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Managing the expectations of clients and colleagues with a view to maximising profitability

Managing the expectations of clients and colleagues with a view to maximising profitability. Peter Scott Peter Scott Consulting www.peterscottconsult.co.uk. Purpose of today?. To challenge your thinking To help you manage change. Law firms today?. Impact of the Legal Services Act on:

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Managing the expectations of clients and colleagues with a view to maximising profitability

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  1. Managing the expectations of clients and colleagues with a view to maximising profitability Peter Scott Peter Scott Consulting www.peterscottconsult.co.uk

  2. Purpose of today? • To challenge your thinking • To help you manage change PETER SCOTT CONSULTING

  3. Law firms today? Impact of the Legal Services Act on: • Volume / commodity businesses? • Commercial firms? • “the high street”? Need for wholesale consolidation PETER SCOTT CONSULTING

  4. The drivers of change? PETER SCOTT CONSULTING

  5. The changing needs of clients • In order to provide clients with what they want, law firms need critical mass • Breadth and depth of resource - people • Rise of the national firms • Global firms • Need for consolidation PETER SCOTT CONSULTING

  6. Other drivers of change? • Technology • Economic forces • Globalisation • Political forces PETER SCOTT CONSULTING

  7. Why adapting to change is necessary “It is not the strongest of the species that survive nor the most intelligent, but the ones who are most adaptive to change” Charles Darwin ‘Origin of species’ PETER SCOTT CONSULTING

  8. Maister’s “Predictive package” • “Client satisfaction is a top priority at our firm” • “We have no room for those who put their personal agenda ahead of the interests of the clients or the office” • “Those who contribute the most to the overall success of the office are the most highly rewarded” • “Management gets the best work out of everybody in the office” PETER SCOTT CONSULTING

  9. Maister’s “Predictive Package” • “Around here you are required, not just encouraged, to learn and develop new skills” • “We invest a significant amount of time in things that will pay off in the future” • “People within our office always treat others with respect” • “The quality of supervision on client projects is uniformly high” • “The quality of professionals in our office is as high as can be expected” PETER SCOTT CONSULTING

  10. How can firms compete – and win? Three themes: • Focus • Resource • Adding value PETER SCOTT CONSULTING

  11. Managing the expectations of clients and colleagues First - define ‘Values’ • External – what your most profitable clients value • Internal – what your partners and staff value • Identify skills and behaviours which enable the consistent delivery of these values PETER SCOTT CONSULTING

  12. What do your clients value? • Have you asked them what they value? • Do you think you are adding value to your clients – value which is perceived as valuable by your clients? PETER SCOTT CONSULTING

  13. External perceptions of your firm? Do you really know what your clients NEED and what they think about your firm? Have you ever asked them? PETER SCOTT CONSULTING

  14. Some clients’ perceptions • ‘I don’t think they show adequate interest in our business’ • ‘They are not proactive with their own clients’ • ‘They don’t think laterally’ • ‘They never visit, and they should if they want to increase the quality of the relationship’ PETER SCOTT CONSULTING

  15. How well do we communicate with our clients? • ‘Out of sight, out of mind. They must ensure regular communication’ • ‘I am not convinced I have their message or why they are different’ • ‘Their profile is very low – they need to create more noise in the market’ • ‘They must not assume that people know what they do’ PETER SCOTT CONSULTING

  16. What kind of firm do we want to be? ‘I am not sure what they are trying to do with the firm. Are they trying to position themselves as ‘best local firm’ or something bigger?’ PETER SCOTT CONSULTING

  17. Is lack of resource making us uncompetitive? Some of our clients think so - • ‘I don’t believe they have the resources’ • ‘Sometimes they lack polish and quality in depth’ • ‘Depth of expertise – I have only one partner to contact on a day to day basis, which is a little limiting…’ • ‘City firms have greater depth of expertise’ PETER SCOTT CONSULTING

  18. Resource – when and where • ‘Out of town. If a meeting is called half an hour from now, they can’t make it’ • ‘Invariably, we need a London-based firm but this is nothing to do with ability’ • “City Firm Not in the City” strapline? - ‘Not credible’ - ‘Not true’ - ‘I don’t see it’ PETER SCOTT CONSULTING

  19. Build resource • People • Finance NB - competing in the volume areas will require deep pockets - how many will be able to stay the course? PETER SCOTT CONSULTING

  20. Size provides resource Size is important if law firms are to be able to – • Practice safely and compliantly • Provide clients with what they want Is merger an answer? PETER SCOTT CONSULTING

  21. What do we need to do to be successful? We need to gain competitive advantage HOW? PETER SCOTT CONSULTING

  22. You need strategic focus • You cannot be ‘all things to all men’ • To be competitive requires focus on a client-type / work-type value mix • The wider the core client-types, the narrower the work-type focus PETER SCOTT CONSULTING

  23. What are clients looking for? Core issue is to add value: • Morethan the competitors • In a way which - is regarded as valuable by clients - differentiates you – to create a ‘brand’ PETER SCOTT CONSULTING

  24. What is ‘added value’?Value client care about PETER SCOTT CONSULTING

  25. You will add value if… • You provide clients with what they want – and more • At prices they perceive to be value for money; and • You do this better than the competition BUT for smaller and mid-sized firm to do this…. PETER SCOTT CONSULTING

  26. How will small and mid-sized firms be able to compete? • Small and mid-sized firms with appropriate focus can succeed • But focus will be crucial - sharper focus on client/work types than larger firms - wider focus than niche firms PETER SCOTT CONSULTING

  27. How to compete with the best? • Being small or mid-sized is not about being second rate - not a mirror image of larger firms - but must be able to compete with best of the large in chosen markets • Depth of resource may be crucial in some markets PETER SCOTT CONSULTING

  28. Value Clients Care About • Our clients’ perspective • Not our own perspective • Is there a gap? PETER SCOTT CONSULTING

  29. Is there a perception gap? PETER SCOTT CONSULTING

  30. The value gap • It is clients’ perception of value that matters • Too much emphasis on service attributes • Not enough on helping clients achieve results PETER SCOTT CONSULTING

  31. The value gap Typical remarks by clients: • “I cannot recall any innovative thinking being applied” • “I don’t expect lawyers to be businessmen” PETER SCOTT CONSULTING

  32. You will add value if… • You provide clients with what they want – and more • At prices they perceive to be value for money; and • You do this better than the competition PETER SCOTT CONSULTING

  33. The Competitive Moves High Perceived Added Value X Ave Suicide Zone Low Low Ave High Perceived cost PETER SCOTT CONSULTING

  34. High Value – Added Services High value-added services – strategic impact on client – generally wisdom/experience driven • Identify and recognise needs of the decision maker • Understand clients’ needs • Nurture wisdom/experience within the firm • Ensure added value is perceived as valuable PETER SCOTT CONSULTING

  35. Moving to High Value Added Services • Focus on specific client types/work types • Seek leadership in a few, cohesive segments • Understand how brand influences PAV - brand is about differentiating yourself PETER SCOTT CONSULTING

  36. Moving to High Value Added services • Do not add too much PAV – especially in a price sensitive market • Focus cost reduction only where it will not jeopardise value added • Ensure added value is always perceived as valuable PETER SCOTT CONSULTING

  37. Low Value – Added Services Low value –added firms will compete on processes and price – technology driven services with minimum professional input • Value enhanced by - driving down cost - facilitating implementation of solutions • Invest in standardising processes PETER SCOTT CONSULTING

  38. Issues in providing Low Value – Added Services • Understand the need to move north to hold position - constantly squeeze out more value for same cost • Ensure financial strength to stay the course • Avoid creating the perception of reduced “quality” • Be careful not to undermine PAV PETER SCOTT CONSULTING

  39. Do not wait for the client to ask Be proactive PETER SCOTT CONSULTING

  40. Any questions? PETER SCOTT CONSULTING

  41. Internal attitudes in your firm? PETER SCOTT CONSULTING

  42. Do all your partners want the same? PETER SCOTT CONSULTING

  43. Your firm? PETER SCOTT CONSULTING

  44. Is your firm firing on all cylinders?Answer – Yes / No PETER SCOTT CONSULTING

  45. Are all your partners hungry?Answer – Yes / NO PETER SCOTT CONSULTING

  46. Do all your partners want to earn more?Answer – Yes / NO PETER SCOTT CONSULTING

  47. Do you have the ‘right partners’ on board to help you to achieve your goals?Answer – Yes / NO PETER SCOTT CONSULTING

  48. Are all your partners prepared to be managed?Answer – Yes / NO PETER SCOTT CONSULTING

  49. Are all your partners supportive of management and of each other?Answer – Yes / NO PETER SCOTT CONSULTING

  50. Are all your partners prepared to be accountable?Answer – Yes / NO PETER SCOTT CONSULTING

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