What clients want and how the FD can give it to them

When you stop and think about it, it’s surprising how much client contact the FD really has, although nearly all of it is second hand. Dealing with client-facing issues is possibly one of the least ‘financial’ aspects of the role, requiring a combination of HR, IT and marketing skills to achieve success. The FD has a leading role to play in ensuring that the non-technical services a client receives complement the high-quality legal work that is done for them – and present the firm in a good light.

To start with, the task of giving clients what they want means working via the fee-earners. There is very little scope for an FD to have regular, direct contact with clients. The exception to this is obviously in the credit control arena – but this hardly fits into giving the client what they want – it is usually more about getting the firm what it wants (cash).

Much has already been written on giving clients more cost certainty, and, in the current economic environment, this trend is accelerating. FDs are, or should be, closely involved in supporting these types of pricing initiative. Rather than going over the area of costing models and different pricing options (yet again), this article looks at two other areas where the FD might have a role to play.

Client needs cannot be characterised as a single set of requirements. At one extreme are the clients who just require technical input and very little else. At the other are those very needy clients that are in contact throughout the day for reassurance and advice. Similar extremes can also apply to the fee-earners themselves. There are those whose style is purely to deliver technical advice: at the other extreme – and hopefully, increasingly so – there are those who seek to build a deep relationship with the client, giving lots of advice (commercial and other).

The opportunities for an FD to influence what is given to a client lie partly in resolving the mis-matches between client and lawyer. Beyond this, the FD is well-positioned as a semi-independent observer of the overall culture of client service in his/her firm. Based on this, there is scope for the FD to ‘hold a mirror’ up to the firm and challenge whether its culture is conducive to giving clients what they want.

Matching the fee-earner to the client

Where there is most scope for FDs to better meet client needs is where there is a ‘gap’ in client expectation and fee-earner delivery. This could be a gap where a ‘needy’ client is being serviced by a ‘technocrat’ lawyer, with the result that the client is frustrated by the limited (or lack of) communication and the lawyer is missing an opportunity to generate further fees by more closely meeting client needs. The ‘gap’ may apply the other way round – perhaps where a more sophisticated client just needs basic technical information, but is being overloaded by a fee-earner who is providing the full works, which can result in write-offs of excessive time spent. In both scenarios, the firm suffers from dissatisfied and potentially lost clients.

The initial challenge for the FD is to identify where these gaps are occurring. In smaller firms, this can be achieved, in part, by personally knowing the fee-earners involved. In any firm, this type of information should come out of the appraisal process; to that end, it is important to carefully frame the sections in the appraisal dealing with client handling so as to ensure the fee-earner’s preferred approach becomes apparent. From the client’s perspective, gaps can be identified from face-to-face post-transactional reviews or from matter-review questionnaires, both of which should allow the client to comment on the running of each matter. It is important to ask the right questions to drive the answer out. The questionnaire approach can be complemented by regular relationship reviews (conducted by someone other than the client team) to establish the overall success of the relationship over and above the successes and failures of individual matters.

This is clearly an exercise with a fair degree of subjectivity, and not one that is worth doing for the smaller clients on the firm’s roster – unless they are of strategic significance to the firm (potential for growth/a new sector the firm is targeting). As with most such exercises, it is expected that the information-gathering is the most difficult part. However, once the gaps are identified, the bigger challenge is likely to be in making the training or organisational adjustments required to match the quality of advice given with the needs of the client; for example, injecting a bit more advice into the work done by a technocratic lawyer for a needy client.

The major challenge, therefore, becomes that of ownership of the work: most lawyers are loathed to give up a client relationship, even in exchange for another more suitable one. This issue can be partly circumvented by having client-relationship partners, supported by matter partners/managers. This results in the creation of multiple relationships with the client, and allows the overall client partner to select the appropriate person to lead new matters based on the client they will be dealing with.

The FD’s role in this is to highlight where things aren’t going as they should, and support the analysis and solution to the problem. The ideal outcome fits in with the FD’s overall objectives of maximising profitability, risk management and client retention. The tools and information used, however, are not those normally associated with finance – the data comes from HR and marketing departments, as well as from the finance systems.

Getting the culture right

Sometimes, the overall culture of the firm has an impact on the general attitude to client service. It was only a few years ago that many items of client care required by the Law Society were seen as optional by some firms and/or fee-earners – now they are followed much more rigorously. The clients may, or may not, want this information, but there are big risks involved in allowing a culture where low standards of client-care continue. However, because ‘that is the way it has always been done’, it may not be apparent to the fee-earners that this is an area that needs to change. As an internal observer of these attitudes, and at least as part-owner of the processes surrounding client care, the FD is in an ideal position to highlight any such deficiencies and develop the processes to address them.

Management information systems and processes

It may be that finance is inadvertently acting as a block to better client service by making it difficult for key financial information to be relayed to the client. There may be good reasons for this: a report showing work-in-progress (WIP) at full valuation instead of at a client-specific set of rates could inadvertently be generated by an unwary user. To prevent this happening, finance can take control of the production of financial information for clients, resulting in a restricted supply of information for the fee-earners to share with clients.

Equally, the provision of financial information to share with clients can pose a major challenge to finance: a consequence of identifying client information-needs will be that a range of different requirements need to be satisfied, leading to the classic ‘standard versus bespoke’ conundrum. Keeping track of those reports that are required on a regular basis, and those to be prepared on an ad hoc one, only adds to the complexity and increases the chance of sending incorrect or untimely information to the client. The response can often be a small ‘cottage industry’ within finance, preparing a range of non-standard reports that are pumped out, often for years, with no feedback on whether the clients still find them relevant.

Regular information-needs might centre on WIP balances, amount billed year-to-date and debt balances. Ad hoc information could be anything else, for example: ‘What were we billed for matter X last year?’ The challenge here is for the FD to develop systems and processes that deliver information to the point of need (usually the matter partner) in a way that is flexible enough to allow them to respond to the client. A second client question often follows the first one, and having the information at their fingertips allows the fee-earner to respond to the client instantly, without having to refer back to finance. Similarly, fee-earners can decide when to stop producing information or reports that have outlived their shelf-life.

While that might be the ideal, as mentioned earlier, giving financial information to clients is notoriously prone to errors. A small difference in interpretation (for example, forgetting to value using the client-specific charge out rate) can lead to incorrect information going out and embarrassment all round. The ‘blame’ often ends up with the finance department.

The challenge is to deliver only robust and straightforward measures that are not subject to ambiguity and interpretation onto the fee-earners’ desktops. Complex analysis of the financials should remain the preserve of the finance department. Experience of the range and frequency of client information requests makes the FD the ideal person to assess what the most likely measures will be.

Know when to say ‘no!’

Giving the client what they want doesn’t always have to be met with a ‘yes!’. Despite the temptation, and a culture of moving heaven and earth to deliver for the client, occasionally the right answer may be ‘no’. Consider the question: ‘Can you bill matter Y to a different address this month?’ While this may be a simple administrative request from the client’s perspective, and, on the face of it, easy for the fee-earner to agree to, it rightly sets a number of compliance alarm bells ringing for the FD. Time to investigate the request and potentially open a new matter may mean ‘no’ would have been the right answer. Given that the fee-earner has probably already agreed there was no problem with the client, the FD needs to find a way of modifying the response to ‘no, but… ’ and find a third way.

Promoting the role of finance

In looking at this whole area, the consistent feature has been that the primary interface with the client remains with the fee-earner. The success of any of the suggested actions really depends on the fee-earners adopting them and being aware of when to ask finance to help. In achieving this, the FD needs to adopt the role of internal marketing, and relentlessly sell the services of finance to an, at times, indifferent audience. As ever, it places finance and the FD in the sometimes difficult role of being both a business partner and a policeman to the practice it serves.

Tim Nash is chief executive at Edwin Coe LLP. He can be contacted at tim.nash@edwincoe.com