The meaning of value for the client of a legal firm
The "value" for the customer is the difference between the willingness to pay and the real price for acquiring the product or service, for the company it would be the difference between the sale price and the cost of production.
How can we generate greater value for the customer? There are two basic ways of doing this: As suppliers of a product or service, we can try to increase the willingness to pay for the customer, so that the value contributed by him is greater than in the initial condition. The second option would be to lower the sale price, so that the customer appropriates a larger portion of the value generated.
Higher value to the customer does not necessarily mean that the supplier should charge a lower price for their service or product, or that the customer expects a lower price, In each industry there are a series of value drivers that can characterize the product or service and that are appreciated by customers in general.. These are factors that increase the customer's willingness to pay and, therefore, the value that the customer can appropriate, as long as the supplier does not increase the price.
What are these drivers of value to clients of a law firm? Since 2009, the Association of Corporate Counsel (ACC) has developed a value index, which is a systematic way of measuring what the client really values of law firms. Through this tool, six key drivers of value have been identified:
1. Understanding of the client's objectives
It refers to the knowledge of the objectives and expectations of the client, beyond winning a single case, winning an isolated case, above all it is relevant to extensive and recurrent legal advice. They expect proactivity from their legal advisers, to help them solve problems, but also to anticipate them. The client expects his lawyer to stay in contact, proactive support on a day-to-day basis.
2. Efficiency in process management
The client expects the firm to deliver results with a reasonable use of time and financial and organizational resources. Continuous improvement processes need to be created and communicated to the client so that they have that image of efficiency. It is an area in which North American law firms are currently being more active, incorporating technology to automate processes, creating formal knowledge management processes,
3. Predictability of the final cost
Accuracy and clarity in the total cost of the legal service. It is something that applies particularly to the subject of professional services. We are naturally averse to uncertainty. We observe greater pressure from customers for greater use of fixed payment methods, not hourly ones. Every time we are going to observe more alternative billing modalities.
4. Legal “Expertise”
According to the ACC, this is the minimum condition for legal firms to be considered viable providers.
Refers to formal and informal communication flows, such as response times for a customer inquiry. They expect attorneys to be a proactive communicator, anticipating questions and problems, and proactively and consistently offering solutions.
6. Obtaining results
It is the most important of all. This is what top management appreciates the most. It is not necessarily winning the isolated case or understanding the details of the process, but the way in which the executive understands that value is the impact that the result can have on the business, how much the legal service of the firm saved him or how much made him win. To the extent that we can translate these results into more tangible, monetary terms, we believe that the client will appreciate it very much.
Excerpt from the webinar "The meaning of Value for the client of a legal firm", dictated by Professor Octavio Martínez Argüello, from our International Diploma in Business Administration for Lawyers - DANA program.