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April 21, 2008

Solo/Small Firms Win Big Clients on Value - Not Price

Marcie Shunk of BTI Consulting wrote a powerful article for The Complete Lawyer called, "Welcome to the Age of the Smaller Firm" where she discusses how smaller firms are quickly becoming favorites on the short lists of law firms selected by the Fortune 1000. 

Surveys conducted over the past seven years show clearly that client service is king...not price.

Client service is one of the most powerful advantages smaller law firms are using to win over large clients. In an environment rampant with dissatisfaction (just 34.6% of corporate counsel recommend their primary law firm first) smaller firms are distinguishing themselves through superior communication, client focus and value.

Each year, BTI asks more than 250 corporate counsel to tell us which law firms stand out as the absolute best in 17 activities that are critical to the law firm-client relationship. Smaller law firms consistently outperform their super-sized peers in the four activities that truly differentiate a law firm in the eyes of clients:

  • Client focus
  • Understanding the client’s business
  • Providing value for the dollar
  • Commitment to help

Smaller law firms also stand out in the two problem-solving skills that are essential to establishing solid relationships: handling problems and dealing with unexpected changes.

Moreover, smaller law firms have raised their profile in several realms historically reserved for larger law firms including breadth of services and bringing together national resources (though they still lag their bigger competitors).

The client service advantages offered by many smaller law firms are winning the kudos—and dollars—of in-house counsel at top companies. Corporate counsel applaud the attention they get from smaller firms, as well as the feeling that their law firm is truly dedicated to helping them achieve their business goals.

Value: It's Not Low Rates

A component of client service, value earns independent distinction as an advantage for many smaller firms. Nearly half of the law firms corporate counsel recognize as best at providing value for the dollar are outside of the top 200. Yet it is not simply a matter of rates that places these firms at the top of the value list. Rather, corporate counsel laud smaller firms for their:

  • Practical approach
  • Superb communications and updates
  • Wise staffing decisions
  • Keen sense of risk and reward
  • Talent at articulating business stakes in client-friendly terms

All of these drive value in the eyes of corporate counsel.

This exceptional ability to deliver high value is one of the factors that helped vault smaller firms to the forefront of client short lists. It is also one that, in conjunction with client service, will help keep them there. Law firms that deliver value are, according to corporate counsel, a hot commodity. 30.1% of corporate counsel report that finding a law firm that delivers better value is one of their top unmet needs for 2008. To the extent that smaller law firms can continue to distinguish themselves in this arena, they will be well-positioned to maintain their current advantage over big name competition.

What Can We Learn From The Little Guys?

The advantages of smaller law firms are wide and varied, according to the feedback of hundreds of clients. Yet each of them finds their strength in a single place: Differentiation.

Whereas many of the large, national law firms have grown increasingly similar to one another in their breadth, scope and reputation, smaller law firms have managed to represent unique characteristics that help them stand out in the eyes of corporate counsel. We can all learn from their ascent into the short lists of the world’s largest companies.

Sometimes we hear the word 'differentiation' and we don't quite get what that means.  Differentiation is really listening to complaints and doing the opposite of what is causing the complaining.  If you hear often enough that clients are not satisfied with not getting phone calls returned, bad attitudes, not feeling important...then overcharging, you are not hearing 'my lawyers are overpriced.'  You are hearing 'I'm not getting the kind of service I was willing to pay for.'  So, you take this potential client who was willing to pay and market to them they will receive what they have complained they did not with their current lawyer.  This creates that elusive 'value' you also hear so much about.

Differentiation is also about presentation.  If you are technologically forward market this.  Market how it enhances the client's experience when working with your firm.  Showcase how it adds to the client experience because you understand and have listened to the client when they express their needs when hiring a lawyer. Market the nimbleness of your solo practice, your one-on-one connection with the client and attention to their goals. 

It's not about price.  It's about a client not getting what in her mind she paid for.  Yet lawyers bring their own prejudices about pricing, their own self-esteem issues believing they are not worth it, infuse their own morality to their pricing structure.  And thusly, they believe pricing is the number one factor in the client's selection process.

Pricing is part of the equation, but it is wrongly placed in first position for many solo and small firm practitioners.  If you listen to what your clients need and you are ready, willing and able to satisfy what they deem valuable in an attorney/client relationship you will be able to price yourself properly to make an enjoyable living while servicing the clients you choose.

Do you have an opinion about pricing?  Let's discuss.

Links of Interest:  In a Weakening Economy, Will BigLaw......

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