GENERAL COUNSEL SURVEY. Hear what general counsels and senior in-house lawyers are saying about the law firms they use.

Transcription

1 Hear what general counsels and senior in-house lawyers are saying about the law firms they use.

2 Understand a client s loyalty to their law firm We recently surveyed general counsels and senior in house lawyers from across Canada to better understand what clients value from their law firm. Some of the results are what you might expect while others surprised us. One of the key takeaways is there s a significant disconnect between the service provided by law firms and the service expectations of law firm s clients. The first key question we asked was to understand a client s loyalty to their law firm by using the globally recognized Net Promoter Score 1 (NPS) program, which asks clients to rate how likely they would recommend their outside legal counsel to a friend or colleague. The results identify those clients who would actively promote their law firm to others (called Promoters) and those clients who would actively tell peers about the concerns they have about their law firm (called Detractors). NPS is used by European law firm DWF, as an example. 1 The globally recognized Net Promoter Score Program asks clients, on a scale of 1-10, how likely they would be to recommend their service provider. Results are then grouped into Promoters, Passives, and Detractors. A 9 or 10 means the client is a promoter and highly likely to recommend them, a 7-8 is a passive which tends to mean a client is satisfied but may not go out of their way to recommend them, and a score of 6 or lower means the client is a detractor and will tell peers they have concerns about the services they receive. The resulting NPS score takes the total percentage of Promoters and subtracts the total percentage of Detractors for a score between 100 to Organizations with a score of 50 or higher are very highly correlated with firms that show long term profit growth and higher customer loyalty.

3 5 KEY HIGHLIGHTS We have written a detailed report on our findings which is included; however, what follows are a number of the key highlights: By focusing on providing exceptional service, law firms can increase the amount of clients who would promote and recommend them to others. This involves going beyond specific legal challenges and understanding their business challenges. A law firm s office space is, therefore, a tool in communicating this commitment to service, as it reflects the values and brand of the law firm. SERVICE MEANS EVERYTHING Companies that score over 50 on the Net Promoter score show long term profit growth and higher customer loyalty 27 LAW FIRM SCORE 80 % of people think they provide a superior service while only 8 % of customers believe they receive a superior service* *Survey completed by Bain & Company 80 % % of customers are wanting alternate fee arrangements 44 % of happy customers will increase their legal spend in the next 12 months 73 % 13 % of clients said the reason they chose not to rehire their law firm was poor service 76 % cost was rated the lowest at of law firms don t understand their client s business problems very well??????? 87 % of clients visited their law firm s office in the past 12 months

4 7 RESULTS The goal of this survey was to understand what drives client loyalty, to better understand what clients of law firms value from their law firm and how this affects their likelihood to not only retain them, but also promote them to friends and colleagues. There is room for growth in law firms service only of clients would actively recommend their outside legal counsel to others. General Counsel 27 Colliers 65 Dan Jordan 85 Colin Scarlett Clients were asked how likely they would be to refer the firm who does the majority of their outside legal work to a friend or colleague. Of those surveyed, only would actively recommend their legal counsel. This indicates there is room for improvement in law firms service as 6 of clients would not actively recommend and promote their legal counsel % PERCENTAGE OF PROMOTERS, PASSIVES AND DETRACTORS Detractors 47% Passives Promoters Promoters: Client gives a score of 9 or 10 and is highly likely to recommend. Passives: Client gives a score of 7-8 and is satisfied but may not go out of their way to recommend. Detractors: Client gives a score of 6 or lower and will tell peers they have concerns about the service they received. One way to benchmark these results is using the metrics of the Net Promoter Score (NPS) Program. When Colliers International started its journey with the NPS program in 2013, its score was 57 and we worked diligently to bring our score up to 65. Using the same methodology, the score for law firms in this survey would be 27, which shows significant room for growth in providing memorable service. To put this in context, companies can score a range of 100 to -100 with HSBC scoring -14 and Apple scoring 69. These scores help identify which companies are meeting their client s needs and where there are areas for advancement.

5 GENERAL 9 Happier clients mean more business - 44% of clients who would recommend their legal counsel plan to increase their legal spend within the next 12 months, compared to just 16.7% of those who wouldn t. Of the clients surveyed, 44% of Promoters anticipate increasing their outside legal spend within the next twelve months, while only 33% of Passives and Detractors anticipate spending more. This result identifies that having more Promoters can increase profits as they are more likely to bring repeat business, as well as referrals. It is, therefore, important to understand what motivates clients to promote their external legal counsel. PE RC E N TAG E OF CLI ENTS W HO PL AN ON SPE NDING MORE, LESS OR NO C H A N G E ON OUTS I DE LEGAL SPE ND IN THE NE X T 12 MONTHS 33.33% 33.33% More Although, over the past twelve months, only 4% of clients regularly requested an alternative fee arrangement; in the coming year, anticipate requesting more alternative fee arrangements from their outside counsel. However, 58% do not anticipate changing how often they ask for alternative fee arrangements. This speaks to the general trend of flexibility with fees and how client s expectations are changing. 58% of respondents do not anticipate increasing the amount of time they will request an alternative fee arrangement. Perhaps it is a concern that law firms will always be traditional and rigid in managing their fee structure. However, this is definitely an opportunity to find creative ways to be progressive and better align with your client s needs. PE RC E N TAGE O F A LT E RN AT I V E F E E A R RA N GE ME N TS RE Q U EST E D I N T H E PA ST 1 2 MO N T H S % No Change % % Less 22.22% Detractors Passives 1% - 25% 26% - 51% - 75% 76% - 10 C L I E N T S E X PEC TAT I O N S F O R A LT E RN AT I V E F E E A R RA N GE ME N TS I N T HE N E X T 1 2 MO N T HS 28.57% Promoters 7 58% 6 3 Alternative fee arrangements are an opportunity to be more progressive with meeting client s needs of clients expect to request more alternative fee arrangements. 1 2% Less No Change More

6 11 Service trumps price 73% of clients rank service (or lack thereof) as a very important factor in their reasoning to not rehire their legal counsel, while only 13% rank price as very important. To determine what motivates clients to leave a law firm, clients were asked to rate the importance of price, service, a contact moving firms, and advice in their decision to change their outside counsel. Service and advice were overwhelmingly the most important factors in a client s dissatisfaction with their counsel. Poor service ranked the highest, with 73% of clients ranking it as very important, followed by poor advice with 53% ranking it as very important. Service is more important than advice! Only 18% of clients changed firms when their contact moved. Interestingly, price was rated the lowest, with only 13% rating it as very important in their decision to change firms. Clients further support this, with one client stating, Service is hands down the most important thing I look for in terms of outside counsel and where I m referring our legal work. These findings indicate areas of focus for legal counsel in order to provide positive client experiences. Clients will value more effort spent on exceptional service than a discount on prices and in doing so will be more likely to promote their legal counsel. A selection of survey responses, verbatim, are attached in the Appendix. THE FACTORS (AND THEIR RELATIVE IMPORTANCE) FOR NOT RE-HIRING YOUR PREVIOUS LAW FIRM The key to great service is in understanding your client s business 67% of clients who would recommend their counsel feel their law firm understands their business challenges as opposed to their specific technical legal challenges. Only of Detractors felt their counsel understands their business challenges. Clients were asked how well they think their outside counsel understands their business challenges as opposed to their specific technical legal challenges. 67% of Promoters felt their law firm understood their business challenges while only 43% of Passives and of Detractors felt their business challenges were understood. This indicates a correlation between understanding a client s business and client satisfaction. The key to developing a great relationship with clients and a successful long term business relationship is in understanding their business challenges in addition to their specific technical legal challenges. The goal should be to aim to deliver more than just legal solutions and to become an authentic trusted advisor. 7 % THAT EACH GROUP OF PROMOTERS, PASSIVES AND DETRACTORS FEEL THEIR LAW FIRM UNDERSTANDS THEIR BUSINESS CHALLENGES 0=NOT AT ALL, 10=ABSOLUTELY 67% Your Contact Moved Firms Poor Advice 6 33% 57% 43% 3 Poor Service Too Expensive Very important Important Somewhat important Not very important 1 Promoters Passives Detractors

7 Of the clients surveyed, 87% had visited their law firm s office space within the past 12 months, with 42% visiting within the past 3 months. With this high percentage of clients visiting a law firm s office, the office space itself becomes a key factor in building a relationship. Survey comments indicate the importance of law firms having professional and upscale spaces, but not so extravagant that clients feel their fees are paying for the office space. use your office space to make a statement about your brand 87% of clients visited their legal counsel s office space within the past year and all felt that it reflected on their counsel s brand and identity. 13 Of those surveyed, 89% think their law firm s space accurately reflects the firm s brand and identity, with 11% having not seen the space. In Colliers Occupier Survey completed two years ago, 75% of those surveyed said that brand is a critical driver for their business. This question illustrates the significance of the impression a law firm s office space is leaving on its clients. It communicates a message about the brand and values of the law firm and influences clients perception of their experience with them. If designed properly, the space itself can enhance the customer service. THE LAST TIME THE CLIENT VISITED THEIR LAW FIRM S OFFICE SPACE 45% 42% 35% 3 25% 24% 15% 13% 1 5% Longer than 24 months Within the last 7-12 months Within the last 6 months Within the last 3 months Full client responses are attached in the Appendix.

8 15 APPENDIX A selection of comments on question #7, Thinking about the last law firm that you decided not to rehire, please rank the factors below in order of importance in your decision to not rehire : too expensive, poor service, poor advice, your contact moved firms. Given our parent is a conglomerate and we work in different areas of the capital markets, the need for specialized knowledge affects our choice of counsel. We like to build long term relationships with our external law firms. This tends to address the issues raised #7. Service is hands down the most important thing I look for in terms of outside counsel and where I m referring our legal work. Firm failed to respond at the pace required for our business. Understanding the nature of our business and how we conduct the same is of paramount importance to us as a client. Price is not as important an issue as good service and advice. For some easy day to day matters, hiring the best lawyer is not important, cost is the most important. Availability is a huge issue, being able to get someone on the phone. Survey Questions: Thinking about the firm who does the majority of your outside legal work, how likely would you be to refer them to a friend or colleague? (0=Not at all, 10=Absolutely). Do you anticipate spending more or less on your outside legal spend in the next 12 months? In the past 12 months, what percentage of time have you requested an alternative fee arrangement (ie. Fixed fee, performance fee, etc.) In the next 12 months, will you request more or less alternative fee arrangements from your outside counsel (ie. Fixed fee, performance fee, etc.): How well do you think your outside counsel understands your business challenges as opposed to your specific technical legal challenges: (0=Not at all, 10=Absolutely). Slide to choose your answer. Thinking about the last law firm that you decided not to re-hire, please rank the factors below in order of importance in your decision not to re-hire. Too expensive, Poor Services, Poor Advice, Your Contact Moved Firms. When was the last time you visited your law firm s office space? Do you think your law firm s space accurately reflects the firm s brand and identity? Did not follow instructions or seek to understand our business needs and interests. Billed for work that was not requested nor value added. Did not have sufficient support to get work done on a timely basis, and did not treat his staff or clients respectfully. A selection of comments on question #9, Do you think your law firm s space accurately reflects the firm s brand and identity? I think law firms walk a fine line. You want your premises to be modern, professional, rich, etc., but not so over the top that clients start thinking that they are paying too much in legal fees. While decent space is important, if it s too nice I am just reminded that I paid for it. I do not think they are better lawyers because they hired a better designer or are on a higher floor. Space needs to be appropriate in terms of being high end, but not too much so in my opinion. Fine line between having a space that is not nice (and off putting to clients) and too nice (makes us think our fees are going to their office build out). It should be modern, but not too modern. Very professional and upscale

9 COLIN SCARLETT* Executive Vice President DAN JORDAN* Vice President COLLIERS INTERNATIONAL 200 Granville Street, 19th Floor Vancouver, BC V6C 2R This document/ has been prepared by Colliers International for advertising and general information only. Colliers International makes no guarantees, representations or warranties of any kind, expressed or implied, regarding the information including, but not limited to, warranties of content, accuracy and reliability. Any interested party should undertake their own inquiries as to the accuracy of the information. Colliers International excludes unequivocally all inferred or implied terms, conditions and warranties arising out of this document and excludes all liability for loss and damages arising there from. This publication is the copyrighted property of Colliers International and /or its licensor(s) All rights reserved. This communication is not intended to cause or induce breach of an existing listing agreement. Colliers Macaulay Nicolls Brokerage Inc. (Vancouver). *Personal Real Estate Corporation. PO12010