The most accomplished lawyers are those that become ‘trusted advisers’ to clients. That means their counsel is sought not only for discrete cases but also on an enterprise basis—and not just for ‘legal’ matters. The trusted adviser has a profound understanding of the client’s business and provides professional judgment, emotional intelligence, candor, and experience tailored to the client’s risk tolerance, enterprise objectives, and company DNA. That’s a far cry from simply ‘knowing the law’ or ‘handling a case.’
Law firms have profited handsomely from trusted adviser colleagues– ‘excellence by association.’ Clients have long said that, ‘We hire lawyers, not a law firm.’ Let’s take them at their word noting that, until recently, retaining the lawyer also meant hiring the firm’s cast of supporting attorneys– and enduring big hours, high rates, faux budgets, and sticker shock. Trusted advisers—a subset of rainmakers– perform the critical functions, delegating all other tasks — the bulk of legal expense—to others. This suited the firm’s pyramidal structure and was tolerated by clients because there were no alternatives.
Clients can now ‘hire the lawyer’ without the baggage of the firm. The ‘practice of law’ is no longer synonymous with ‘the delivery of legal services. Legal delivery is now bifurcated; it is ‘the practice of law’ and the ‘delivery of legal services.’ The former refers to the core tasks that licensed, experienced, lawyers perform—counseling clients, representing them in tribunals, and rendering strategic advice in commercial transactions. The latter describes the process by which technology and process are deployed to reengineer the business of delivering legal services—the business of law. This process is often described as ‘disaggregation’ or the ‘legal supply chain.’ And just as outstanding legal practitioners emerge as ‘trusted advisers,’ so too is there an emergent cadre of ‘trusted adviser’ legal service providers that may or may not be lawyers. Translation: legal delivery is not just about lawyers anymore.
‘Legal Practice’ is now a component of ‘Legal Delivery’
Legal practice is a component of legal delivery in the same way that medical practice/expertise is an element of healthcare services. Legal operations, an amalgam of interrelated disciplines designed to improve the customer experience by efficiently and measurably resolving business challenges raising legal issues, is an equal partner in the new legal delivery paradigm. That means that trusted advisers with practice expertise now share the spotlight with peers providing delivery excellence. And while the practice of law and business of law intersect, clients are apt to have two types of ‘trusted legal advisers’–one for ‘practice,’ the other for the ‘business of law.’ Each is essential in providing clients with competent, effective representation that delivers value and business impact.
Elite service providers have secured a firm footing in the marketplace by reengineering the delivery of ‘fat middle’ (non-bespoke corporate) legal tasks once performed by law firms. The new model providers—and that includes some in-house legal departments—have corporate structures that reward efficiency, output, and results, not hours, revenue, and origination. They offer key stakeholders equity that creates an economic alignment with the long-term success of the enterprise. They are focused on clients– not preservation of PPP– and constantly reassess delivery methods (by relying on data and customer feedback), customer alignment, and pricing models that are very different than traditional partnership model law firms. Many ‘legal’ tasks once performed by ‘brute force,’ labor intensive firm lawyers have been routinized and are now delivered either as products or services via efficient, cost effective resources—human and/or technological. Legal service providers have migrated up the complexity chain. Their ‘alternative provider’ moniker –like so many other inaccurate, pejorative ‘alternative’ references in legal nomenclature– should be jettisoned. What was once ‘alternative’ is now mainstream. Trusted advisers with delivery expertise are every bit as important as those with elite practice skills. And to maintain their elevated status, each must be conversant with the other’s skillsets. The integration of legal practice and legal delivery is the next phase of law’s evolution.
From a functional perspective, the dividing line between law firms and service providers has become blurred, especially in the corporate segment of the legal market. Legal practice and legal delivery are distinct–yet interconnected– elements of the process; one without the other affords the consumer a half-loaf, not a whole. And while elite legal service providers—and that includes corporate legal departments and companies—are now providing managed services solutions, the industry has yet to see a scalable provider that fully integrates the two. It’s inevitable that this fusion of the practice and business of law— pioneered by Clearspire nearly a decade ago– will reappear.
Traditional Partnership Model Law Firms Are Internally Focused; Legal Service Providers Accentuate Client Satisfaction
Law firms are internally focused and remain fixated on PPP. They have largely failed to address the myriad causes of client disaffection and have instead doubled down on stasis— rigid hierarchical structures, resistance to regulatory change (an irony as it would create more fiscal and structural flexibility), and fear and loathing of technology and process perceived as threats to PPP. Firms have unsuccessfully attempted to mold the market to suit their model rather than to reconfigure that model to accommodate the market. It is becoming increasingly difficult for a trusted adviser partner not to recommend that clients reallocate work between the firm and service providers.
A recent study of the British legal market commissioned by LexisNexis and Judge Business School at Cambridge University contains a stark finding: ‘There is unambiguous evidence of a significant and persistent disconnect between law firms and their clients.’ The disconnect refers to the widening delta between firm/client perceptions of output and value. Law firms continue to believe they are doing a good job even as demand for their services is flat in a growing market. Firms are still selling the ‘practice’ of law even as the market is migrating to a new delivery paradigm where practice tasks are narrowed and leveraged by technology, process, and delivered from new economic and structural models.
Top Legal service providers focus on satisfying—and exceeding– the expectations and demands of customers whose businesses are increasingly complex. The providers measure success by customer satisfaction and relationship building. They provide customers with solutions to transactional challenges while simultaneously identifying systemic ones. Law firms remain reactive; top service providers are proactive. Firms handle matters; providers identify and implement ways to streamline enterprise operations. Firms measure success by PPP; providers focus on customer satisfaction. Unlike firms that rely on ‘sense impression’ to gauge this, service providers use established business metrics to calibrate customer sentiment.
NPS will be the new PPP
Business has focused on Net Promoter Score (NPS)—customer loyalty and willingness to serve as an advocate—since Fred Reichheld introduced it in his 2003 Harvard Business Review article, ‘The One Number You Need To Grow.’ Reichheld created a simple 1-10 scale broken down into three customer categories determined by the answer to one question: ‘How likely is it that you would recommend (Company X) to a friend or colleague?’ The high end of the spectrum represents ‘extremely likely’ and the low end ‘not at all likely.’ The middle band is indifferent customers susceptible to changing providers. NPS is determined by taking the percentage of high-end responders (endorsers) and subtracting from it the percentage of low end (detractors). The higher the resulting score the better, because NPS is a proven predictor of revenue growth. Not surprisingly, the legal industry has low NPS scores compared to other verticals.
One wonders why firms continue to focus on PPP, a snapshot of the firm’s economic performance during the past year, rather than NPS that provides an accurate view of customer sentiment, a predictor of its financial future. This is especially important in the age of social media where ‘word of mouth’ has a global platform—positive or negative. The words of Henry Selfridge, the pioneer retailer, come to mind, ‘The customer is always right.’
Trusted legal practitioners are more important than ever. Technology has, paradoxically, heightened practitioner value because they make critical judgment calls based upon an ever-increasing volume of data and variables. Practitioners determine what is material, what’s not, and how to present it before tribunals or in significant commercial transactions. At the same time, legal delivery– the ‘business of law’– has created a new category of trusted legal advisers that often are not lawyers. These trusted advisers are trained in business, technology, or process management. They counsel clients/customers how to acquire and integrate legal services to achieve business impact.
Legal practice and delivery trusted advisers each require specialized skills. This is emblematic of law’s transition from a labor-intensive delivery paradigm to a tech and process-enhanced one that replaces ‘brute force’ with automation, productization, and leveraging differentiated practice skills. Practice and delivery are equally important, and the marketplace will soon witness a more complete integration of the two. That’s where things are headed.
This post was originally published on Forbes.com