Category Archives: Clients

2015-05-26 13.48.09

Breaking silos for client service: the internal view

Unbundling legal services has become the norm. Less than a decade ago, virtually no firm would even have known what this might mean, but now even the Law Society has recognised in its recent report, The Future of Legal Services, that this is a real choice for firms and clients.

An AdvanceLaw survey of GCs from 88 major companies, found that almost 75 per cent would be willing to move legal work away from the Magic Circle or Top 50 firms assuming a 30 per cent difference in overall cost. Fifty-seven per cent also noted that they find lawyers at the top firms less responsive than those of their second tier colleagues.

Rather than purchasing the full service option, by 2020 an increasing number of in-house lawyers are more likely to have taken work back in-house or opted for unbundled services, where they buy expert advice and assistance at key stages but deal with the actual running of their own cases. And by 2020 we are likely to see general public buyers also starting down this path.

WoodpileIt is interesting that the Law Society presents this as being driven by client demand, as if firms have played no part in the disaggregation process. In fact, whilst this is clearly in the client interest, some firms have played a leading role in thinking more imaginatively about the way in which they provide legal services.

A number of new roles have grown up to support unbundled legal services — legal project managers, matter coordinators, and so on. As such, unbundling is part of a set of practices aimed at improving legal work (including process mapping, greater use of technology , and so on). As Graham Laing puts it, unbundling makes legal services customisable to client needs, which is potentially a very powerful outcome.

Customisation of legal services is about integrating the client into the firm’s value chain. Firms are being required to reconnect with their clients and to compete effectively by recognising market drivers and investing in a deep understanding of client needs and desires. It’s about grasping what clients really want. Listening to them more. Understanding them better. Gathering valuable client information to attain reliable data on market demands will result in services with better market suitability. Merely satisfying what clients ask for is no longer enough for survival in a legal market environment of intense competition.

This is clearly something that clients want, as shown by these two tweets by Brett Farrell, a former lawyer, now responsible for buying legal services:

Brett’s view is not unusual, neither in its content nor in its tangible frustration at the current state of law firm client-centricity. Many firms appear to be moving (slowly) in the right direction. But the picture is much less pretty when one looks at how firms organise themselves internally. Real change needs to take place there, and few firms realise it.

Whilst most good firms are actively working on meeting client desires by rethinking the way their lawyers work with each other, with client lawyers and commercial people, with other firms, and with alternative legal providers, there is much less imagination about the way they expect their own business services professionals to operate. If unbundling is right for lawyers, should it not also be considered for internal services? What might that look like?

Although some firms have started to think more imaginatively about how they organise their business services professionals, most still approach recruitment and resourcing questions in a very traditional manner. Looking at the jobs listed on recruitment sites, for example, it is clear that firms still expect sales and marketing professionals to be part of a business development function, technology experts to be in IT roles, and resourcing specialists to be deployed in HR.

Arranging business services like this ignores the possibility that a more effective arrangement might be possible, where the starting point is not “how do we group similar people together?” but “what things need to be done, who should do them, and how should they be managed?” Thinking about deploying expertise in this way might help firms to serve clients better, amongst other benefits.

So, for example, there may be a set of responsibilities that go along with ensuring that the business can work effectively — infrastructural tasks. This would include the provision of core IT services, facilities management, core accounting and financial services, and some procurement and contract management responsibilities. Depending on the volume of work in each of these areas, some of these could be outsourced. Even if they are still done in-house, it is most likely that they can be managed to a specification, which suggests that they might reasonably be grouped together as a single management responsibility. in doing this, the firm might see benefits, such as a common approach to resilience and business continuity, that would be more difficult to achieve if they are separated.

Another approach might work at the other extreme — activities that are intimately associated with the provision of legal services to clients. Here silos can result in competition for resources between different areas, whereas a coordinated approach might allow more transparency about costs and benefits. Take client care as an example. The various people in a firm who come into contact with clients all have a part to play in providing a good (and consistent) client experience. However, few firms would consider managing their front-of-house reception teams (who are often internally managed in a facilities group or outsourced) alongside client relationship managers (more commonly found in business development teams). But those two groups have a lot that they could share with each other to improve the overall performance of the firm. Client management itself is often seen as a role for lawyers as well as expert managers. But not all lawyers take well to the demands of client management, and the client experience suffers as a consequence. Sadly, few expert client managers understand exactly what it is that lawyers do for clients, and this can also affect the client experience. Why not rethink client care completely — perhaps develop an account management capability (including people of all types) akin to the model used in advertising agencies?

Another approach might be to use dynamic teams for specific types of work or projects. A firm wanting to improve the way its technology supports clients, for example, might draw together a specialised group of people — lawyers, technologists, client relationship managers, information and knowledge professionals and financial experts, and others drawn from inside and outside the firm — to dedicate their time to developing a product or service that meets client needs. At the moment, firms tend to go a little way towards this model, but they often make it hard for the project team by expecting some or all of them to carry on with other work. When lawyers keep their chargeable targets, and the IT developers are expected to maintain systems, and the marketing folk have events that need support, all at the same time as being involved in a project, the urgency of the ‘day job’ tends to detract from the importance of the project. Managing the group separately and giving it targets to be met as a group should improve the likelihood that something good can be produced in the shortest time. The cost to the firm is that some less important tasks are not done. That is a choice of priorities that the firm needs to make with its eyes open.

Firms that have adopted a clear sector focus, or that have a set of key clients, might also consider aligning business services professionals with the legal teams working most closely with those sectors and clients. Some firms already do this to some degree, with pricing specialists, relationship managers, and business analysts for example, but there may be scope to broaden the idea to include others. This kind of approach also introduces a form of matrix management that firms don’t always get right. An accountant managed within the firm’s finance team who also has a role on pricing for a sector team might find themselves torn between two sets of management instructions. My experience is that in most firms the client or sector team rarely has a formal management responsibility for business services professionals. If the client experience is supposed to be at the heart of what the firm does, should those teams not be entitled to exercise stronger management control?

Putting the client at the heart of the firm does not mean automatic acquiescence to client demands. The customer is not always right. What this approach does is to allow professionals of all kinds (not just lawyers) the opportunity to participate in improving the way clients are supported. Each specialist will have their own perspective on this, but the current siloed model, with direct client contact reserved to lawyers and a few others, generally inhibits any real understanding of how things might be arranged differently and better. An unbundled, client-focused model can provide firms and their people with a more rewarding working experience.

Unbundling internal services also has consequences for the firm’s senior managers (directors and ‘heads of’ business services groups). In the silo model, each of these people has a clear set of responsibilities, and a fairly fixed group of people to manage. Sometimes roles at this level can become ossified, and sometimes the strategic focus that they should have is overwhelmed by the daily grind of operational management. An unbundled model would allow a firm to think more dynamically about line management, so that senior people can dedicate more time to strategic issues. Equally, unbundling some traditional silos might lead a firm to realise that not all the roles at this level are necessary. But a silo that exists only because it serves the interests of the person at its head is probably one whose work is least connected to the interests of the firm’s clients or its other employees.

I can’t promise that Brett Farrell’s plea for law firms to provide a better client experience will come quickly, but I am fairly sure that if it is to come at all it needs to involve more than just the lawyers. Traditional business services structures are much less likely to help generate the right experience than a more imaginative approach that draws on all the relevant talents that the firm holds.

Gibson Mill at Hardcastle Crags

Change, technology and people

A long time ago, I argued that social technologies make most difference when they start by meeting real needs that people have. I still think that is true, and I am beginning to wonder if the same is true for other types of technology too. A few things over the past week have brought some threads together for me.

Gibson Mill at Hardcastle CragsJoanna Goodman wrote a very good overview of the state of legal IT and innovation in the Law Society Gazette. Embedded in the middle of the article was this short statement:

Firms are focusing on innovation because legal IT is getting a lot of attention at the moment and they are looking for opportunities to use technology as a differentiator.

I am not so sure that technology alone can be a differentiator, except for a short time, especially as firms generally have to buy in systems and expertise (which is therefore likely to be available to everyone else on the same terms). When firms mix technology with something unique that they have (the knowledge of their people, for example) then there is a possibility of differentiation. I posted a couple of tweets suggesting my reservations (within the scope of 140 characters.

There followed a very interesting discussion about the need to consider technology and cultural issues in innovation, sparked also by a couple of observations by Charles Christian. (The whole thing can be seen on Storify.) In the end, I was persuaded by Joanna’s argument that technology is too important (and moving at too fast a pace) to be left to one side while firms deal with people and cultural issues.

Today, two excellent blog posts have made me return to the question of the balance between people and technology.

Julian Summerhayes, writing about “the broken law firm”, suggests that firms have never been particularly good at considering people issues:

As someone who’s worked in the business a long time, I’ve witnessed countless changes. Mostly these have been technologically driven. But what I’ve not witnessed is any attention being paid to the soft stuff. At this stage I’m reminded of what Tom Peters has been banging on about for about 40 years: Hard is Soft. Soft is Hard. In other words, focusing on the numbers is easy. The other 101 soft stuff is the really, really hard part of running a law firm (or any business).

Julian is not just concerned about innovation, but his point is particularly valid in that context. How many firms focus on improving processes or on taking advantage of the latest technology in the belief that these are hard options, when the really meaningful work consists in nurturing people (employees and clients)?

Anne Marie McEwan comes at the question from a slightly different, but no less interesting, angle. She has been developing a new approach to workplace learning that she has called Tiny Triumphs, and has written a long post on LinkedIn describing why it is important. (The post was first published last week, but Anne Marie substantially updated it today.)

Tiny Triumphs has a deceptively simple structure:

Eight themes and associated topics are explored across three phases:

  • Diagnose workplace context (what’s happening)?
  • Select, scope and plan a small workplace project – do it!
  • What happened? What next?

What sets Anne Marie’s work apart from other approaches to developing skills is the fact that she puts people and their social interactions at the heart of work, and this principle then drives the learning experience:

…business processes are socially-generated through people, their relationships and inter-actions. These dynamic social processes are emergent (they emerge from what people do together) and they are complex – the people who generate them are diverse, connected, inter-dependent and adaptive.

I prefer self-organising to adaptive. People are not robots. Despite prescribed rules and sanctions for deviating from them, people decide the extent to which they will comply. They self-organise, acting alone (influencing / coercing others) and together in ways that may or may not be in line with what’s expected of them. It is therefore important to have some knowledge of topics like power, cultures (national, organisational, professional, demographic), collaboration, conflict, and how taking personal responsibility and organisational values-in-action encourage humane behaviour.

Anne Marie takes a similar approach to understanding customer-facing workflows — meeting (often undefined) customer expectations through the “outcome of relationships among people, their capabilities and how they interact” — and to workforce needs:

…work is changing. Operational roles are expanding and becoming more socially, technically and organisationally complex. What sort of pressures, for example, might fast-paced, collaborative, relationship-focused demands create for people? What might the issues be where knowledge is new, perhaps abstract and emerges from cross-boundary, cross-cultural conversations.

The issues that Julian and Anne Marie raise brought be back to the technology vs culture discussion I had last week. I am still persuaded that the future for law firms must involve advances in technology. (Those who hold out will become as rare as modern hand-weavers, compared to the successors of the 18th-century developments in weaving technologies.)

But, law is still an inherently people-centred business. As such, technological development needs to proceed with people in mind. When innovation is led by technology, and by people who promote technology without considering its impact on people, it is less likely to succeed than if change is driven by and depends on the interests of real clients, employees and others inside and outside the firm.

2014-07-02 19.40.40

What if technology isn’t the answer?

Most of the current thinking about the future of law firms (and other legal activities) turns on the use of technology. Richard Susskind has been in the vanguard, and the accuracy of his predictions has drawn law firms and technology suppliers alike to the same conclusions — improvements in the practice of law and client service in the future will depend heavily on technology.

I agree. Any firm that isn’t making technology investments is drastically reducing its chances of survival.

Old and new techBut that only means that enhancing legal practice with technology has become the norm — table stakes. Clients and potential recruits will increasingly shun those firms without effective technology. (And by ‘technology’ I mean not just IT systems, but also the improved practices and processes that come from a more structured approach to legal practice. Technology is as much a mindset as it is a collection of algorithms and data.)

If technology investment is unavoidable, everyone will end up in the same place once the fuss has died down. Apart from minor adjustments in position between firms (differences in the rate of adoption, for example), the rising tide of technology will lift everyone to practically the same degree. The tools, systems and attitudes of technology have to be imported into traditional law firms, therefore they are available to everyone without preference. (The status of technology within the firm is a relevant issue here, but I want to leave that for another time.) If one firm sees something that another firm has, in many cases it is not difficult to acquire it.

That situation is great for suppliers (especially those, like HighQ, that have a product which becomes the default tool for a particular purpose) and for clients (who can start to rely on firms to improve their service through the use of technology), but it may be a problem for firms. If everything you can have is also available to everyone else, how can you stand out from the crowd?

A few firms will have the first-mover advantage, but this is probably minimal (given the stickiness of clients) and brief (given that few developments are truly bespoke).

In order to find something that truly differentiates them, firms need to ignore the commonplace of technology. By assuming that there is no technology solution, they become freer to consider possibilities that might be truly novel and useful to clients.

It is commonly suggested that there is no real difference between firms. It may appear that way from the outside, but every firm is unique. It has a unique collection of individuals within it. It has a unique collection of clients (each of whom is also unique). It has a unique history, and a unique place in the present. But very few firms make good use of their uniqueness (which is why they appear so similar to observers).

Every firm has the capability to stand out by making good use of the knowledge that is uniquely contained within it.

Everyone in the firm has a partial and unique insight into:

  • The firm itself;
  • The people within the firm;
  • Their relationships with each other, and outwith the firm;
  • The firm’s market;
  • Clients and their behaviour;
  • Clients’ markets;
  • Working practices (in all sorts of businesses);
  • The law;
  • Technology and other pervasive changes in the world;
  • And so on…

Gathering these insights from across the firm can only help the leadership team see new possibilities for action that is uniquely fitted to the firm.

This has to be done carefully. Some popular methods (such as brainstorming, amongst others) may be less effective than they appear to be because of factors such as:

By using techniques to foster openness, dissent and diversity, coupled with simple constraints and support for emergent ideas, firms can start to make sense of their unique position in the world and then act accordingly.

If your firm is interested in finding its own way, or at least in knowing more about what might be possible, you know the drill: get in touch.

2015-05-12 11.07.09-3

Writing with respect

Recently, I have been helping a firm improve some of its marketing collateral. They had a really great message for their clients and potential clients, but it was hard to see because there was an expected way of doing things. When we moved beyond that template, we could produce something that actually expressed the firm’s value (and values) more coherently. Looking back, I think the key was making sure that the writing was done with respect.

Respect for time

Major junction (A7/A1), Edinburgh Lawyers read and write for a living. For most of them, a ten-page marketing document is short and sweet, especially when it is on a topic that interests them. More often than not, clients don’t have the same interest. If the message can be conveyed in two pages, it should be. If the document can be structured differently so that the important material comes first, it should. (And you need to be really clear about the meaning of ‘importance’. That has to be judged from the perspective of the reader.)

Imagine your readers have only two minutes or less to decide whether they care about your firm. What do you want them to learn in that short time? Your answer to that question may mean that you have to push the things you find interesting to the back of the document. If so, you must.

Respect for language

I am ambivalent about jargon. On the one hand, it can act as a useful shorthand between peers. On the other, it can act as a barrier to good communication. The linguist Geoffrey Pullum calls it ‘nerdview’:

It is a simple problem that afflicts us all: people with any kind of technical knowledge of a domain tend to get hopelessly (and unwittingly) stuck in a frame of reference that relates to their view of the issue, and their trade’s technical parlance, not that of the ordinary humans with whom they so signally fail to engage.

So lawyers should avoid using a legal frame of reference in their non-legal writing. (I’ll leave clarity in legal writing for another time.) But this could be an opportunity to demonstrate a connection with your audience’s knowledge. If you can comfortably and genuinely use their technical parlance, you should.

This has to be natural. Only use the technical terms if your lawyers use them in their daily work. Many do. If that comfort comes across in the document, readers will get it. Any discomfort will push your material into the uncanny valley.

Respect for your people

Law firms like to put lawyer profiles on their websites. Most of them shouldn’t bother, because their standard template removes all the humanity by reducing people to their contact details and a lifeless account of career history and recent work. Sadly, this approach often finds its way into marketing material as well.

In my experience, asking people about themselves produces very different results. Let that come across to your readers. What does that partner see as the high point of their work in this sector? How did that associate get to grips with the  tricky issues in that recent transaction?

I have seen some firms try this approach in combination with a standard template, especially when they what to show the more human side of their lawyers. This can make people uncomfortable: perhaps they don’t want to tell the world what they do at the weekends. Leave the template behind and ask open questions. Let the lawyers write their own account. Interview them and let their story come through.

Above all, respect for the reader

Marketing teams often struggle to get the attention of their lawyers. That is one reason why they resort to standardised documents and templates — they save time and effort. The result is often sterile, and lawyers know that. That’s why they don’t play along.

On the other hand, lawyers often spend a lot of their own time and effort making sure their clients get what they need. This isn’t just because that’s where the money is. Many (if not most) lawyers actually get a kick out of helping clients. If they see marketing as having the same aim, they are more likely to take part whole-heartedly.

Being more respectful may produce greater variety in your marketing materials. That is a virtue, not a weakness. The firm’s character can shine through, and your readers can decide much more easily whether it’s a character they like. Don’t be bland, because clients don’t want to find out too late that they have instructed a lawyer who doesn’t fit their needs.

If this interests you, and you’d like to have a longer conversation, please get in touch.

Curving right

Make it easier for clients by standing for something

Last week, the people of the United Kingdom made their quinquennial choice. The outcome was a majority Conservative government for the first time since 1997.

Curving rightFor some people (probably fewer than in previous generations), politics are easy — they cleave to the same party loyally from election to election. Parties have nothing to gain from courting these voters. The rest, whose choices are undecided until late in the day, need to be persuaded. This, as Dave Trott points out, is a marketing problem.

The point about marketing is, it’s not about what you want to say.

It’s about what your market (people) needs to hear.

What they need to hear are two things:

1) Clear and Simple

2) What makes you different

Bad marketing people don’t understand this.

Dave is discussing Ed Miliband’s promises set in stone. He shows that each of the six promises is neither clear nor simple, and none of them marked out the Labour Party as different from the competition.

What you are left with is a message “Carved In Stone” that tries to say everything to everyone.

It avoids differentiation in case it offends anyone.

It isn’t marketing, it’s just a list: a mind dump.

Thinking that a gimmick, like carving something in stone, is more important than what you carve in stone.

Many commercial organisations fail Dave Trott’s marketing tests too. Law firms may not be the worst offenders, but the legal sector as a whole has always struggled with differentiation. (We can leave clarity and simplicity for another day.)

The week since the election has been filled with navel-gazing. All the parties, apart from the Conservatives (who won much more convincingly than the pollsters predicted), the SNP (which won every seat in Scotland, bar three), and the Greens (who won many more votes than anticipated), are trying to work out what went wrong. For most of them, I think the answer is simple: either the electorate couldn’t tell what you stood for, or they could and they didn’t like it.

Much the same is true in commerce. Potential clients and customers need to know what they are buying. If you can’t tell them why your service fits their needs better than the other firms, they won’t buy it. You can’t even rely on existing clients remaining loyal. If another firm comes along that can say more clearly why what they do is better, your clients will jump ship.

Differentiation requires you to stand for something distinctive that clients are willing to pay for. You need to risk offending some people (by being too expensive or too cheap or too Lean or too bespoke…) in order for the clients that fit you to know that they fit. You might end up with a market share as small as the Greens, but at least you can be confident about its stability.

2013-10-20 17.38.31

Being a client

Bruce MacEwen has been interviewing law firms in an attempt to find one that can advise his church on a real estate issue in New York City. His experience hasn’t been good, as his account of the process shows all too clearly. Any lawyer should find it painful to read, but I wonder if the firms involved will see where they are going wrong.

The walls of Duffs Castle undermined

To help them, Bruce concludes with a set of asymmetries that he sees in the market for legal services:

  • One asymmetry is that of consequences. If the client chooses a firm that delivers a wonderful result, everyone wins; but if the chosen firm delivers a disappointing or even deleterious outcome for the client, the firm gets paid. Pretty much in full.
  • The other asymmetry is one of disclosure and, to be pointed about it, candor: The client needs to tell the firm as much as honestly possible about the engagement and what the client knows, while the firm’s instinct and practice is to guard information, hedge predictions, and avoid definitive statements.

In addition, he notes that there is no real risk sharing — firms don’t have the same commitment as clients do; no account is taken of this. And there is no correlation between fees and value to the client.

Bruce concludes with a suggestion for lawyers:

If you wonder why clients are pushing back on fees and what that objectionable word “value” really means, all I can say is: You should try this for yourself some time.

This is something I have advocated for some time, but I am actually far from confident that lawyers learn much from being clients (of other firms or of other professionals). I think there are too many escape clauses, so that only the most self-aware will actually see a need to change their own behaviour. (And of course that group is more likely to be reflecting on their performance in any case.) Here are two for starters:

  • Being a critical client and seeing poor service might actually lead you to think that your own performance is good by comparison. “That lawyer is terrible; I’m glad I don’t do that kind of thing.”
  • If the firms in Bruce’s account recognise themselves, I suspect that they will have plenty of excuses for the answers they gave to his questions. “It’s really more complicated than he thinks. If he knew, he’d understand that we couldn’t have quoted a better price for the job.”

In reality, many lawyers are clients at various times in their careers. Firms often get other firms to advise them on major transactions — someone has act as the client in that relationship. As individuals, lawyers instruct other lawyers for personal transactions, and they may also instruct financial advisors, accountants, architects, and other professionals. With that wealth of experience being a client, how can they still deliver the kind of service that Bruce describes?

I want people to reflect on and learn from the widest range of experiences, including things that other people do and things that happen in other areas of work and life. However, I have to recognise that some people are impervious to that kind of reflection. They need much more direct feedback, of a kind that I hope Bruce gave privately to the firms he interviewed. If someone does a bad job, they may need to know why it was bad, and how it could have been better.

That said, the rest of us should learn from Bruce’s public feedback.

2015-02-12 13.51.24-1

The reality of client ‘loyalty’

In my last post, I said I would come back to the question of client loyalty. It isn’t possible to state definitively what keeps clients with firms — each situation will be governed by a unique combination of events and actions. However, experience suggests that, amongst those elements, one or more of three key factors is likely to be at issue. Knowing and dealing with those will help firms (and their new competitors) understand and address their strengths and weaknesses within the future market. In the end, they may conclude that what looks like loyalty is no more than inertia. It is essential not to be complacent about that — inertia is rarely permanent.

2015-02-12 13.51.24-1

These observations are primarily relevant where firms have long standing relationships with clients with the expectation of a pipeline of work. Similar factors may be at play where the relationship is more intermittent or ad hoc, but I know much less about those.

The three factors that play a part in sustaining relationships between clients and their firms (whether a single firm or a panel) are the following:

  • Minimal relationship management
  • The 9x problem
  • Genuine trust

Relationship management

In recent years, some law firms have invested significantly in actively managing client relationships. On the other side of the fence, some of the largest clients have begun to extend existing vendor relationship management programmes to their legal advisors. This is atypical — for most businesses, the relationship with lawyers is much less important than that with other suppliers. Law firms value the client relationship much more, which is why they are right to invest in it.

A few months ago, I spoke to a former colleague who now runs a significant in-house legal function to see if he might need any help with knowledge issues in his team (or in liaison with his panel firms). I got a friendly, but firm, rebuff. As he saw it, his biggest problem wasn’t one that I could fix — he just didn’t have enough time to do everything the job demanded.

I think this is a common situation for GCs and in-house lawyers generally. I once started to sketch out on a mind map all the things that a GC might have to do, manage, or understand. The result is below (click for a bigger version).

IMG_3729.JPGI only have a partial understanding of the burdens of an in-house lawyer, so I have probably mssed many more things that concern them. This exercise was also done in the context of thinking about content published by firms for clients, so there is a bit of an imbalance. Notwithstanding these caveats, I think it is clear that GCs have very little time for active management of their external lawyers, except when a formal review of advisors is scheduled.

As a result of pressure on time and the low priority for legal supplier management, it shouldn’t be surprising that many clients are loyal to their law firms for no better reason than a disinclination to invest in change. Businesses without in-house legal support probably have even more inertia.

The 9x problem

Even if a client commits time and effort to reviewing existing relationships with advisors, there is no guarantee that they will value new providers properly. The Harvard academic John T. Gourville has studied the psychological reasons why new products or services don’t succeed as quickly as they might. Building on, amongst others, Daniel Kahneman’s and Amos Tversky’s prospect theory, Gourville suggested a rough rule of thumb for expressing the scale of the persuasion problem that new entrants have.

At the heart of this conundrum are two facts.

  1. People who use a particular product or service (consumers) will tend to overvalue it, by comparison with new alternatives
  2. People who produce a new product or service (developers) will tend to overvalue its benefits, by comparison with existing equivalents.

Gourville applied numerical factors to these propositions:

Consumers overvalue losses by a factor of roughly three.


Developers overvalue the new benefits of their innovation by a factor of three.

With this outcome:

The result is a mismatch of nine to one, or 9x, between what innovators think consumers desire and what consumers really want.

This is presented diagrammatically:


The 9x effect explains why innovative entrants into any market often fail to achieve the success they expect (at least initially). Incumbent firms with a traditional offering will benefit from their clients’ nervousness about novelty. The psychological factors are also relevant, but to a lesser extent, when a like-for-like exchange is proposed — any incumbent has an advantage even against an equivalent competitor.

The trust factor

When all else is equal, an firm with a particularly good relationship with the client (or, at least, those who are responsible for instructing lawyers) will have another advantage — the relationship itself.

One of the clichés of professional services is the notion of the ‘trusted advisor’. It is even the title of a classic book on the topic. One of the authors, Charles H. Green, now runs a consultancy focussing purely on developing trustworthy professionals. At the heart of The Trusted Advisor is a measure of trustworthiness based on four elements:

  • credibility
  • reliability
  • intimacy
  • self-orientation

These elements match the common academic division between cognitive and affective trust:

Cognitive trust is a customer’s confidence or willingness to rely on a service provider’s competence and reliability. It arises from an accumulated knowledge that allows one to make predictions, with some level of confidence, regarding the likelihood that a focal partner will live up to his/her obligations.

Affective trust is the confidence one places in a partner on the basis of feelings generated by the level of care and concern the partner demonstrates. It is characterized by feelings of security and perceived strength of the relationship.

(These definitions are taken from “Cognitive and affective trust in service relationships” by Devon Johnson and Kent Grayson.)

Most law firms now claim to understand their clients. Ultimately, such claims can only be assessed by reference to the clients’ level of trust. Lawyers (or any other professional) who work hard on knowing everything about their clients’ businesses, markets, and customers may succeed in being seen as credible and reliable — cognitive trust. Only those who show that they genuinely care about those things and provide security in the relationship will enjoy sufficient  intimacy and diminished self-orientation to justify affective trust.

The distinction between the two types of trust matters most in times of stress. When the relationship is tested (when mistakes are made, for example) it is unlikely to survive if only cognitive trust is present. This is because cognitive trust depends only on what is known or presumed to be known of the other party’s credibility and reliability. If those are demonstrably reduced, trust will disappear and the relationship will founder.

By contrast, a relationship rooted in affective trust can withstand failures in performance. Being good at the job is necessary but not sufficient as a foundation for affective trust to develop. Once affective trust is present, mistakes are more likely to be forgiven — at least until the point that confidence in the other party evaporates.

Newton’s first law of motion

An object that is at rest will stay at rest unless an external force acts upon it.

An object that is in motion will not change its velocity unless an external force acts upon it.

The three factors described here may explain why law firms might be confident about the loyalty of their clients. That confidence is misplaced unless nothing changes at all. In reality, many things may happen to overcome inertial loyalty.

Incumbent firms should, first of all, be wary of the assumption that any or all of these factors are present. Only those who engender affective trust in their clients, whose services are not three times overrated by those clients, and whose clients are disinclined to spend any effort reviewing the relationship may rest easy. Anyone who doubts the nature of their clients’ trust, who is nervous about the perceived quality of the service provided, or whose clients regularly examine the relationship closely should be very worried.

I suspect most firms are in the latter category. Whether they are worried enough is another matter.

Very few lawyers can be sure that the trust the client has in them is rooted in confidence and intimacy. It is much more likely to be based on an expectation of service quality that can be spoilt too easily. Even where there is affective trust, it is likely to be a bond between individuals. If either the lawyer or the client move, the relationship is likely to move with them. The firm cannot rely on it.

More significantly, any of these factors are irrelevant when the relationship is controlled by others. One such situation arises when the client’s procurement team manages and reviews appointments. That team is likely to be immune to the 9x problem, unbothered by trust issues, and ready to review relationships on a frequent and/or regular basis.

Client loyalty is by no means an immovable object, and the forces acting on firm/client relationships are almost unstoppable. The only same assumption is that inertia will be overcome. The only possibility of surprise is when and why it might happen.

Firms can reduce the element of surprise by actively working on improvements for clients, to match client need with the firm’s own capabilities (this doesn’t mean aping new entrants, since they will always have a head start). The situational awareness required to assess need and capability should in turn make it less likely that firms would fall short on any of the three factors described here.

Improving practice: insights for lawyers from Atul Gawande’s Reith lectures

As expected, Atul Gawande’s third and fourth Reith lectures were worthy of attention by lawyers despite notionally being about the practice of medicine. It is a truism that there are many commonalities between different professions, but Gawande’s insights provide some practical pointers for professionals themselves.

Lecture 3: The Problem of Hubris

(Audio | Transcript)

Gawande’s third lecture centred on the ways in which medical professionals deal with terminal care. This is an area where technology (better drugs and other treatments) plays a significant part, the lecture was more interested in the way doctors interact with their patients. Concerned by his experiences in managing care for waging patients, Gawande had spent some time talking to people about their experiences of terminal care — as patients, relatives, and doctors. These are some things he learned.

And so when I asked folks as I interviewed them, I’d say “So what would be on the checklist you would give me to use in my next office visit when I come to a critical decision point with a patient about whether we should do an operation or not or other kinds of considerations?” And one of the items that people said I ought to have on my list is that in that conversation I should be talking less than 50 per cent of the time while we’re in that room. And so I paid attention to what I was doing in those conversations and to my horror I found I was talking 90 per cent of the time. I had lots of facts and figures and pros and cons and risks and benefits, so now what do you want to do? And I’d see this bewildered person across from me.

They also said you know if you are going to talk less than 50 per cent of the time, the key thing is you have to be able to ask questions. And there are certain questions that I saw people ask that were really great at eliciting what people’s real understanding and their priorities were. The first question was to ask, “What is your understanding of where you are with your condition or your illness at this time?” Another is, “What are your fears and worries for the future?” “What are your goals if time is short?” “What outcomes would be unacceptable to you?” And with that, they’ve told you their priorities and what they care about and then that tells you both where the bright lines are that you do not cross and what you might actually be aiming for.

Now not everyone can answer such questions and their answers can change over time, so you have to ask it, you know, as things go along.

Drawing some wider conclusions, the following seem to me to be critical points.

  • Listen more — talk less than 50% of the time
  • Ask some key questions. For doctors these are:
    • What is your understanding of your current situation and its likely outcome?
    • What are your fears and worries about the future?
    • What outcomes would be unacceptable to you?

The need to listen more to patients or clients comes up repeatedly. It is interesting that Gawande actually actually tested himself and found himself wanting. Perhaps more professionals should do the same.

I find the key questions more interesting. It is clear from Gawande’s responses to the audience following the lecture that the first and last of the questions are the most significant. Eliciting what people really think about their (possibly irretrievable) situation, and what they would find unacceptable feel like truly important factors in deciding on the right treatment or advice. As Gawande puts it, the answers help doctors finding people’s priorities and bright lines. It is also important that the responses might change over time, so the questions need to be repeated as things progress.

One of the points drawn out by Gawande is that better personal care, in which patients have more autonomy about what happens to them, can actually result in better outcomes (in terms of survival time) than practitioner-led treatments involving surgery or drugs. After the lecture, there was a question from Pat Kane’s about the role of technology in prolonging life. Gawande’s response recognised the important part played by new treatments in extending lifespans, but also pointed out that what happens towards the end of life is crucial, by reference to a study of patients with incurable lung cancer:

Half of the patients got usual oncology care and the other half got usual oncology care plus saw a palliative care physician who would discuss with them what their priorities and goals might be for the end of life. Now the group who had that discussion ended up choosing to stop chemotherapy sooner. They were much less likely to go onto the fourth round of chemotherapy, in fact had one third less chemotherapy costs. They had one third fewer days in the hospital. They were much less likely to die in the hospital or in the intensive care unit. They started hospice earlier. They had less suffering at the end of life. And the kicker was they lived 25 per cent longer. If this were a drug, it would be a multi-billion dollar drug and we wouldn’t be asking oh could we afford it, how is this going to be possible? But you know in truth it isn’t even a matter of affording. These are basic skills around having conversations that enabled a win-win situation.

I think there is a deeper issue, in that the motivation to focus on technology in medical care (and possibly in other professions too) is a set of assumptions about ‘value’ which may not be the right ones. In medical terms, prolonging life may be an obvious choice if we think about humanity as a whole. But if we ask individuals who are actually mortally ill, their choices may well be different (as Gawande’s lecture makes clear). There is a similar issue in law. Legal technology is often rooted in a set of assumptions about efficient legal practice which are almost undeniable from the perspective of legal business. From a client perspective, those assumptions may not deliver the best outcome. Instead, an apparently more inefficient client-led process (with less technology) might be better for the client and produce different savings for the firm.

Lecture 4: The Idea of Wellbeing

(Audio | Transcript)

Gawande’s final lecture differed from the others slightly in that it didn’t have a single narrative at its heart. It depended more on an account of research into childbirth care and the way professional conduct themselves during childbirth.

In one health centre, staff may not wash hands because they don’t know it’s important; in another, because they don’t have sinks or running water in the delivery rooms; and in another, because they simply have not made it their habit and no one cares.

That last phrase I think is the critical one: if no one cares when someone takes the trouble to do things right, nothing changes. And the overwhelming message to the people who work at the frontlines of care around the world is that no one notices excellence and no one cares. That is the biggest source of burnout and discouragement for health care workers everywhere.

For me, this was the most important point made in any of the lectures. It is one thing to ask people to care — in almost all cases they will aim to do that. (In my experience this is as true of lawyers as it is of medical professionals.) However, that intention to care is often undermined by a wider failure to value excellence and caring, rather than some other factor (often management metrics). If people who are inclined to care about doing a good job are not supported in doing so, they will tend to stop caring as much over time.

A member of the audience made a point about this. “If nobody cares about delivering a good burger king hamburger, that would seem normal; but when it comes to medicine, you wonder why nobody cares.” Gawande developed his analysis in response:

I think this is really important because I think that feeling of being at the very frontline is that nurse responsible for you know a thousand deliveries in a year and that no one cares if you’re doing a great job or you’re doing a poor job; that you’re only going to get your hand slapped if you have some trouble along the way – you shouldn’t ask questions, etcetera. That is common. Overcoming it is what we’re finding can happen by bringing someone from the outside who says let’s look and see do you want to be washing your hands better, do you believe in what’s on this checklist, how can we begin to achieve making it work? And the fascinating thing is that the process of having the nurse speak to the sweeper to say can you bring a basin of water and soap every time you clean that room, it was creating communications and interlinking, it was creating a system that had literally not been there before.

Organisations of all types work very hard at reducing the risks of bad outcomes. Sadly, this work often finds expression in the kind of hand-slaps that Gawande mentions. Rarely does it result in recognition for a caring job well done. Sometimes that is because it is often harder to see caring happen. Sometimes it is more serious — the organisation has forgotten to value the good things about the way their people take responsibility for caring. Hospitals, clinics, law firms — all can suffer from the same failings.

Care: the future of practice?

These two lectures are a really good expression of the way that patient care needs to develop: better listening and question-asking by physicians and other health professionals; combined with institutional recognition of caring by all those participating in care.

The same can be applied to legal practice. Clients get a better service if they are listened to properly. That listening process requires a good understanding of the client’s own perception of the situation as well as what they are not prepared to accept or risk. Lawyers and those working alongside them need to care about doing things well (which most of them tend to do anyway) and — crucially — the firm needs to see and value the fact that people are doing good things.


Strategy step 0: understanding where you are

One of the areas where knowledge is undervalued in law firms (and probably in other organisations as well) is the creation of strategic plans. This has always seemed odd to me, but I suspect that the pressure to respond to changing markets in the same way as other firms is a very strong one. (Especially as it sometimes appears that there is little differentiation between firms — something that I believe less and less the more firms I see at work.)

Map of the Siege of Toulon, led by Napoleon Bonaparte

Why is knowledge important for strategy? A number of reasons. I found these particularly well explained by William Duggan in his book Strategic Intuition. He described Napoleon Bonaparte’s success (the first in his military career) in the siege of Toulon as resulting from a combination of factors: tools and resources, knowledge of previous actions, openness to different solutions; and insight.

In 1793, the port of Toulon was held by the British navy in the name of the French royalist forces. Napoleon was an artillery captain in the revolutionary army. He formulated a plan to put pressure on the British forces by attacking forts on either side of the harbour. The first attempt at executing the plan failed due to the poor leadership of the general in charge. A later, better coordinated, attempt was successful. The British withdrew their forces in fear of being cut off from the rest of the navy.

The tools and resources Napoleon used were available to all — light cannon and contour maps. What he brought was an understanding of historic battles — the sieges of Boston and Yorktown in the American Revolutionary War, and the siege of Orléans in 1429. At both Boston and Yorktown, British forces on land were threatened with being cut off from their navies at sea and gave up the fight or surrendered. At Orléans, Joan of Arc’s forces routed the English army by attacking smaller forts rather than the large well-defended town itself. Napoleon’s insight was to see that rather than attacking Toulon (the obvious target, but a recipe only for a prolonged siege of attrition), his forces could use the high ground (discovered with contour maps, and accessible to light cannon) to take two key forts protecting the harbour. This strategy combined elements of all three historic actions in a way that was unique to the situation at Toulon.

Duggan is interested in the intuitive leap that Napoleon makes — he calls it strategic intuition. Successful strategic intuition depends on drawing together previously uncombined elements. Duggan recommends a similar approach to business strategy. In reality, what I see of many strategic efforts appears to depend more heavily on mere intuition — gut feel — without a real understanding of key factors affecting the organisation.

Firms often focus very closely on their own capacity and capability — what can we do now, and what could we do in the future — without thinking deeply about territory and logistics — external forces that need to be understood or managed. Ultimately, of course, Napoleon’s failure to consider logistics properly led to his greatest strategic failure — the march on Moscow in 1812. The  most fundamental failure, though, is not getting to grips with the territory.

My earlier posts in the legal ecosystem series were aimed at helping law firms get to groups with what is happening around them — helping them ask (and work towards answering) the right questions. Richard Susskind’s work has a similar aim — especially his characterisation of legal services transitioning from bespoke to standardised to systematised to packaged to commoditised.

I recently came across a more thorough way of mapping activities to help organisations understand how the land lies before making their strategic choices. The value chain mapping model was created by Simon Wardley, whilst working in the technology sector. Most of his examples arise out of this sector, but there is no reason why the mapping technique should not work elsewhere. He explains it well in this video of a conference presentation.

There is also a site that brings together many of Wardley’s writings on maps, including guidance on how to create maps for your own organisation.

I am still getting to grips with how the mapping might best be used for law firms, but the basic concept is fairly easily understood. It comprises three main activities.

The first thing is to describe the value chain, starting with user needs (client needs in law firm terms) and then identifying every subsequent need. Wardley uses a cup of tea value chain as an easily-understood example. (The diagrams that follow are taken from and link back to Simon Wardley’s blog.)

NeedThis simple diagram shows how a person’s need for a cup of tea depends on a chain of other needs, some more readily acquired than others.

However, even a complex set of such diagrams, describing a host of business needs, is incomplete because it is fixed at a moment in time. In reality, things change. Making a cup of tea in a domestic kitchen now is a much easier task than it might have been 200 years ago because of the reliable ubiquity of electricity, piped fresh water, supermarkets selling vast arrays of different types of tea and so on. Without those things, making tea was a more labour-intensive process.

So what Wardley does is to align each of those needs against an axis marking the typical evolution of products or services (similar to Susskind’s model): from genesis to custom-built to product to commodity to ubiquity.

Screen Shot 2014-04-16 at 09.40.43

The different components of the value chain can then be placed at the right (current) point of their evolution. That then allows the organisation to look at how each of those components may develop and plan accordingly.

Screen Shot 2014-09-07 at 10.08.36The end result may look a bit like this map which describes a major infrastructure project. The location of each of the components allows the project owner to decide how best to acquire or develop that component. The most evolved can be bought off the shelf, and those that are novel can be developed internally.

This kind of unbundling or componentisation is something that a number of law firms are doing for client work, although rarely to this level of abstraction. I am still reflecting on how well it might adapt to other aspects of a firm’s activities (I have a lingering uncertainty about the placement of risk factors and regulated activities, for example), but my current thinking is that this would be a very powerful tool to help firms with the very first step of developing any aspect of their strategies — working out the lie of the land.

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Triangulating knowledge: value and purpose

In an earlier post, I mentioned Nick Milton’s useful model for positioning KM. However, I did note that I had reservations as to his assessment of where law firms might sit in the model. This post expands on that thought.

As a reminder, Nick suggests that the primary focus of an organisation should dictate the type of knowledge management that is used — process-based, product-based or customer-based. His view was that law firms would tend towards being product-based, as this diagram indicates.

Locating KM — diagram by Nick Milton

I think this is a really useful way of thinking about knowledge activities at a range of levels. It might apply across the whole organisation, or within specific parts. The key then, is to start with a basic understanding of what the relevant people should be achieving and then match the knowledge activities to achieve the desired outcome.

I have slightly revised the triangle in my diagram below.

Photo 12-09-2014 10 46 52

For me, the points of the triangle are characterised by three questions. What do we do, how do we do it, and why do we do it? These questions may contain a number of additional questions too — knowing why something is done will encompass a need to know for whom it is being done, for example. At each extreme, there will be a very different focus. A law firm that is most interested in providing legal solutions (which I think is the example that Nick Milton has in mind) will need to be completely on top of all the changes in the law that affect the creation of those solutions (know-what). On the other hand, a firm that is looking hard at improving the way advice is provided will need to concentrate on know-how — ‘how we do things here’. Firms with a strong client focus will be interested in developing deep understanding of the businesses and people they work with — the legal solution will be presented more as a business solution tailored for that client.

Many law firms struggle with anything other than managing legal knowledge (know-what). I think this is a real challenge for the sector as a whole. Unlike many other professionals, lawyers need to work with a constantly changing stream of legal change — new cases, statutes, regulations, court and administrative practices and so on. New law doesn’t just change the range of possible solutions that could be offered, but it can also render previously good advice dangerously bad. Naturally, all law firms take their obligations to stay up to date with the law very seriously. But this is costly. Maintaining access to all the relevant sources of information about and commentary on the law is a significant financial burden. In addition, individuals (whether practising lawyers themselves or the firm’s Professional Support Lawyers) need to take time to understand the impact of legal change on their own work. It is not surprising, therefore, that many firms exhaust their KM efforts at this point — keeping on top of the law is all they can manage.

Knowledge management delivers real value to organisations when it enables people to draw on the knowledge of those around them so that they can improve their own work. By contrast, facilitating the flow of information and analysis from outside the organisation can only prevent failure. Because all similar organisations have access to the same external material, and the same imperative to make use of it, being good at understanding this material cannot be a differentiating factor (apart from improving speed to market). This means that if legal KM continues to focus on legal knowledge alone, it will become increasingly irrelevant to firms that want to improve their market position. The real differentiators are in the other points of the triangle.

In order to get the best value from its knowledge activities, a firm needs to know with confidence exactly where its sweet spot is. This is not an easy task, and it is important in doing so to avoid entrained patterns of thought and behaviour. I intend to write more about this in a later blog post.

Once the sweet spot is known, then the right activities can be developed, to combine different components to produce interesting alternatives:

  • coupling know-what with know-how to enable
    • more efficient and consistent advice for all types of work and any client
    • a basis for clear pricing models
    • allocation of tasks to the right level
    • improvements in quality control
  • combining know-what and know-why to improve
    • bespoke advice to match client needs
    • strategic legal advice promoting client business goals
  • linking know-how and know-why to allow
    • collaboration involving a range of providers alongside the client to produce better value
    • reciprocal improvements in working practices between the firm, the client and other professionals

And there are probably many more possibilities — these are just off the top of my head. I am developing these ideas for use with clients. If your firm is interested, please get in touch. I will also be talking about these issues at the London Law Expo next month — come and say hello.