Client Audits

Preventing small problems from escalating into larger relationship issues ' If problems exist, once identified, they can now be fixed before they fester.

Learning what the firm does well ' Knowing the things that stand out in the client's mind as particularly valuable will encourage continued repeat performances.

Unearthing undetected opportunities and spontaneous invitations ' Once client executives start talking about the firm, besides offering their evaluative comments, they often also address the company's future legal needs and ask for further information about the firm's capabilities.

Converting good clients into great clients ' The results of a Client Audit will translate directly into specific actions that the client-serving team can take to enhance the value of the firm's services and increase client loyalty.

Determining and improving competitive positioning ' Client executives will usually identify who the company uses for particular types of matters and compare the firm to other competing law firms.

How Are Client Audits Related to Firm Strategy?

Revenue growth of key clients is a vital component of any strategic plan ' Because adding new clients might be hard to do, the growth of existing clients can become a primary avenue of expansion.

Good risk management practices include protection of the firm's key client relationships ' Potentially having a higher impact on the firm than a casualty loss or even a malpractice suit, the loss of just one key client could have significant repercussions. Hence, Client Audits can represent one aspect of firm management's due diligence.

Client satisfaction is important to the firm's reputation and its internal culture ' Outstanding client service, as attested to by the firm's clients, is an effective competitive differentiator and can be translated into performance standards for the firm's lawyers.

What's Involved in a Client Audit?

Conducted by an independent third party ' A consultant is used in order to maximize candor during the client interviews, bring to bear a consistent and proven methodology, minimize intra-firm politics ' and to get the job done. Often, where firm partners have been assigned the task, they run out of time and the interviewing schedule lags behind or is ultimately abandoned.

Typically, four to six executives are interviewed at each key client ' Candidates for interviews might include all the key “touch points” at the client including key decision makers and key influencers involved in the decision to hire, fire or expand the use of law firms.

Interviewees should include members of the law department as well as line business executives ' Key players in the relationship with the law firm often include persons outside of the law department.

Interviews are conducted primarily in-person and in an open-ended fashion ' Phone interviews are used only if the cost/benefit for in-person is not advantageous, for example, for some foreign locations. The interviews are not of the “20-questions” type and no agenda is circulated in advance. Rather, the interviewer lets the interviewee set the agenda and then facilitates the client executive in telling his/her own “story.” During the course of the interview, all the client serving team's issues are explored and a number of quantitative performance measures are gauged.

The client-serving team and the firm's business development professionals are central to the process ' The firm's CMO and, usually, designated members of his/her staff orchestrate the proceedings, including: researching background information; conducting the orientation meetings with the client team and consultant; and directing the team in developing a Client Service Expansion Plan.

Firm Chair/MP or designated senior partner is in charge ' This person will authorize and oversee the entire Client Audit program.

Which Clients Should Be Included and How Will They React?

Top 10 to 20 clients ' These are the clients that generate the largest volume of revenue and the ones that the firm most wants to retain and expand.

Clients with Major Upside Growth Potential ' Good candidates for Client Audits are newly acquired clients, fast-growing companies or those at which, for any number of reasons, the firm may have the opportunity to dramatically improve its position.

A big payoff of client audits is the positive reactions of those interviewed ' The results of the Audits are generally positive. Clients are usually impressed and flattered that their lawyers would ask them about the firm's performance and related issues. And the Audits demonstrate a “we care” approach that is so often not communicated in a lawyer/client relationship.

What Else Is Important to Know About Client Audits?

Partners can be defensive at first ' Lawyers dream up any number of negatives regarding the Client Audits, including: clients are too busy; they won't like it as a matter of principle; and, “I already know what my clients think.” All these objections and fears can be true, but can be overcome if the Client Audit program is properly conducted.

Client audits do not replace the need for lawyers to meet with their clients and for the firm Chair/MP to make visits ' However, such communications and meetings are made much easier after a Client Audit has been conducted because certain subjects will now be “out on the table” and firm personnel will be much more informed, in advance, about the client's issues.

Major corporations utilize both customer feedback methodologies and supplier reviews ' Hence, many of the firm's clients are very familiar with and would endorse and appreciate the firm's initiating a procedure such as a Client Audit.

Client relationship management best practices can be leveraged ' After some number of Client Audits have been completed, “lessons learned” and other “do's and don'ts” can be synthesized from the feedback and presented to the full partnership to provide further training and development.

Client audits are different from a “client survey” ' Client Audits involve a number of interviews at any given client, with the interviews being conducted in an in-depth manner and encompassing all subjects relevant to that client's satisfaction and loyalty. In contrast, a Client Survey typically involves interviewing one representative at each of a sample of clients and addresses more generalized subjects, for example, the firm's overall image in the marketplace.

A “pilot project” could be the first step ' The firm could initiate a pilot project involving the clients of a few secure, team-player, volunteer Relationship Partners. With this learning complete ' plus some feedback provided by the clients and Relationship Partners regarding their experiences with the process ' the firm can then proceed to ramp up a full-scale Client
Audit program.

This article first appeared in Marketing the Law Firm, a sister publication of this newsletter.

Bruce D. Heintz is president of Heintz Consulting LLC, where he advises law firms in strategic planning, governance and management, profit improvement, partner compensation, mergers and acquisitions, and client relationship management issues. He may be reached at [email protected]. Gary R. Garrett, Ph.D, has been involved in professional services management for more than 30 years as a chief executive officer, expert witness and management adviser specializing in mergers and acquisitions; strategic planning; management structure and organization; and partner, practice group and office planning/performance and accountability. He may be reached at [email protected].

Client Audits have proven to be a valuable tool in support of a law firm's strategic plan and related client relationship expansion efforts. Typically, each Client Audit is a significant undertaking, and focuses on gaining actionable feedback and implementing revenue and service enhancement initiatives in any of a firm's top 10 to 20 most important clients ' one client at a time.

What Are the Benefits?

Explicitly knowing what the client wants ' The feedback comes straight from the client executives, in contrast to hearsay or guesswork on the part of the firm's lawyers.

Preventing small problems from escalating into larger relationship issues ' If problems exist, once identified, they can now be fixed before they fester.

Learning what the firm does well ' Knowing the things that stand out in the client's mind as particularly valuable will encourage continued repeat performances.

Unearthing undetected opportunities and spontaneous invitations ' Once client executives start talking about the firm, besides offering their evaluative comments, they often also address the company's future legal needs and ask for further information about the firm's capabilities.

Converting good clients into great clients ' The results of a Client Audit will translate directly into specific actions that the client-serving team can take to enhance the value of the firm's services and increase client loyalty.

Determining and improving competitive positioning ' Client executives will usually identify who the company uses for particular types of matters and compare the firm to other competing law firms.

How Are Client Audits Related to Firm Strategy?

Revenue growth of key clients is a vital component of any strategic plan ' Because adding new clients might be hard to do, the growth of existing clients can become a primary avenue of expansion.

Good risk management practices include protection of the firm's key client relationships ' Potentially having a higher impact on the firm than a casualty loss or even a malpractice suit, the loss of just one key client could have significant repercussions. Hence, Client Audits can represent one aspect of firm management's due diligence.

Client satisfaction is important to the firm's reputation and its internal culture ' Outstanding client service, as attested to by the firm's clients, is an effective competitive differentiator and can be translated into performance standards for the firm's lawyers.

What's Involved in a Client Audit?

Conducted by an independent third party ' A consultant is used in order to maximize candor during the client interviews, bring to bear a consistent and proven methodology, minimize intra-firm politics ' and to get the job done. Often, where firm partners have been assigned the task, they run out of time and the interviewing schedule lags behind or is ultimately abandoned.

Typically, four to six executives are interviewed at each key client ' Candidates for interviews might include all the key “touch points” at the client including key decision makers and key influencers involved in the decision to hire, fire or expand the use of law firms.

Interviewees should include members of the law department as well as line business executives ' Key players in the relationship with the law firm often include persons outside of the law department.

Interviews are conducted primarily in-person and in an open-ended fashion ' Phone interviews are used only if the cost/benefit for in-person is not advantageous, for example, for some foreign locations. The interviews are not of the “20-questions” type and no agenda is circulated in advance. Rather, the interviewer lets the interviewee set the agenda and then facilitates the client executive in telling his/her own “story.” During the course of the interview, all the client serving team's issues are explored and a number of quantitative performance measures are gauged.

The client-serving team and the firm's business development professionals are central to the process ' The firm's CMO and, usually, designated members of his/her staff orchestrate the proceedings, including: researching background information; conducting the orientation meetings with the client team and consultant; and directing the team in developing a Client Service Expansion Plan.

Firm Chair/MP or designated senior partner is in charge ' This person will authorize and oversee the entire Client Audit program.

Which Clients Should Be Included and How Will They React?

Top 10 to 20 clients ' These are the clients that generate the largest volume of revenue and the ones that the firm most wants to retain and expand.

Clients with Major Upside Growth Potential ' Good candidates for Client Audits are newly acquired clients, fast-growing companies or those at which, for any number of reasons, the firm may have the opportunity to dramatically improve its position.

A big payoff of client audits is the positive reactions of those interviewed ' The results of the Audits are generally positive. Clients are usually impressed and flattered that their lawyers would ask them about the firm's performance and related issues. And the Audits demonstrate a “we care” approach that is so often not communicated in a lawyer/client relationship.

What Else Is Important to Know About Client Audits?

Partners can be defensive at first ' Lawyers dream up any number of negatives regarding the Client Audits, including: clients are too busy; they won't like it as a matter of principle; and, “I already know what my clients think.” All these objections and fears can be true, but can be overcome if the Client Audit program is properly conducted.

Client audits do not replace the need for lawyers to meet with their clients and for the firm Chair/MP to make visits ' However, such communications and meetings are made much easier after a Client Audit has been conducted because certain subjects will now be “out on the table” and firm personnel will be much more informed, in advance, about the client's issues.

Major corporations utilize both customer feedback methodologies and supplier reviews ' Hence, many of the firm's clients are very familiar with and would endorse and appreciate the firm's initiating a procedure such as a Client Audit.

Client relationship management best practices can be leveraged ' After some number of Client Audits have been completed, “lessons learned” and other “do's and don'ts” can be synthesized from the feedback and presented to the full partnership to provide further training and development.

Client audits are different from a “client survey” ' Client Audits involve a number of interviews at any given client, with the interviews being conducted in an in-depth manner and encompassing all subjects relevant to that client's satisfaction and loyalty. In contrast, a Client Survey typically involves interviewing one representative at each of a sample of clients and addresses more generalized subjects, for example, the firm's overall image in the marketplace.

A “pilot project” could be the first step ' The firm could initiate a pilot project involving the clients of a few secure, team-player, volunteer Relationship Partners. With this learning complete ' plus some feedback provided by the clients and Relationship Partners regarding their experiences with the process ' the firm can then proceed to ramp up a full-scale Client
Audit program.

This article first appeared in Marketing the Law Firm, a sister publication of this newsletter.

Bruce D. Heintz is president of Heintz Consulting LLC, where he advises law firms in strategic planning, governance and management, profit improvement, partner compensation, mergers and acquisitions, and client relationship management issues. He may be reached at [email protected]. Gary R. Garrett, Ph.D, has been involved in professional services management for more than 30 years as a chief executive officer, expert witness and management adviser specializing in mergers and acquisitions; strategic planning; management structure and organization; and partner, practice group and office planning/performance and accountability. He may be reached at [email protected].