Grow Your Business by Maintaining a Focus on Client Retention

In this current economic environment, it is challenging to grow law firm business through new client relationships when firms are cutting marketing budgets and corporations are making cost-cutting decisions that directly impact their use of outside counsel. Daily news reports include announcements of firm layoffs, reduction or suspension of yearly bonuses as well as adjustments in summer associate programs. Since it is generally understood that more than 80% of new business comes from existing clients, law firms are using this time to renew their commitment to retain and expand their current client relationships.

Studies show that the cost of acquiring a new client is higher than the costs associated with client maintenance and that repeat transactions are generally most profitable. Providing value and superior customer service is a way of ensuring that you weather this challenging economic storm while positioning yourself for future business opportunities. As you reflect on your client retention program, evaluate your performance in each of the following areas:

1. Timely communication and responsiveness – The ability to shorten response time has a direct impact on client satisfaction. A client’s expectation that counsel be responsive extends beyond returning telephone calls or emails within a twenty-four hour period. Clients expect that their outside law firms have procedures in place that reduce operational inefficiencies that hinder an attorney’s ability to respond to a client’s inquiry. For example, firms that embrace this tenet have up-to-date document management systems. They appreciate that technology facilitates closer communication with clients so they outfit their attorneys with equipment including cell phones, BlackBerries, laptops and access to after-hours IT assistance to ensure remote access to firm resources. These tools also enable outside counsel to provide timely progress and status reports for open matters.
2. Knowledge of your corporate client – More in-house counsel are going beyond requiring that their outside counsel keep them informed of strategic decisions. Instead, they expect active involvement in these decisions. This degree of collaboration requires that outside counsel have a strong understanding of the corporate entity they represent, including corporate culture, business plans and internal business practices. This knowledge is best learned through frequent personal interaction with both in-house counsel and leaders from the various business groups within the corporation. These face-to-face meetings also provide an excellent opportunity to solicit feedback regarding the client’s level of satisfaction with the quality of legal services provided to date. The most common reason clients stop doing business with a law firm is perceived indifference. Showing interest in your clients’ business not only solidifies your relationship, but also positions you to earn future business. Firm leaders should give a high priority to these meetings as this telegraphs the law firm’s commitment to partnering with their corporate client and that the firm has a budget in place to allow attorneys to schedule these visits.
3. Agreement on clear billing practices – Discuss the billing process during the early stages of your relationship. Include detailed information in your invoices and provide your client with an appropriate level of specificity on the bill as this enables clients to assess the value you are providing. Expect that in-house counsel will require a budget. Embrace the fact that a budget clarifies spending expectations and sets milestones against which to determine whether projects are going as expected. Perception is reality when it comes to billing for legal services. Audit your law firm’s bills with an expectation that your client will also perform an audit of your invoice. Be open to creative and incentive-based payment for legal services rendered. Find ways to manage costs and share risk and reward. Law firms that enjoy high client retention rates have shifted from a short-term focus on selling billable hours, to a big picture goal of forging and maintaining longstanding client relationships. Be sure your invoice reflects this understanding.
4. Accountability for outstanding client service – Many law firms recognize that the only way to consistently provide a superior level of client service is to appoint one person to focus on ensuring that the client is attended to in a memorable way. Some firms refer to this person as their client services manager or their business development manager. This law firm ambassador handles everything from establishing protocol for incoming business calls, responding to billing issues, prioritizing marketing initiatives and reactivating former clients. Job responsibilities may include assisting the firm with client seminars and conducting periodic research on competitors and their service delivery improvements. Your clients expect that your attorneys will provide an excellent work product. This alone is no longer enough to distinguish you from other suitable law firms. Clients must be engaged in a deeper and more personal way.

Maintaining loyal clients will do more to increase your bottom line than any marketing or advertising campaign. Client-focused retention and loyalty strategies should be the primary objective of all business development efforts regardless of the state of our economy.