Connecting the Dots: Carrying Costs, Outsourcing, Contract Lawyers and Working from Home

Within hours of publishing my article reacting to Yahoo's reversal of a longstanding work-from-home policy, I was engaged in a lively debate with a law firm managing partner regarding the benefits of a distributed workforce. He posed a simple question, one that I didn't fully address in my earlier article:  Why would a law firm allow any employees to work offsite when collaboration and, more importantly, instant availability when clients call, is so critical? Interestingly, many of his points mirrored those of another law firm managing partner from a separate discussion last week who scoffed at the mere notion of using contract lawyers or outsourcing in his firm, for fear that quality would suffer. The two issues are very much related and I appreciate the opportunity to connect the dots.

Companies are in the business of making cars or furniture or software or bed linens or rust-resistant rivets used on ocean liners or x-ray film or lunch meat or ships in bottles or countless other offerings. Most businesses find forays into non-core areas dilutive to earnings, so they hire others to mow the lawn at the company headquarters and manage the company cafeteria or make the coating that they apply to the rivets and so on. Every business eventually encounters a need for legal advice yet few have lawyers on staff. And those companies with enough scale to have in-house lawyers generally hire quarterbacks to manage outside specialists rather than to hire one lawyer for every specialized legal need they might ever encounter.  In a word, the legal needs are outsourced -- first to in-house counsel, when available, and then to outside counsel. The primary reason for existence for most, if not all, law firms is to serve as an outsourcing provider to clients who do not have and do not want to maintain this function as a core competency.

So the law firm leaders who immediately dismiss outsourcing as a tool in their own arsenal are short-sighted. If it weren't for outsourcing, many lawyers would not be nearly as gainfully employed. The reason outsourcing works is a simple economics term: carrying costs.  There is a recurring cost to establish and maintain any function, and some services are needed frequently enough that incurring this cost as overhead is more desirable than hiring one-off experts. But not every business reaches the same conclusion for each function. Some hire salespeople, others use third-party channel providers; some hire accounts receivables clerks, others rely on an outside agency to perform this task; some hire a full-time marketer, others bring in experts on an as-needed project basis.  Sometimes this "make vs. buy" decision is straightforward, other times the addition of an FTE (full-time employee or equivalent) is a big deal that requires deeper analysis.

Yet many law firm partners, especially in Biglaw, have become enamored with the idea of the "instantly hot" water supply -- you know the kind, no matter which faucet or what time of day, the moment you turn it on you get hot water without delay. "The ability to mobilize instantly and staff a complex matter literally overnight is our greatest asset," reported one law firm leader in an interview I conducted several years ago.  In layman's terms, law firms are like the supermarket with 20 checkout lanes, with every lane staffed and open at all hours, every day, all year, regardless of demand, just in case a client might call.  Upon closer inspection, however, we might find the law firm's checkout lanes staffed by guys who normally collect shopping carts in the parking lot, stockroom clerks, butchers and bakers, in addition to specially trained cashiers. This is the result of hiring untrained associates and making them available as a general resource to any partner that needs a body.

We've all been frustrated when forced to wait in line at a supermarket, everyone crowding into three checkout lanes while 17 remain closed. While this memory is vivid, the statistical reality is that we rarely face this delay at our busier stores because they employ statistical modeling called "queuing theory" to estimate peak and slack times, and they staff accordingly. No supermarket would be profitable if it incurred the carrying costs of staffing every checkout lane at all hours, and it would be similarly unprofitable if it constantly forced buyers to wait, which would drive buyers to seek alternatives.

What does this mean for our law firm leaders?  Clients do indeed call and request assistance on a moment's notice. But why not explore a model that allows the firm to quickly access scores, even hundreds, of well-trained, specialized, experienced lawyers, some of whom are nearby, some of whom are remote, all of whom are connected via high-speed Internet access to phones, computers and possibly video, but who prefer not to embrace the daily life of a Biglaw associate?  The carrying costs of the combined salaries, benefits, real estate, equipment, subsidized food and late night transportation of associate employees are enormous compared to the $0 carrying cost of for contract lawyers.  In some cases there will be higher transactional costs ramping up contract lawyers, but as the outsourcing providers have demonstrated beyond any doubt to in-house counsel who regularly hire them, the higher up-front cost is more than recovered by improving the quality of the work product and the reduction in repetitive rewrites, among other factors.  And, by the way, the traditional associate locked in the library for hours on end conducting research isn't collaborating as much as we think she is.

Now, before the ATL crowd overreacts, I'm not advocating the elimination of associates on the law firm payroll. But I am suggesting that many of the unhappy and unproductive associates who are on the payroll today would enjoy doing creative and challenging work from the comfort of their own home office, without the many distractions incumbent in working every day in a law firm, especially if making partner isn't in their future.

It's simple economics. Savvy law firm leaders long ago recognized the wisdom of outsourcing non-core back office functions. The progressive leaders have begun to embrace the use of work-from-home lawyers, contract lawyers and outsourcing firms to provide "instantly hot" services with lower carrying costs, and found that this approach can provide access to greater experience and more productive lawyers too. Whether or not you embrace a work-from-home policy that reduces your overhead while increasing productivity, or establish a network of contract lawyers to serve on a moment's notice, or contract with an outsourcing provider to fill specific needs on an ongoing basis, is a decision only you can make and only after reasoned analysis. You can cling to the notion that quality only results from the Ivy League-to-Biglaw-partner-track staffing model, and you can cling to the notion that 20 open checkout lanes at 3 AM is a wise allocation of resources, or you can apply some established business analytics to your own enterprise and make informed decisions. The choice is yours... until your clients make the choice for you.

Timothy B. Corcoran delivers keynote presentations and conducts workshops to help lawyers, in-house counsel and legal service providers profit in a time of great change.  To inquire about his services, click here or contact him at +1.609.557.7311 or at tim@corcoranconsultinggroup.com.

The Work from Home Calculus: Productivity + Inequality - Collaboration + Quality of Life - Cost

Yahoo's newish CEO, Marissa Mayer, recently reversed the company policy that allowed, even encouraged, employees to work from home.  This action has generated a lot of news copy, both for and against, and as is now the norm the masses are weighing in via social media.  Most views I've read tend to be stridently for or against working from home, with little middle ground:  one camp assumes such a policy encourages lazy people to watch Ellen all day while the hard workers toil; the other camp assumes such a policy extracts more output from workers who no longer know when the workday ends.  There are endless variations on the theme.  I first worked remotely in 1991 while living outside Boston for a Denver-based company, and since then I've seen every permutation and combination of work-from-home policy and I've seen both experienced and novice executives fumble with managing in such an environment.  My view is that such a policy is a simple study in microeconomics:  if you're clear what outcome you're solving for, the correct policy is easier to choose.  Wearing my former CEO hat, here are the issues I think about when deciding whether an employee may work from home. Inequality - Let's tackle this right up front. Few businesses can operate 100% virtually. This means that, sooner or later, some people will have to be centrally located and won't have the option to work remotely. Get over it. Your H.R. professionals will quake at the notion of treating employees inequitably, but that's just one of many reasons H.R. professionals rarely end up as CEO. The fact is, treating everyone the same is a stupid idea. Hersey and Blanchard in their Situational Leadership theory posit that people have to be managed differently based on their individual skill set and the task at hand. One person might need to be micro-managed for a task that another person can handle unsupervised.   As I've discussed previously, too often managers make decisions out of a misguided sense of fairness, whether it's cutting all budgets proportionally during down times without regard to profit contribution, or, in this case, refusing to allow a work-from-home policy because if we can't offer it everyone, then we can't offer it at all. Simply put, good leaders focus on what's right for the business and what's right for the individual, and when you have to break ranks and treat someone differently in order to achieve a better outcome, and you can do so without imposing undue hardships on the business, you act.

Productivity - Studies have shown that people are generally more productive when outside distractions are minimized.  I'd provide a few references here, but it doesn't take a double blind study to agree that limiting the interruptions of phone calls, sneezing co-workers, lengthy commutes, endless status meetings, emails, periodic fire alarm drills and long lunch breaks can lead to increased focus and output. In fact, as many companies have learned, those who work from home often fail to adhere to regular work schedules and often work far more than if they were sitting in an office or cubicle for 7.5 hours each day. But the key is to recognize which tasks can benefit from prolonged and isolated focus, and which tasks are unsuitable. I can't answer that for you, but I have enjoyed success asking my various teams to conduct a self-assessment and recommend which of their jobs could be performed remotely, and I've been pleasantly surprised at the candor and objectivity. And at the risk of beating a dead horse, I have rarely been impressed with my H.R. staff's assessments, primarily because so few of them understand the business, let alone individual job designs or tasks. Will some of your employees occasionally watch television, or duck out for a dentist appointment? Of course. But no workplace, even those with an open floor plan, prohibitions against personal phone calls and restricted access to social media, is fully productive at all times.  Also, if you or your managers are unable to hire responsible adults, then I question your own competence.

Collaboration - Technology exists that fosters virtual collaboration, whether it's the awe-inspiring Cisco Telepresence video-conference system, the document management systems allowing simultaneous annotation by multiple parties or business-oriented social media like Chatter or Yammer (although let's not get carried away with our virtual tools!)  Trouble is, many organizations invest in technology as if its presence alone will somehow change behaviors. The fact is, where there is a culture of collaboration, people will find ways, even inelegant non-technology ways, to interact; where there is no culture of collaboration, no technology will solve the problem (One example, law firm CRM, a technology asked to solve a problem lawyers refuse to acknowledge; here's another).  Some who work remotely will suffer from the lack of creativity and innovation sparked by interaction with others -- often spontaneous and unscripted and unrelated to the given task.  Salespeople who primarily operate independently and in the field, but who periodically need more brochures or contracts reviewed, can typically do so without ever setting foot in an office. Programmers who are constantly sharing code or who regularly need input from other teams writing code sets immediately upstream or downstream tend to perform worse when they delay collaboration until pre-set meeting times rather than simply getting up and walking two rows over to compare notes. Again, you'll have to assess the importance of collaboration in your own organizations, but don't underestimate its importance, even in jobs that don't ostensibly appear to benefit from it.

Cost - A former colleague of mine substantially raised his profile and career prospects by spearheading a controversial initiative to close all regional offices and send employees home to work, saving millions of dollars in office leases, equipment and presumed lost productivity from employee commute times.  Like many organizations, we talked of long-term strategy in our annual reports but spent most of the year focused on short-term performance, and make no mistake we saved a lot of money and boosted earnings for a few years through this initiative.  But be sure to focus on the net savings, once the transition costs are calculated. For example, in our case we had to purchase desktop computers or laptops for scores of employees, reimburse in full or in part for an extra phone line (this was before ubiquitous high speed internet access), and reimburse for hotel meeting rooms and countless Starbucks for confabs of small groups who needed to interact regularly. Our savings were still substantial, but your mileage may vary.  An economist might also point out that one man's cost savings is another man's cost shifting. For example, those who regularly visited customers were now required by IRS guidelines to treat their first and last appointments of the day as a commute, which is not typically a reimbursable business expense. The company saved a few bucks in the short run, but the employees devised ingenious solutions to limit their personal outlay by re-arranging their days (and impairing their productivity) in ways that we didn't anticipate. (For more on the cost savings vs. cost shifting debate, see this health care example.)

Quality of Life - An employee who was facing some troubling family health issues and who needed to be home approached me and asked if he could work from home.  The nature of the work he performed for me was pricing analysis, forecasting and modeling, and he could access all systems from home and join meetings by phone or, with sufficient time to plan, in person.  He was far too valuable to lose, and his remote working arrangement posed no burden to the company (other than feelings of inequity from other cubicle-bound colleagues), so I agreed.  For quite some time he was able to attend to his family issues and deliver a quality work product.  When his situation changed, he returned to the office, grateful to his forward-thinking employers for the opportunity.  Without question, the loss of income would have burdened him as would the loss of his specialized expertise have burdened us. It was an optimal arrangement.  For me, even when I was a HQ-based executive, I periodically worked from home in order to avoid the stress of my harrowing hour-plus commute on the highways of New Jersey.  Simple common sense suggests that, all else being equal, a happier employee is a more productive, stable employee.

Your own calculus may differ.  To me this is a fairly straight-forward linear programming equation.  Factor in the things that matter to you - cost, quality of life, productivity, collaboration, equality, etc. - weight the factors accordingly, determine specifically what you're solving for, and do the math.  If cost savings is what matters most, you may choose a different path than someone focused on employee retention or someone focused on a short-term max productivity to push a product out the door.  And don't invite the contribution of the silly protectors of the status quo, the H.R. staff, unless they can add demonstrable value.  Whatever you choose, make it a rational choice based on a variety of factors.  And if you choose to conduct this analysis at home on your comfy recliner while watching funny daytime TV, you have my blessing.

Timothy B. Corcoran delivers keynote presentations and conducts workshops to help lawyers, in-house counsel and legal service providers profit in a time of great change.  To inquire about his services, click here or contact him at +1.609.557.7311 or at tim@corcoranconsultinggroup.com.

New Group to Address Client Value - Pricing, Project Management, Process Improvement

Those of us who have spent years in the trenches helping law departments obtain more value from outside counsel, and helping law firms better profit while delivering more value to their clients, have long lamented the lack of an organized effort to share best practices with others facing the same challenges, particularly with regard to best practices in pricing, project management and process improvement.  Our wait is over:  the international Legal Marketing Association (LMA) announced the formation of a new "Client Value" Special Interest Group (SIG) with a charter to network, educate and share best practices among law firm, law department and service provider professionals who focus on pricing, project management and process improvement.  The SIG is one of several offered by LMA; the others focus on Competitive Intelligence, Small Firm/Solo Marketing, Service Providers, Social Media and Chief Marketing Officers. I've faced these issues from all angles -- in my role leading business development for a global law firm, I was constantly faced with drafting RFPs that were client-focused and priced to win while also maintaining law firm profitability; as a CEO and senior corporate executive, I was regularly battling the in-house legal department for more transparency on budgets and risk management, and hiring outside counsel who took a "you need us more than we need you" approach to client interaction; as an executive with several service providers, I've brought to market products and services designed to help law departments and law firms forge stronger and more collaborative relationships; as a management consultant, writer and frequent keynote speaker, I am constantly addressing audiences of in-house lawyers or private practice lawyers struggling with adapting to the enormous changes taking place in the legal profession.  One thread has been constant in every one of these interactions:  no one can do it alone!  It's critical for clients and providers to get and stay on the same page to ensure that both parties enjoy a mutual and financially lucrative relationship.

This issue of mutual advantage, in my opinion, has been lacking from many of the existing perspectives:  whether it's the standard client panel filled with self-important General Counsel providing endless anecdotes of law firm foibles, while simultaneously ignoring the fact that the their own internal corporate clients are just as unhappy with the law department; or the various caucuses of in-house counsel defining the new normal as "law firms made enough money, now it's our turn" as if their collaboration was somehow an ever-shifting zero-sum game; or law firm leaders who refuse to acknowledge the very real impact of economic forces on their practice; or my fellow consultants who have great depth of expertise to advise either law firms or law departments, but not both -- because they've never worked with "the other side" except in an adversarial capacity.  This era is ending.

My expectation is that the new SIG will is represent all stakeholders - lawyers from law firms and law departments, of course, but also business professionals managing corporate budgets, e.g., procurement; pricing experts retained by law firms to better link price, cost and value; vendors building tools to analyze and manage complex matters; business development and marketing professionals who are increasingly asked to differentiate law firms on factors such as budget predictability, use of alternative fees and project management rather than just size and practice mix.  What these professionals can do together is establish an ongoing dialog, define and improve industry metrics, better define for vendors what to build and why, and provide a roadmap and best practices for those who have been heretofore reluctant to join the fray.  Just as other industries have settled on standard technology formats, a common vocabulary, licensing protocols and educational tracks for newcomers, the legal marketplace can greatly benefit from such interaction.  (And for the occasional detractor who assumes any interaction between buyers and sellers or among competitors inevitably leads to collusion or anti-trust concerns, I say "You are more than welcome to remain on the sidelines and keep out of our way!"

So join me in congratulating the Legal Marketing Association for proactively embracing one of the critical four P's of Marketing (product, place, promotion, price) and launching the new SIG.  And join me in thanking the many busy professionals who have, informally and formally, collectively and individually, led these efforts prior to the formation of the SIG, most notably Toby Brown, Director of Pricing & Strategic Analysis at Akin Gump, who will head the new SIG.  Also, thanks to Aleisha Gravit, President of LMA, and Betsi Roach, Executive Director of LMA, for making this happen.  I look forward to a new chapter in the growing book about the business of law.

Full Disclosure: I am a member of the Board of Directors of the Legal Marketing Association and contributed to the effort to form the new SIG.

 

 

Timothy B. Corcoran delivers keynote presentations and conducts workshops to help lawyers, in-house counsel and legal service providers profit in a time of great change.  To inquire about his services, click here or contact him at +1.609.557.7311 or at tim@corcoranconsultinggroup.com.

On Guns, Liability, Societal Change and the Role of Plaintiff Lawyers

There have been a number of tragedies in the news recently, including the shooting at Sandy Hook school in Newtown, CT, the luring and shooting of volunteer firemen in Webster, NY, and the shooting massacre of moviegoers in Aurora, CO, among many others.  These events have provoked a national debate over America's relatively easy access to guns, with a particular hue and cry over those type of weapons designed for military action rather than for recreational hunting.

CNN newsman Piers Morgan, among others, has become a highly visible and vocal advocate for gun law reform (and has become a target for vitriolic attacks and an unrealistic grass roots effort to deport him as a result), sales of the assault weapon used in Newtown have skyrocketed and the FBI reports a record number of background checks -- necessary in many states for the purchase of handgun -- in late 2012.  The latter two are presumably a reaction to an expected tightening of gun laws.

I don't profess any expertise in Constitutional Law generally or the Second Amendment specifically.  However, it seems to me that the phrase "A well regulated militia being necessary to the security of a free state, the right of the people to keep and bear arms shall not be infringed" reflects the founding fathers dual beliefs that guns should be available to citizens and that such availability should be regulated.  Others have opposing views, and frankly unless or until we develop the technology to reanimate the founding fathers and inquire directly, we may never reach consensus.

Still, one cherished hallmark of a free society is to engage in vigorous debate, advocating for or against a view.  As the fictional President Andrew Shepherd once said:

"You want free speech? Let's see you acknowledge a man whose words make your blood boil, who's standing center stage and advocating at the top of his lungs that which you would spend a lifetime opposing at the top of yours. You want to claim this land as the land of the free? Then the symbol of your country can't just be a flag; the symbol also has to be one of its citizens exercising his right to burn that flag in protest. Show me that, defend that, celebrate that in your classrooms. Then, you can stand up and sing about the "land of the free."  (The American President, © 1995, Universal Pictures, Aaron Sorkin, screenwriter)

There is without question a troubling and growing trend of mass shootings using military-style assault weapons.  Do we blame the guns?  Do we point to insufficient mental health care?  Regardless of your particular stance on gun control, we can all agree that society benefits from a reduction in mass shootings.

I have no idea where the idea first germinated, but the Twittersphere has been abuzz of late with the novel suggestion to require liability insurance for gun ownership, in much the same way that automobile owners must carry liability insurance.  While such action wouldn't eliminate guns, it would shift the economic costs of misuse from society generally to those most associated with guns.

As Cornell economist Robert Franks said in a recent NPR interview, "Nothing in the constitution grants people the right to expose others to serious risk without compensation. Insurance sellers are skillful at estimating the risks posed by drivers with specific characteristics, and we could expect them to be similarly skillful at assessing the risks posed by gun owners."

But others are taking a different approach to drive societal change. Plaintiff lawyer Irving Pinsky has floated the idea of a massive lawsuit against the State of Connecticut for the Sandy Hook incident.  An interesting twist is that his client is reportedly a child who was not a victim, but a survivor who was traumatized as the events unfolded.  According to Pinsky, there are multiple additional parties who could become defendants as more evidence is uncovered. 

A spokesperson for Connecticut Attorney General George Jepsen responded that such a claim is misguided, and that "...a public policy response by the U.S. Congress and the Connecticut state legislature would be more appropriate than legal action."  Other responses to Pinsky's action have been livelier, including multiple death threats and a communication from the state's trial lawyer association scolding Pinsky for the timing of his action.  A local newspaper discusses the folly of suing the state rather than Newtown, the municipality which has domain over the implicated school. 

The blogosphere and many Facebook walls have exploded with commentary declaring the lawsuit frivolous and equating it with other misguided tort actions - notably the McDonald's hot coffee lawsuit in which a woman received nearly half a million dollars in damages after spilling hot coffee on herself.  But as with most issues that engage and enrage the populace, there is more nuance and complexity than meets the eye.

In the McDonald's case, the jury was shown evidence that McDonald's had multiple opportunities to address a clear trend of scalding coffee injuring customers, yet business leaders chose, based on a microeconomic cost-benefit analysis, to quietly settle cases as they occurred rather than implement a company-wide solution.  Similarly, in the early part of this century ample evidence, including statements from Ford engineers, established that the auto manufacturer was explicitly aware that its SUV had a tendency to roll over and kill passengers, yet Ford's leaders chose, based on a microeconomic cost-benefit analysis, to quietly settle cases as they occurred rather than implement a company-wide solution.

British Petroleum's Deepwater Horizon oil spill into the Gulf of Mexico was reportedly based on a series of cost-cutting decisions and a lack of a system to ensure oil well safety.  The space shuttle Challenger disaster shares some of the same characteristics, namely that groupthink decisions coupled with flawed economic analysis tend to underestimate the likelihood and impact of an adverse outcome.

We've leapt from gun control to hot coffee to astronauts.  What, you may ask, is the connection?

Simply put, organizations consistently fail to properly predict disasters.  Combine the inherent optimism of leaders with a tendency to underestimate financial risk, and most businesses will peg the expected value of an adverse outcome at near zero.  (At its core, Expected Value is the probability of an outcome multiplied by its financial impact.)  Government, via its regulatory bodies, almost by design enacts rules and guidelines only after a recurring pattern of incidents require it.  Note that the transportation, energy and food industries are regulated, yet this failed to prevent the aforementioned incidents.

In our legal system, a necessary role of plaintiff lawyers is to identify these gaps, publicize them and, where possible, change the underlying economics of organizations' Expected Value calculations.  Consider the optimistic McDonald's executive who calculated the bottom-line impact of a few hundred hot coffee lawsuits, each of which might incur a couple of thousand dollars in settlements annually, and contrast that with chagrined McDonald's executive who must factor in a $2.8 million punitive damages award on a single hot coffee case (the amount of the original jury award before a judge reduced it), and you can see the impact the plaintiff lawyers have on driving corporate change.

Pinksy, in a compelling interview with Bloomberg Law's Lee Pacchia in which they discuss the potential Newtown lawsuit, makes exactly this point:  when businesses or government can't or won't act, it's up to plaintiff lawyers to drive change.  Of course, there are numerous examples of abuse, leading over time to efforts at tort reform - capping punitive damages awards, making it harder to certify a class in a class-action lawsuit, etc. I won't pretend to defend frivolous lawsuits, though it's helpful to point out, as this Yale Medical Journal does, that one man's frivolous lawsuit is another man's biased media portrayal.

In one of my corporate roles, I ran a company that provided services to plaintiff lawyers, which was quite a change from my many years (before and now) working with mid-size to mega defense law firms and in-house counsel clients.  A key takeaway was an appreciation for the voice plaintiff lawyers give to people and issues that otherwise would not reach the light of day.  I met numerous plaintiff lawyers who were passionate advocates for the "little people."

And, yes, I met some who regarded the little people as mere pawns in an endless quest for ego gratification.  But I've met both types on the defense side too.  Say what you will about the brash plaintiff lawyers who have stepped up to the microphones after each shooting or other disaster, but I've come to respect the role such lawyers play in our legal system.  A topic for endless debate, no doubt, but surely another reason to love this country.

For some more fantastic and in-depth back and forth discussion of gun control, see the Becker-Posner blog, where Nobel prize-winning economist Gary Becker and esteemed Federal Judge Richard Posner offer insightful and often opposing perspectives on issues of the day.  Even the reader comments are far more educational than any of the pablum put forth on our Facebook walls by self-anointed experts!

Timothy B. Corcoran is principal of Corcoran Consulting Group, with offices in New York, Charlottesville, and Sydney, and a global client base. He’s a Trustee and Fellow of the College of Law Practice Management, an American Lawyer Research Fellow, a Teaching Fellow at the Australia College of Law, and past president and a member of the Hall of Fame of the Legal Marketing Association. A former CEO, Tim guides law firm and law department leaders through the profitable disruption of outdated business models. Tim can be reached at Tim@BringInTim.com and +1.609.557.7311.

The 2 Critical Questions that Lead to Continuous Improvement

If you want to improve your law practice, your business, your customer service posture, then you need to ask two simple questions, and ask them regularly: What are we doing well and what can we improve?

I believe in reducing complex ideas into bite-sized morsels that can be more easily consumed, particularly when it comes to something so fraught with peril and emotion as gathering candid client feedback to improve your business.

I recently engaged in a vigorous discussion with a consultant whose academic credentials in statistics and market research far exceed my own. She produces exhaustive reports on brand familiarity, relative market position, and statistically precise indexes of client satisfaction. But, she laments, her clients generally ignore her studies, filing them away in the proverbial circular file rather than formulating an action plan. My diagnosis was simple, and it reflects my own approach to assessing client satisfaction and continuous improvement: reduce the complexity and focus on gathering actionable information.

There's a time and a place for complexity and nuance, but it always follows the acceptance of core concepts. If you don't know explicitly what your clients value about your service and if you don't know explicitly what they wish you would do better, then all the charts and graphs and analysis are just so much statistical noise. Sustainable profitability comes from client satisfaction. Client satisfaction comes from continuous improvement. Continuous improvement happens when we regularly ask our clients what we do well and what we can improve.  It's that simple.

When I present these two simple questions, there is always someone who will suggest alternative wording or suggest two or three or ten additional questions to add color or depth to the findings. Sometimes this works. Often it just complicates things. It seems as if we create complexity where simplicity is needed, because complexity pays better, or provides job security. But there is no better job security than channeling the voice of the customer, and this isn't hard to do.

What are we doing well?  Let's not assume that everything -- heck, anything -- we're doing is worth continuing. It's critical to know explicitly and specifically what clients value, why they value it, and that they want us to continue doing it. Here are actual excerpts from client feedback sessions I've conducted, or feedback my clients have compiled. The consistent theme of each is that no one knew the high value the clients placed on the specific action or service, and in some cases we had been debating whether to stop the practice.

"We appreciate the monthly one-page project summary reflecting progress against the original budget and timetable. We may have never mentioned it, but we distribute that report to key executives and they love how we demonstrate that the law department operates like other business functions."  (Deputy GC responsible for Litigation to outside counsel retained for a single high stakes matter)

"I like the detailed time entries on the invoice. I have to carve out time every month to make phone calls to my outside counsel to ask for clarification on the invoices, but with your firm I rarely need to."  (Chief Legal Officer for a small manufacturing company)

"No other vendor salesperson stays involved during the configuration and implementation phase, but [our salesperson] stayed in touch all the way through rollout to ensure we got everything we needed."  (Law firm CIO to a legal technology vendor)

What can we improve?  This is specifically worded to acknowledge that there is always something we can do better. Many of the law firm partners I work with are hesitant to hold annual client satisfaction reviews, let alone end-of-matter reviews, because they cringe at the thought of inviting criticism, or worse the thought of that criticism being shared with a colleague such as a Managing Partner instead of them. Or perhaps worst of all, they loathe even the idea of sharing a client's criticism with their implicated colleagues. The question worded in this way reduces that emotional baggage, because it's clear our intent isn't placing blame or avoiding responsibility. Our goal is simply to identify specific actions that we can improve. More examples:

"I don't enjoy having to wait an indefinite period for a call back. Sometimes I get the sense that you won't call until you have an answer. It's okay if you need time, if it's urgent I'll say so in my voice mail or email. But it would be better for me if you acknowledged receipt of my call or email and let me know when you can get back to me. I'd much rather know that you're in court and can get back to me next Monday than wonder all weekend if you even got my call. In fairness, if it's urgent and you can't get to it right away, I may need to call in someone else. But I will always find another opportunity for those who are good at managing my expectations.  (Associate GC for a clothing manufacturer to a law firm that has received very little work even after a lengthy process to reach the preferred panel list)

"I enjoy attending your dinners at [a major conference] because you invite others that I want to see. But I am uncomfortable with the invitations to ball games and other events. It's not that I dislike one on one time, I'm happy to meet over lunch, but we have a policy against accepting gifts and attending a sporting event in your suite doesn't feel right to me."  (Executive Director for a mid-size law firm to major legal services vendor)

It may come as a surprise to learn that many clients, possibly most clients, don't relish the thought of giving criticism any more than those on the receiving end like hearing it. The questions posed above help avoid the emotional baggage and put the focus where it belongs.  Let's discuss those things we do right and that you believe we should continue, and let's discuss those things that from your perspective we can do better.  Once you master this approach, there's a lot more to help you home in on specific industries or market segments or to help synthesize and prioritize a high volume of disparate feedback.  But let's not get ahead of ourselves. Start simply and grow from there.

Timothy B. Corcoran is principal of Corcoran Consulting Group, with offices in New York, Charlottesville, and Sydney, and a global client base. He’s a Trustee and Fellow of the College of Law Practice Management, an American Lawyer Research Fellow, a Teaching Fellow at the Australia College of Law, and past president and a member of the Hall of Fame of the Legal Marketing Association. A former CEO, Tim guides law firm and law department leaders through the profitable disruption of outdated business models. Tim can be reached at Tim@BringInTim.com and +1.609.557.7311.