earner seems to have made the curve steeper!  This is because, as we mentioned before, anything the client receives that is not positive is not neutral – it has a negative effect on the client’s perception of the firm.  The client can’t understand why (when he has invested time in ensuring his legal advisers understand him and his business) the firm insists on sending irrelevant information through.  With the best of intentions they are continually giving the impression they don’t understand him or, at least, they don’t care enough to make sure he only receives information that is valuable to him.

Too often even the best intended initiatives seem to encourage blanket marketing – “we do it because now it is easy to do!”  If clients are to receive value, firms need to move towards one-to-one marketing – at the very least for designated key clients.  Client relationship partners cannot abdicate responsibility to the marketing department.  They must know their clients well enough to ensure that they know what should be sent, and what not, and then must take the responsibility for making sure the right things are done at the right time.  In that way the client’s enthusiasm can be maintained and improved, as shown in Figure 3.

At points C to G the investment in targeted communications has helped to enable, direct and motivate actions that add real value to this particular client – he is getting a real return on the firm’s investment.  The law firm’s return comes from the actions he takes as a result of his continued high enthusiasm for them and for what they do.

In their research, Nisus identified the marketing communications that clients valued and those they didn’t.  At the top of clients’ lists were staff secondments, seminars at their (the client’s) offices, regular service review meetings, seminars at advisers’ offices and research into key issues.  In contrast the majority saw little value in their adviser’s websites, corporate hospitality or sponsorship.

It’s a two-way thing
Clients also have a part to play in helping their lawyers to deliver real added value.  They can do this by openly discussing the expectations they have of their advisers.  This discussion should go beyond just their technical requirements and include what they see as added value and what they do not, how they expect the two sides to work together and how they prefer to communicate with advisers.  They can guide their advisers on how often they expect contact with the firm (and with whom), how meetings should be run and what issues should not be discussed in open forum. 

We have also come across clients stipulating how information should be presented and what additional capabilities/activities in the firm would help them in their day-to-day job. It would help the law firm to deliver relevant added value, if the client communicated what current challenges they are facing, which the firm may be able to help with – although the law firm needs to be sure the client understands the breadth of their capabilities and hasn’t pigeon-holed their expertise to a narrow area.

Summary
Clients are keen to receive added value from their lawyers, but firms do need to recognise that one hat doesn’t fit all. What is valuable to one client isn’t necessarily so to another.  Law firms can manage these different expectations to their advantage and be more focused in how they use their valuable resources. Added value can become a reality, rather than a hollow promise, if firms:

• listen to and understand each client
• find out what they value
• decide what to do to deliver that value
• put a plan in place to make sure it happens
• measure the performance and progress of the plan against the client’s expectations; and
• review, at regular intervals, the client’s perception of the added value they have received and ensure the client is aware of it.

Added value makes real sense.  It is good for the client and it is good for business in the long-term.

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© 2008 The PACE Partners LLP London England