An old joke about lawyers has it that one lawyer in a town will starve. If there are two, they’ll both get rich. This is a wry way of commenting on a central, ethical tenet of legal practice that forbids one attorney or firm from representing both sides in a conflict. It’s logical as well as ethical. You wouldn’t want your lawyer, with whom you share unique confidences, to be beholden to you and someone you’re suing. This isn’t much of a bother for individual practitioners or small firms. But the larger the firm, the bigger an issue “conflicts management” becomes.
Imagine you work in the East Coast office of a firm with more than 500 lawyers in 10 offices. You get a call from a business colleague who has been let go and wants to sue his employer for wrongful termination. You take the case and proceed to do your due diligence and get all the facts from him. Let’s say you win, and he is awarded a large settlement. Which the company appeals—partly on the grounds that your firm’s West Coast office is legal counsel for the HR department of the parent company of the one being sued! Not only will you lose this client, but also you could be guilty of an ethical violation. All because you didn’t understand the relationship between a current client and a new piece of business.
It’s for precisely these reasons that conflicts management (CM) has been the first real CRM initiative embraced by large, corporate law firms. Not only does a good CM system keep you from getting burned, but also firms may get a break on their malpractice insurance premiums if they have a coherent CM program in place. Conflict management issues may, in fact, be the main reason many firms have switched to actual billing systems, rather then calculating and sending bills “by hand” using paper time-sheets and/or Microsoft Word.
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Buy why haven’t other CRM caught on with large law firms? Attorneys at large, corporate firms will tell you that the most important aspect of their practice, from a marketing standpoint, is their relationships. So one might think CRM would find easy root in the soil of legal practice. The need to maintain relationships in a complex and stressful environment seems like a perfect reason to use sophisticated software and systems to make the job even a little easier.
It is precisely because the relationships are so important that attorneys are deeply reluctant to trust technology to “manage” this resource. A retail business may have thousands or millions of consumers; a mid-size law firm may owe its success—and survival—to a dozen-or-so highly placed executives at their top-tier clients.
The case for CRM has rarely been made in a language that speaks to the primary goals of attorneys and their firms. Conflict management is the current exception to that rule. In other areas—customer satisfaction, lifetime value tracking, account management, touch-point analysis, revenue history—firms have had less success. I believe it is because, as in other industries, firms have purchased expensive CRM packages that aren’t necessarily relevant to their business practices. They expect the software to have some kind of “magic” effect on results, and when it doesn’t, they become frustrated.
Some firms, though, are making headway on applying CRM practices to other areas of law firm management. In these cases, technology provides a competitive edge for firms that fit CRM into the way they do business, rather than trying to change their processes to fit the dictates of a particular software platform.
A CRM opportunity: referrals
As chief marketing officer for a large, corporate law firm, I saw an opportunity to provide a CRM solution for an area almost as tricky as that of conflicts: referrals.
If a lawyers or firms can’t take a case, they will often try to provide a client with one or more referrals to capable attorneys. Sometimes, as in the example above, a firm is “conflicted out” of a matter. Sometimes they’re too busy to do the work in the needed timeframe or don’t have the particular expertise the client needs. Whatever the reason, referrals are often thought of as a lose-lose proposition.
Why? Provide a bad referral, and your client will be unhappy. Provide a good one, and you could be introducing the client to a competitor. As one seasoned attorney said to me about referrals, “It’s like paying someone to steal your client.”
What is the answer, then? If you can’t do the work and must make a good referral, there’s no way to win, right? Wrong. You just need better tools for managing that part of the relationship. And that’s where appropriate CRM can be a huge benefit.
In the old days, when an attorney needed a referral recommendation from his partners, he’d stick his head out the door of his office and yell, “Does anyone know a good plaintiff-side employment lawyer in Pittsburgh?” These days, attorneys at large firms will send an email to all other attorneys asking, ” Does anyone know a good plaintiff-side employment lawyer in Pittsburgh?” Same process. New technology.
What are the downsides of this method?
- Time wasted. At a firm of more than lawyers, that email may generate an immediate response of 12 emails and 15 calls. It’s a time-intensive process for the requesting attorney as well as those suggesting referrals.
- Incomplete data. The referral information provided by attorneys is often well-meaning but incomplete. A typical response might be a one sentence email of, “Roy McCheswick is near Pittsburgh somewhere, and he’s fantastic.”
- Incorrect data. The information as provided is often wrong; people misremember or data deteriorates—common issues but ones that aren’t addressed in the “e-shout” method.
- Repetitive tasks. Attorney John Smith may request the above referral June 1. On July 7, attorney Julie Jones needs the same information. You’ve just repeated an identical task.
- Dismissal of process. The “does anybody know” emails go out so frequently that many attorneys begin to regard them as a kind of internal spam. They don’t have the time or interest to respond.
- Loss of control. This method provides no way of tracking who eventually got the work. As stated before, you give away money—and possibly the relationship—when you make a referral.
- Loss of value. Suppose John Smith refers a piece of work to Firm B. He recommends Firm B to Julie Jones at his own firm at some point, and she later sends Firm B another piece of work. Unbeknownst to all of them, Fred Brown also sends Firm B some work. All this work may go to different lawyers at Firm B, so nobody there realizes that the firm where John, Julie and Fred all work has sent them more than $1 million worth of business.
How did we improve on this clearly flawed system? First, we understood the internal dynamics. We didn’t call it a customer relationship management issue. When you put the word “management” next to “relationship,” lawyers get nervous. So we referred to the process as “contact management.” Much less bad mojo. The lawyers manage the relationships; the staff manages the contacts.
We began the process, as all good marketing should begin, with goals. They were:
- Provide more appropriate, more complete and faster referral information to our clients.
- Save time for our lawyers.
- Track and be able to report on which firms got referrals from us.
That’s it. Everything else was process. By keeping the goals very short and specific, we got almost universal buy-in for the program. You just can’t argue with doing something better, doing it faster and knowing where you’re spending a resource as valuable as referrals.
Under our system, lawyers simply sent an email to (or called) our newly created contact support coordinator. The coordinator would gather a standardized data set from the internal customer, which gave us the chance to make sure we had all the information we needed to make an appropriate request.
And then we’d do the e-shout. In the early days of the new program, we got complaints because it was “the same old email but from one person instead of many.” We had to explain—several dozen times—that the information had never been recorded in the past, and we needed to get that done before we could organize it in a database. Over time, as the database grew, referral requests could often be met with data from past instances. As the number of e-shouts diminished, the firm as a whole began to recognize that something good was happening.
And requesting attorneys loved the new process from the get-go. Staff handled the barrage of responses. Which is entirely appropriate and efficient, as staff time is much less expensive. And the coordinator cleaned the data before replying. Instead of 45 random replies, the requesting attorney would receive a clean, nicely formatted report with the following information:
- All contact information
- A history of who at the firm recommended this referral
- All comments (including negatives) about the referral
- A history of work that had been referred
The name of the firm and attorney
Over time, as we collected data, we were able to see which firms were the benefactors of our outgoing referrals. This provides a lever when dealing with those firms in the future. In the absence of other compelling reasons, you send work to people with whom you have a good overall relationship: i.e., the folks who reciprocate. If you’re going to give value away to potential competitors, it’s good to know how much you’ve given, to whom and who has given back.
There exists in professional services firms—law firms, accounting firms, consultants, architects, engineers and others—a great opportunity for the use of CRM to address existing business issues. These professions do not need sophisticated technology that creates entirely new relationship management tasks. They need sophisticated partners who can analyze their business processes and help them automate, improve and leverage current activities more fully. When that happens, firms will see a significant return on their CRM investment.