Publication

How can a law firm generate value?

May 30 2017
Executive Education INCAE

“I need you to be my eyes and my ears in the market. I want you to give me a five-minute call and let me know what's going on, "said business expert Kevin Hasset, paraphrasing a corporate high command in a request for services to a law firm.

This function, an ideal in the service of a legal firm, can only be fulfilled if the team of lawyers fully understands the client's objectives, beyond winning a legal case or complying with a simple diligence. Ultimately, a value that is trading on the rise in hiring is proactivity, the ability to anticipate problems.

Thus, the client will be able to translate the value given by a legal signature into numbers. You will be able to say how much you earned thanks to your services or how much you stopped losing, an unavoidable sum when weighing the obtaining of results, undoubtedly the most important factor when hiring a law firm. This is explained by Professor Octavio Martínez, consultant in business strategy and member of the Faculty in the International Program Diploma in Business Administration for Lawyers - DANA, at INCAE Business School.

After remembering that there is necessarily a greater willingness of the client to pay for a service when he attributes more value to it, Martínez breaks down the six value drivers that are most appreciated in the market for legal firms. Several of them are referenced by the Association of Corporate Counsel in the United States.

The first by importance is the one we mentioned, obtaining results. What the client wants is for the firm to bear fruit, for it to work for his business, but this is actually the sum of other valuable drivers worth listing.

The first of them is the one we refer to in the Hassett quote: understanding the client's goals, know your goals, your market and your methods, especially in long-range legal advice.

Another factor is the service efficiency, an area in which law firms in general have opportunities for improvement, especially in cultural settings that are unlikely to beat the clock. Incorporating technology, creating processes to transfer information between offices or partners, or making awards for efficiency are some of the possibilities that can be tried, in addition to try joining a Project Manager to verify correctness in planning and execution.

This control over the process links another value generator: predictability in the final cost of the service. Professor Martínez recalls that humans and uncertainty do not usually get along, even less in business. Setting the hourly rate is the usual, with the problem that there is hardly ever an approximation of how many hours of service the customer will end up paying. Since 2009, as a result of the economic tightening generated by the crisis, companies have pressed more for fixed payment methods that reduce nervousness and the feeling that the balance will be favorable at the time of obtaining the results.

This will be an important factor when evaluating the service and the possibility of getting out of “word of mouth”, one of the main methods to make yourself known in the market. Before, however, it will be essential to have a proven expertise, which gives the client peace of mind and makes him see himself as a viable supplier.

Part of the good name is know how to handle communication with the client effectively and productively. A direct message will always be appreciated and Professor Martínez recommends the direct route, be it with a telephone conversation of a few minutes, with an appointment for coffee or with a quick visit. The method of e-mails to notify a result of a legal diligence or issue a recommendation is no longer attractive, stressed the specialist.

Is it necessary then to have a professional with managerial knowledge in charge of the legal form? 

Developing values ​​with the client requires some administrative sophistication. Most value drivers have to do with managerial tools. How to generate internal business processes, how to convey the message of efficiency and how to be adept at reducing budget variability. How to communicate systematically and others.

In addition to reputation, how can the firm make it clear that it has obtained results?

If the client is corporate, top management always wants to know the financial impact. Hopefully it can be translated into numbers, at least in estimates.

How do you know if a firm has the necessary or desirable expertise?

Of course, a lot is reputation and word of mouth, although some advertising can also be useful to create that brand, always based on results. 

What is the profile that the legal firm administrator should have?

There is no recipe. Some lawyers become managing partners and they drive well. Also legal firms of a certain size where the professional is an administrator. What you should have is knowledge of management issues.


International Diploma Program in Business Administration for Lawyers - DANA

Beyond the legal domain, attorneys must possess managerial skills to successfully run their law firms and know how to comprehensively advise their clients. That is why INCAE Business School, in conjunction with Georgetown University, has developed an international program that seeks to provide professionals in the legal field with the tools to better understand the needs of their clients and develop an innovative project.
Next edition: July 11, 2017.

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