Client Speak: Cross-Selling ' Optional or Obligatory?

Cross-selling in today's environment? You must be kidding. I have enough trouble holding on to what I have.

If that's your reaction, it's understandable. After all, businesses are cutting back on expenses; and, as you well know, in-house legal departments are not immune. These departments are feeling the pinch in terms of reductions in salary increases, greater control over headcount, and retention of more work in-house rather than awarding it to outside counsel. Furthermore, the mantra has changed from litigate, litigate, litigate to settle, settle, settle.

But consider this: Convergence is still very much in vogue. And there are now probably more compelling reasons for it ever since the economic tsunami swept across the landscape. Cutting back on the number of law firms and rewarding each with a greater workload is obviously of financial benefit to each of the selected firms. However, the benefits for the client can be even more significant ' among them: 1) an overall fee reduction due to the client's greater negotiating power with each firm; 2) an increase in efficiency due to each firm having responsibility for more of the work thereby obviating the need to get up to speed on each new assignment; 3) the likelihood that less apparent areas of need will be uncovered due to each firm's greater knowledge of the client; 4) the need for fewer in-house legal department personnel to manage the reduced number of outside law firms; and 5) the client's enhanced awareness of the various firms' distinctive strengths and weaknesses.

Effective Cross-Selling: The Nine Prerequisites

So how does a firm assure itself of success in the convergence process? With some exceptions, most successful firms are those that have previously served the client well. But it is still possible that some of these may lose out.

Winning one of the preferred-provider slots in the convergence process will require a focus on those same prerequisites that lead to effective cross-selling. From our Client Feedback interviews, we have determined the following to be the most critical:

• High-Value Performance and Results;
• Perceived as Trusted Adviser;
• Lead Partner's Involvement and Access to Necessary Firm Resources;
• Coordinated Service Delivery ' i.e., Project Management;
• Primary Focus on Client's Needs and Interests;
• Favorable Competitive Position;
• Lead Partner's Confidence in Other Partners and Practice Areas;
• Competitive Fees; and
• Familiarity with Client's Procurement Process.

Each of he foregoing is described in more detail below. You should consider these prerequisites carefully because ' according to a prominent consulting group ' most law firms rate themselves very poorly when it comes to assessing their own ability to cross-sell effectively.

1. High-Value Performance And Results

Outstanding performance may well be the key prerequisite for cross-selling as well as for success in the convergence process. However, stellar performance must be accompanied by a willingness to be appropriately proactive in not only introducing the full breadth of the firm's relevant services, but also pointing out areas of need that may not be readily apparent to the client.

As one very senior in-house Associate General Counsel said, “You get more business by doing good work. And that's why I am intent on finding more work to keep the firm engaged. They are my first-call when new frontiers open up. I would definitely recommend the firm and I have. Practically, you recommend the team. But I believe this team is representative of the firm.”

And a VP in charge of IP marveled at the “remarkable record of wins for us. In fact, I can't think of any losses. They typically exceed my expectations with their passion for the work and their drive to do whatever it takes for success and results.”

But just performing in an outstanding manner may not be enough to optimize the relationship if the client is not adequately familiar with the firm's breadth of service and expertise. For example, a GC, who was unaware that the firm had offices in China, said during her interview, “It would be nice if they had a corporate or transactional presence in Asia. We use local firms over there and each time we have to pass on to each firm all this institutional background.”

To overcome such lack of awareness, interviewees have offered such suggestions as: “The firm should market itself to us more effectively”; “I'd love to expand our use of the firm, so it would be helpful to know what else they do”; “They should be broadening their contacts here, developing relationships at higher levels in the organization, and increasing our awareness of the various areas where they could be of service to us.”

However, those suggestions are often accompanied by certain caveats: “Don't over-market me”; “Don't be intrusive ' walk a fine line between being proactive and reactive”; “Don't oversell, as too much selling creates a sense of distrust that can drive us apart rather than together”; “Don't try to sell me the next engagement before completing the present one.”

2. Perceived As Trusted Adviser

The perception of trust must apply not only to the lead partner, but also to the firm. Accordingly, the client must be made to feel it is important. Or, as a VP in charge of litigation remarked, “I get a very strong sense that the firm's philosophy is: 'We're here to support you and be loyal to you and provide the resources of the entire firm.' I sense their commitment ' they treat me as their #1 client.”

Because clients want to feel they can place their trust in the partner and the team that is serving them, candor and integrity are key attributes, as is camaraderie. A CEO observed, “The partner is really an excellent attorney who is creative and business oriented. I like working with him. I value his opinions and I trust him. He could be my friend.” Further, an associate General Counsel mentioned, “Because they've earned my trust and respect, I look to the firm for strategic advice and counseling regarding legal and business matters.”

3. Lead Partner's Involvement And Access to Necessary Firm Resources

Interviewees are quick to comment on the lead partner's availability or lack thereof, as well as his/her degree of familiarity with the issues. In addition, “bench strength” is often a critical factor in a client's assessment of a firm's effectiveness, especially for important matters or cases. Hence, the lead partner's clout within the firm coupled with his/her ability to marshal the appropriate resources and expertise on a timely basis is often the difference between satisfaction and dissatisfaction.

Therefore, the significance of the lead partner's role and responsibility should not be taken for granted. The following is representative of relevant client feedback we have received: “We don't stick with one law firm. We look very carefully to pick the right firm for the right case. It depends mostly on the lead partner. And we feel size is secondary to ability to handle the matter in a timely fashion and with the proper resources. But the lead partner is the key. We expect him or her to oversee the engagement, be familiar with all significant aspects of it, be appropriately visible and involved, and provide access to necessary firm experts. He or she should also spend time with our key engagement personnel, be familiar with their relevant goals and objectives, and discuss with them the key issues involved, including matters related to staffing by firm personnel and ours.”

4. Coordinated Service Delivery/Project Management

As this point, a brief discussion of the Client Team concept is probably appropriate. As with cross-selling, the concept of client teams implies the involvement of two or more practice areas in the service of a single client. Presently, it appears that the vast majority of AmLaw 100 firms have established client teams for at least their key clients.

Beyond being composed of team members from various practice areas, these client teams may also be populated with firm personnel from different industry groups, offices and countries, working on a variety of cases and matters. Accordingly, to be successful, the client must be convinced that the firm has a process that will ensure effective coordination and control over all that diverse effort, including budgeting, billing and fees. Generally, interviewees have expressed a preference for “a single point of contact for management of all the assignments and also any new business initiatives. There should be one person at the law firm accountable to us. But we want that partner to exhibit leadership and other management skills. Furthermore, particularly with regard to overseas assignments, the team should be sensitive to differences in culture and style as well as our and their personnel's levels of competence. Finally, regardless of where the work is being done, we want to feel we're dealing with people who are all part of the same firm.”

It should be noted that there are some interesting variations of the client team concept. One of these relates to situations where the client dictates the composition of the team by drawing upon personnel from different law firms and having them work together on a specific matter or case. As one interviewee stated, “It is not unusual for us to have two firms involved on a specific assignment. It is also not unusual for this to generate some tension and resistance between the firms. However, once we decide that's how we want the case handled, both firms had better get with the program and make it work. One firm wanting to be king of the hill is not acceptable.”

And, of course, there are more traditional situations where firm and client personnel share responsibility. As one GC stated, “Our people work together with the firm's personnel on [internal] clients. And we work as one team.”

5. Primary Focus on Client's Needs and Interests

Any cross-selling initiatives should appear to be motivated solely with a view to benefiting the client rather than the firm. The client's reaction should be: “They give the impression that my interests are more important than theirs. In other words, I believe that their need for greater billing opportunity is secondary to my need for the services they're recommending.”

6. Favorable Competitive Position

In the present environment, firms should anticipate that there will be greater competition for new work and fewer sole-source engagements, as clients do not want to rely too heavily on any one firm and wish to obtain various points of view. (See also prerequisite 8. below, regarding competitive fees.) But, as one of the interviewees admitted, “While we prefer to spread the work around, if I could have only one firm, it would be [this firm]. The GC is impressed with their commitment to our success and their results, as are other members of Management.”

There is little question that clients will contend that, more than anything else, they consider value as a key distinguishing factor. Some examples: “I get better value from [this firm] than from any other firm, and it's value they provide, more than just getting results”; “In terms of value, they provide a consistently high level of quality work along with creativity and a balance of skills that's hard to find, all of which makes the firm unique”; “Their rates are reasonable compared to the high value received.”

And, of course, there's nothing like a client feeling s/he's dealing with those considered to be the best: “This is the best team I've worked with. They are dedicated, committed professionals whose efforts for us have been extraordinary. [And] one of the partners is the best guy I've worked with in my career.”

7. Lead Partner's Confidence in Other Partners and Practice Areas

A key requirement for effective cross-selling is the ability to adequately assess not only the client's needs for the services being cross-sold, but also the firm's ability to meet those needs. Furthermore, as indicated in prerequisite 3, above, the client will expect the lead partner to oversee and be appropriately available and involved with any cross-sold services for as long as necessary.

Therefore, the cross-selling partner should have adequate understanding of the services s/he's attempting to cross-sell and, more importantly, have confidence in those who will be brought in to provide those services. But, too often we have heard partners express reservations such as the following: “My relationship with the client couldn't be better. Introducing this new service won't improve it. But it sure as hell could jeopardize it.” Such an attitude is sometimes exhibited by partners primarily concerned about losing proprietary control over their clients. In other cases, however, it may be justified where the lead partner is not convinced that adequate expertise exists within the firm, or as one partner stated, “Just because he's my partner doesn't mean I'd recommend him to my clients. I'd have to be satisfied as to his level of expertise and ability to fit in.”

In situations where there is a client need in an area where the firm has insufficient expertise, the best approach is to acknowledge that fact and then recommend an individual or firm for the client to contact. As one interviewee mentioned, “I was impressed by the partner's admission of lack of competence in certain areas where I was thinking of using his firm or recommending his firm to others.”

8. Competitive Fees

As mentioned in my article on Alternative Fee Arrangements (“AFA”) that appeared in the July 2009 issue, many clients are facing severe cost constraints, so partners should be sensitive to this in proposing for new work by: 1) providing rates and/or fee arrangements that are competitive; 2) clarifying the firm's policy regarding fees and discounts; 3) making realistic estimates of the amount and timing of any benefits the clients will realize; 4) investing in the relationship, as clients react very favorably to free service; and 5) indicating a willingness to “partner” with the client by sharing the risk ' i.e., have “skin in the game.”

Since the partner will be dealing with an existing client with regard to the cross-selling of services, the approach with regard to such areas as “fees and discounts” and “investing in the relationship” will presumably be different than if a completely new client were involved. Nevertheless, keep in mind the admonition from one of our interviewees: “Cost is key. There's enormous pressure here on costs. For example, we had to lay off people this past summer. Law firms could be doing a better job in the cost area by using less expensive personnel, such as more use of paralegals, or not charging for summer associates or first-year associates, or not using such high-billing-rate lawyers to do certain aspects of the work.”

More specifically on the subject of discounts, an interviewee claimed, “Everyone gives discounts and they range from 15% to 20%.” Another alleged, “While the firm is efficient and the fees are reasonable in terms of the quality of work provided, the value of that doesn't stand out versus another firm's 20% discount, which is very visible to those above me.” Unfortunately, some apparently believe that discounts speak louder than value. And this comment from a CEO: “I know of others who will offer discounts to get our work. ' The firm has to appreciate that we take pride in being a low cost and efficient producer with a very cost-conscious company culture.”

On a slightly more positive note, an SVP and GC remarked, “Even though they are a top firm and have high rates, their pricing is excellent and their efficiency is remarkable. And they'll agree to alternative fee arrangements or whatever it takes. They're very committed.”

Much has been written about firm size as it relates to fees. But it's unrealistic to generalize as the following comment by the head of real estate for a Fortune 500 company points out: “I might prefer a smaller firm because I presume they have lower hourly rates. But even low hourly rates must be coupled with efficiency. I look for the best service at the right price. ' Some firms have become so expensive, it's absurd. ' Firms must be reasonable with us when it comes to fees.”

And a final comment about budgeting, which has assumed greater importance and visibility in this cost-conscious era, and for which most firms have been subjected to criticism: “All firms always come in with too low an estimate despite the fact they should have the ability to do much better based on their experience. But more important is when things occur that change the original estimate. Then, the first time I normally learn about it is when I get the bill, and that's not acceptable.”

9. Familiarity with Client's Procurement Process

The following representative comment is worth noting: “By considering and using several firms, we get a better result than by giving one firm all the work all the time.” But, despite the general preference to have a stable of firms to use and choose from, at least one GC we interviewed appeared slightly conflicted. Agreeing with his CEO, he first indicated, “Economically, it's better to spread the work around.” Later on, he appeared to contradict himself by claiming, “I prefer one-stop shopping.”

Therefore, regardless of the espoused philosophy as to the use of outside counsel, it is imperative for the lead partner to understand the client's actual selection process and the relevant criteria used, and then to develop relationships with those important influencers and key decision makers who are involved in the hiring, retention and termination of outside counsel.

As part of the process for selecting outside vendors, many companies require involvement of their procurement department personnel. It is important to know their role and influence in the selection of professional services firms and who will have the final say. Understanding their criteria is also essential. In other words, is there a difference in their mind between the acquisition of legal pads and legal services?

The following excerpts are indicative of a few of the different approaches companies take:

• “The GC is the key decision-maker and he has his own stable of firms that he calls upon and with whom he has built historic relationships over the years.”
• According to the VP in charge of litigation, “I choose the outside counsel. I need more than one firm to choose from in case of conflict issues. I have done beauty contests and will continue to include the firm in them. And I don't do this to piss them off. It's just a good idea to test other firms' strategies and thinking. While the firm is our preferred provider, we're always measuring them versus others.”
• The head of real estate stated, “In the price-value equation, price is more important because the low price sticks out and the value is harder to quantify and may not be realized for years. Therefore, outside counsel needs to appreciate the politics in an organization and target to the right levels with the right combination of terms.”
• “The firm has been appropriately proactive. They became aware of our need for help and approached us with an offer of assistance. Subsequently, other firms also offered, but we picked them because they were the first.”

While selection criteria and the RFP process are important aspects of cross-selling, an in-depth discussion of these would be beyond the scope of this article.

Getting Started: A Cross-Selling Assessment

So is cross-selling really optional any longer? Or has there been a wake-up call to focus on those necessary elements that will place your firm in a position to satisfy more of your clients' needs, and quite possibly in areas where you may not have served them before? As you ponder these two rhetorical questions, you might be interested in a comment from the Ark Group's promotional copy for an April 2010 forum in New York City that claimed: “Over the next few years the legal landscape will be dramatically reshaped ' and for many organizations, [it's] time to recognize and acknowledge the forces that are shaping the industry as these changes will most certainly impact the way corporate law departments approach and buy legal services.”

If most firms actually do not cross-sell well, as indicated above, now may be the opportune time to attempt to stand out
from the crowd and be positioned to gain from both cross-selling and the convergence process. To get started, you can perform a relatively quick and dirty cross-selling assessment. On a client-by-client basis for each of your firm's key clients assign pass/fail grades to each of the following cross-selling prerequisites:

• Responsible for Important Cases or Matters.
• Obtained Favorable Results.
• Advantageous Competitive Position.
• Supporters/Promoters/Repeat Buyers Who Are at Least Key Influencers.
• Positive Visibility at the Decision-Making Level.

Then, for those clients with a “pass” grade for each of the above five prerequisites, your next step will be to determine the most appropriate proactive initiatives ' or sales strategy ' that will result in augmenting your portfolio of necessary services rendered to these designated clients. All the best!

Donald E. Aronson is CEO of D. E. Aronson Associates LLC and a member of this newsletter's Board of Editors. Don's firm conducts market research by interviewing executives of professional services firms' key clients with a primary focus on client feedback. Located in New York City, he can be reached at 212-874-4181 or [email protected]. Copyright ' 2010 by D. E. Aronson Associates LLC.

Cross-selling in today's environment? You must be kidding. I have enough trouble holding on to what I have.

If that's your reaction, it's understandable. After all, businesses are cutting back on expenses; and, as you well know, in-house legal departments are not immune. These departments are feeling the pinch in terms of reductions in salary increases, greater control over headcount, and retention of more work in-house rather than awarding it to outside counsel. Furthermore, the mantra has changed from litigate, litigate, litigate to settle, settle, settle.

But consider this: Convergence is still very much in vogue. And there are now probably more compelling reasons for it ever since the economic tsunami swept across the landscape. Cutting back on the number of law firms and rewarding each with a greater workload is obviously of financial benefit to each of the selected firms. However, the benefits for the client can be even more significant ' among them: 1) an overall fee reduction due to the client's greater negotiating power with each firm; 2) an increase in efficiency due to each firm having responsibility for more of the work thereby obviating the need to get up to speed on each new assignment; 3) the likelihood that less apparent areas of need will be uncovered due to each firm's greater knowledge of the client; 4) the need for fewer in-house legal department personnel to manage the reduced number of outside law firms; and 5) the client's enhanced awareness of the various firms' distinctive strengths and weaknesses.

Effective Cross-Selling: The Nine Prerequisites

So how does a firm assure itself of success in the convergence process? With some exceptions, most successful firms are those that have previously served the client well. But it is still possible that some of these may lose out.

Winning one of the preferred-provider slots in the convergence process will require a focus on those same prerequisites that lead to effective cross-selling. From our Client Feedback interviews, we have determined the following to be the most critical:

• High-Value Performance and Results;
• Perceived as Trusted Adviser;
• Lead Partner's Involvement and Access to Necessary Firm Resources;
• Coordinated Service Delivery ' i.e., Project Management;
• Primary Focus on Client's Needs and Interests;
• Favorable Competitive Position;
• Lead Partner's Confidence in Other Partners and Practice Areas;
• Competitive Fees; and
• Familiarity with Client's Procurement Process.

Each of he foregoing is described in more detail below. You should consider these prerequisites carefully because ' according to a prominent consulting group ' most law firms rate themselves very poorly when it comes to assessing their own ability to cross-sell effectively.

1. High-Value Performance And Results

Outstanding performance may well be the key prerequisite for cross-selling as well as for success in the convergence process. However, stellar performance must be accompanied by a willingness to be appropriately proactive in not only introducing the full breadth of the firm's relevant services, but also pointing out areas of need that may not be readily apparent to the client.

As one very senior in-house Associate General Counsel said, “You get more business by doing good work. And that's why I am intent on finding more work to keep the firm engaged. They are my first-call when new frontiers open up. I would definitely recommend the firm and I have. Practically, you recommend the team. But I believe this team is representative of the firm.”

And a VP in charge of IP marveled at the “remarkable record of wins for us. In fact, I can't think of any losses. They typically exceed my expectations with their passion for the work and their drive to do whatever it takes for success and results.”

But just performing in an outstanding manner may not be enough to optimize the relationship if the client is not adequately familiar with the firm's breadth of service and expertise. For example, a GC, who was unaware that the firm had offices in China, said during her interview, “It would be nice if they had a corporate or transactional presence in Asia. We use local firms over there and each time we have to pass on to each firm all this institutional background.”

To overcome such lack of awareness, interviewees have offered such suggestions as: “The firm should market itself to us more effectively”; “I'd love to expand our use of the firm, so it would be helpful to know what else they do”; “They should be broadening their contacts here, developing relationships at higher levels in the organization, and increasing our awareness of the various areas where they could be of service to us.”

However, those suggestions are often accompanied by certain caveats: “Don't over-market me”; “Don't be intrusive ' walk a fine line between being proactive and reactive”; “Don't oversell, as too much selling creates a sense of distrust that can drive us apart rather than together”; “Don't try to sell me the next engagement before completing the present one.”

2. Perceived As Trusted Adviser

The perception of trust must apply not only to the lead partner, but also to the firm. Accordingly, the client must be made to feel it is important. Or, as a VP in charge of litigation remarked, “I get a very strong sense that the firm's philosophy is: 'We're here to support you and be loyal to you and provide the resources of the entire firm.' I sense their commitment ' they treat me as their #1 client.”

Because clients want to feel they can place their trust in the partner and the team that is serving them, candor and integrity are key attributes, as is camaraderie. A CEO observed, “The partner is really an excellent attorney who is creative and business oriented. I like working with him. I value his opinions and I trust him. He could be my friend.” Further, an associate General Counsel mentioned, “Because they've earned my trust and respect, I look to the firm for strategic advice and counseling regarding legal and business matters.”

3. Lead Partner's Involvement And Access to Necessary Firm Resources

Interviewees are quick to comment on the lead partner's availability or lack thereof, as well as his/her degree of familiarity with the issues. In addition, “bench strength” is often a critical factor in a client's assessment of a firm's effectiveness, especially for important matters or cases. Hence, the lead partner's clout within the firm coupled with his/her ability to marshal the appropriate resources and expertise on a timely basis is often the difference between satisfaction and dissatisfaction.

Therefore, the significance of the lead partner's role and responsibility should not be taken for granted. The following is representative of relevant client feedback we have received: “We don't stick with one law firm. We look very carefully to pick the right firm for the right case. It depends mostly on the lead partner. And we feel size is secondary to ability to handle the matter in a timely fashion and with the proper resources. But the lead partner is the key. We expect him or her to oversee the engagement, be familiar with all significant aspects of it, be appropriately visible and involved, and provide access to necessary firm experts. He or she should also spend time with our key engagement personnel, be familiar with their relevant goals and objectives, and discuss with them the key issues involved, including matters related to staffing by firm personnel and ours.”

4. Coordinated Service Delivery/Project Management

As this point, a brief discussion of the Client Team concept is probably appropriate. As with cross-selling, the concept of client teams implies the involvement of two or more practice areas in the service of a single client. Presently, it appears that the vast majority of AmLaw 100 firms have established client teams for at least their key clients.

Beyond being composed of team members from various practice areas, these client teams may also be populated with firm personnel from different industry groups, offices and countries, working on a variety of cases and matters. Accordingly, to be successful, the client must be convinced that the firm has a process that will ensure effective coordination and control over all that diverse effort, including budgeting, billing and fees. Generally, interviewees have expressed a preference for “a single point of contact for management of all the assignments and also any new business initiatives. There should be one person at the law firm accountable to us. But we want that partner to exhibit leadership and other management skills. Furthermore, particularly with regard to overseas assignments, the team should be sensitive to differences in culture and style as well as our and their personnel's levels of competence. Finally, regardless of where the work is being done, we want to feel we're dealing with people who are all part of the same firm.”

It should be noted that there are some interesting variations of the client team concept. One of these relates to situations where the client dictates the composition of the team by drawing upon personnel from different law firms and having them work together on a specific matter or case. As one interviewee stated, “It is not unusual for us to have two firms involved on a specific assignment. It is also not unusual for this to generate some tension and resistance between the firms. However, once we decide that's how we want the case handled, both firms had better get with the program and make it work. One firm wanting to be king of the hill is not acceptable.”

And, of course, there are more traditional situations where firm and client personnel share responsibility. As one GC stated, “Our people work together with the firm's personnel on [internal] clients. And we work as one team.”

5. Primary Focus on Client's Needs and Interests

Any cross-selling initiatives should appear to be motivated solely with a view to benefiting the client rather than the firm. The client's reaction should be: “They give the impression that my interests are more important than theirs. In other words, I believe that their need for greater billing opportunity is secondary to my need for the services they're recommending.”

6. Favorable Competitive Position

In the present environment, firms should anticipate that there will be greater competition for new work and fewer sole-source engagements, as clients do not want to rely too heavily on any one firm and wish to obtain various points of view. (See also prerequisite 8. below, regarding competitive fees.) But, as one of the interviewees admitted, “While we prefer to spread the work around, if I could have only one firm, it would be [this firm]. The GC is impressed with their commitment to our success and their results, as are other members of Management.”

There is little question that clients will contend that, more than anything else, they consider value as a key distinguishing factor. Some examples: “I get better value from [this firm] than from any other firm, and it's value they provide, more than just getting results”; “In terms of value, they provide a consistently high level of quality work along with creativity and a balance of skills that's hard to find, all of which makes the firm unique”; “Their rates are reasonable compared to the high value received.”

And, of course, there's nothing like a client feeling s/he's dealing with those considered to be the best: “This is the best team I've worked with. They are dedicated, committed professionals whose efforts for us have been extraordinary. [And] one of the partners is the best guy I've worked with in my career.”

7. Lead Partner's Confidence in Other Partners and Practice Areas

A key requirement for effective cross-selling is the ability to adequately assess not only the client's needs for the services being cross-sold, but also the firm's ability to meet those needs. Furthermore, as indicated in prerequisite 3, above, the client will expect the lead partner to oversee and be appropriately available and involved with any cross-sold services for as long as necessary.

Therefore, the cross-selling partner should have adequate understanding of the services s/he's attempting to cross-sell and, more importantly, have confidence in those who will be brought in to provide those services. But, too often we have heard partners express reservations such as the following: “My relationship with the client couldn't be better. Introducing this new service won't improve it. But it sure as hell could jeopardize it.” Such an attitude is sometimes exhibited by partners primarily concerned about losing proprietary control over their clients. In other cases, however, it may be justified where the lead partner is not convinced that adequate expertise exists within the firm, or as one partner stated, “Just because he's my partner doesn't mean I'd recommend him to my clients. I'd have to be satisfied as to his level of expertise and ability to fit in.”

In situations where there is a client need in an area where the firm has insufficient expertise, the best approach is to acknowledge that fact and then recommend an individual or firm for the client to contact. As one interviewee mentioned, “I was impressed by the partner's admission of lack of competence in certain areas where I was thinking of using his firm or recommending his firm to others.”

8. Competitive Fees

As mentioned in my article on Alternative Fee Arrangements (“AFA”) that appeared in the July 2009 issue, many clients are facing severe cost constraints, so partners should be sensitive to this in proposing for new work by: 1) providing rates and/or fee arrangements that are competitive; 2) clarifying the firm's policy regarding fees and discounts; 3) making realistic estimates of the amount and timing of any benefits the clients will realize; 4) investing in the relationship, as clients react very favorably to free service; and 5) indicating a willingness to “partner” with the client by sharing the risk ' i.e., have “skin in the game.”

Since the partner will be dealing with an existing client with regard to the cross-selling of services, the approach with regard to such areas as “fees and discounts” and “investing in the relationship” will presumably be different than if a completely new client were involved. Nevertheless, keep in mind the admonition from one of our interviewees: “Cost is key. There's enormous pressure here on costs. For example, we had to lay off people this past summer. Law firms could be doing a better job in the cost area by using less expensive personnel, such as more use of paralegals, or not charging for summer associates or first-year associates, or not using such high-billing-rate lawyers to do certain aspects of the work.”

More specifically on the subject of discounts, an interviewee claimed, “Everyone gives discounts and they range from 15% to 20%.” Another alleged, “While the firm is efficient and the fees are reasonable in terms of the quality of work provided, the value of that doesn't stand out versus another firm's 20% discount, which is very visible to those above me.” Unfortunately, some apparently believe that discounts speak louder than value. And this comment from a CEO: “I know of others who will offer discounts to get our work. ' The firm has to appreciate that we take pride in being a low cost and efficient producer with a very cost-conscious company culture.”

On a slightly more positive note, an SVP and GC remarked, “Even though they are a top firm and have high rates, their pricing is excellent and their efficiency is remarkable. And they'll agree to alternative fee arrangements or whatever it takes. They're very committed.”

Much has been written about firm size as it relates to fees. But it's unrealistic to generalize as the following comment by the head of real estate for a Fortune 500 company points out: “I might prefer a smaller firm because I presume they have lower hourly rates. But even low hourly rates must be coupled with efficiency. I look for the best service at the right price. ' Some firms have become so expensive, it's absurd. ' Firms must be reasonable with us when it comes to fees.”

And a final comment about budgeting, which has assumed greater importance and visibility in this cost-conscious era, and for which most firms have been subjected to criticism: “All firms always come in with too low an estimate despite the fact they should have the ability to do much better based on their experience. But more important is when things occur that change the original estimate. Then, the first time I normally learn about it is when I get the bill, and that's not acceptable.”

9. Familiarity with Client's Procurement Process

The following representative comment is worth noting: “By considering and using several firms, we get a better result than by giving one firm all the work all the time.” But, despite the general preference to have a stable of firms to use and choose from, at least one GC we interviewed appeared slightly conflicted. Agreeing with his CEO, he first indicated, “Economically, it's better to spread the work around.” Later on, he appeared to contradict himself by claiming, “I prefer one-stop shopping.”

Therefore, regardless of the espoused philosophy as to the use of outside counsel, it is imperative for the lead partner to understand the client's actual selection process and the relevant criteria used, and then to develop relationships with those important influencers and key decision makers who are involved in the hiring, retention and termination of outside counsel.

As part of the process for selecting outside vendors, many companies require involvement of their procurement department personnel. It is important to know their role and influence in the selection of professional services firms and who will have the final say. Understanding their criteria is also essential. In other words, is there a difference in their mind between the acquisition of legal pads and legal services?

The following excerpts are indicative of a few of the different approaches companies take:

• “The GC is the key decision-maker and he has his own stable of firms that he calls upon and with whom he has built historic relationships over the years.”
• According to the VP in charge of litigation, “I choose the outside counsel. I need more than one firm to choose from in case of conflict issues. I have done beauty contests and will continue to include the firm in them. And I don't do this to piss them off. It's just a good idea to test other firms' strategies and thinking. While the firm is our preferred provider, we're always measuring them versus others.”
• The head of real estate stated, “In the price-value equation, price is more important because the low price sticks out and the value is harder to quantify and may not be realized for years. Therefore, outside counsel needs to appreciate the politics in an organization and target to the right levels with the right combination of terms.”
• “The firm has been appropriately proactive. They became aware of our need for help and approached us with an offer of assistance. Subsequently, other firms also offered, but we picked them because they were the first.”

While selection criteria and the RFP process are important aspects of cross-selling, an in-depth discussion of these would be beyond the scope of this article.

Getting Started: A Cross-Selling Assessment

So is cross-selling really optional any longer? Or has there been a wake-up call to focus on those necessary elements that will place your firm in a position to satisfy more of your clients' needs, and quite possibly in areas where you may not have served them before? As you ponder these two rhetorical questions, you might be interested in a comment from the Ark Group's promotional copy for an April 2010 forum in New York City that claimed: “Over the next few years the legal landscape will be dramatically reshaped ' and for many organizations, [it's] time to recognize and acknowledge the forces that are shaping the industry as these changes will most certainly impact the way corporate law departments approach and buy legal services.”

If most firms actually do not cross-sell well, as indicated above, now may be the opportune time to attempt to stand out
from the crowd and be positioned to gain from both cross-selling and the convergence process. To get started, you can perform a relatively quick and dirty cross-selling assessment. On a client-by-client basis for each of your firm's key clients assign pass/fail grades to each of the following cross-selling prerequisites:

• Responsible for Important Cases or Matters.
• Obtained Favorable Results.
• Advantageous Competitive Position.
• Supporters/Promoters/Repeat Buyers Who Are at Least Key Influencers.
• Positive Visibility at the Decision-Making Level.

Then, for those clients with a “pass” grade for each of the above five prerequisites, your next step will be to determine the most appropriate proactive initiatives ' or sales strategy ' that will result in augmenting your portfolio of necessary services rendered to these designated clients. All the best!

Donald E. Aronson is CEO of D. E. Aronson Associates LLC and a member of this newsletter's Board of Editors. Don's firm conducts market research by interviewing executives of professional services firms' key clients with a primary focus on client feedback. Located in New York City, he can be reached at 212-874-4181 or [email protected]. Copyright ' 2010 by D. E. Aronson Associates LLC.