The Predictability and Perils of Over-Monetization

"There is no such thing as over-monetization!" Until the client catches on. And then you're screwed. I don't know when I first learned that money could become a verb and monetize and monetization were a thing. But as a young corporate guy moving up the ladder, these words were ideal additions to my vocabulary. If there was one thing I was good at, it was making money for my organization. But in my perpetual quest to close sales, develop new products, defeat the competition, and win awards, I never lost sight of the client's needs. In fact, it was this laser focus on long-term client satisfaction that formed the basis for my success year after year.

It sounds simple in practice, but when faced with the choice to make a few more dollars today while potentially putting the long-term client relationship at risk, many businesspeople are awfully short-sighted. And so it is with lawyers, whose compensation plans often reward billing hours, collecting cash receipts, and generating sizable short-term profits. Maximizing matter profitability often conflicts with a client's desire to lower legal spending. So we might win the battle but lose the war when the client selects a different law firm for future matters of this type. In the end, did we really profit from this transaction?

In this endless quest to make money and make sales, why are we surprised when clients react negatively to high prices? In simple terms, in a price elastic (or price sensitive) market clients buy less when the price goes up and they buy more when the price goes down. In an inelastic market, the price doesn't have the same direct influence on buying behavior. Many law firm partners came of age at a time when clients were less price sensitive, or had sufficient legal budget so they could overcome their annoyance at rising prices. A simple google search will reveal in-house counsel complaining of rising rates for decades, but most did little about it until the "Great Reset" when shrinking legal budgets drove new behaviors. In addition to seeking lower prices -- by extracting price concessions from incumbent law firms and/or by shifting work to smaller firms with lower rates -- clients also began to seek alternatives and substitutes, e.g., more in-house staff, or LPOs, or non-traditional legal providers, to meet their legal demands. This behavior is as predictable as the sun rising in the East.

The concept of over-monetization is simple: when clients can obtain similar services at lower prices elsewhere, or when clients can obtain reasonable alternatives and substitutes at lower prices, and they act on this, your prices are too high. If your offerings are over-monetized, the clock is ticking. You can try, but you will never find enough new clients with pockets so deep they don't mind over-spending, or with management so inept that they don't recognize over-spending, to make up for the rush of clients out the door.

It is not hard to identify over-monetization. In the legal space, there are some excellent providers variously serving the buyer or seller side to provide such benchmarking. But remember, it's not just how your published rates compare to other firms' published rates; it's what clients are actually paying that matters. However, numerous law firm leaders persist in believing their offerings are unique, not subject to price elasticity, or tied to a premium brand that is immune from the price pressures facing weaker competitors. For a few law firms, this is true. Odds are, this isn't you. (I'm being gentle. All legal services are eventually subject to price pressure.) If you're observing some leading indicators of price pressure, including decreased realization, decreased client retention, decreases in new matters, a declining competition win rate, increased discounts, increased demand to contain firm overhead, and so on, then you're in the thick of it.

Recognizing price sensitivity is half the battle. Business leaders have a bias for optimism, but when that optimism turns to blind stupidity the organization is in trouble. Some years ago my parent company's brand new CEO insisted that warnings of price pressure and declining market demand were merely the bleats of frightened sheep, so he outlawed the term "over-monetization" in all business discussions. He then insisted that all product lines must adopt a hefty price increase in the coming year, irrespective of past price increases, client demand, competitive forces, or any other factor. Every. Single. One. My team had spent a year developing a new pricing methodology for our core product offering because past management’s excessive price increases had eroded the goodwill of even our most loyal clients. The widespread adoption of substitutes and alternatives was rapidly eroding our revenues and profits as well, so we not only resisted raising our prices, we planned to lower our prices. And we were overruled.

More onerous price increases took effect, and a few years later, long after most of us had moved on in frustration, the entire business unit disappeared. Completely. There was nothing left. The CEO, however, was handsomely rewarded when the price increases led to a one-time boost in revenues. Market analysts loved him. Until the following year when clients resisted that tactic. So he then conducted layoffs to boost profits. And he was rewarded again. Consistently boosting prices beyond what the market will bear works if your goal is to make a lot of money and run. But it's no way to build, or lead, a sustainable, successful business based on repeat clients.

The lesson is that ever-rising prices will not only eventually intersect with the clients' desire to spend less, it will often cause the clients' desire to spend less. But it doesn't have to be this way. Any business school teaches the concept of a business cycle in which products and services evolve from shiny new ideas adopted by a brave few, to commonplace tools in use by many, to outdated anachronistic offerings relied on only by slow movers. Typically prices are low for early stage offerings, and prices increase during the lifecycle until they reach their apex, at which point no one buys any longer. If your current offerings are over-monetized, you need to find new early-stage offerings that better meet market needs. Or start to downsize your business, because declining revenues and profits will not support the infrastructure you've built.

For law firms, this means finding new ways to price and package existing legal services so they better meet clients' desire to spend less. This can be a good thing. We can capture more market share from competitors who won't change their approach. We can lower our prices and win more. Of course, savvy business leaders recognize that we can't merely lower our prices to find long-term success; doing so would be tantamount to suicide. But we can embrace project management and process improvement in order to profit from efficiencies even as revenues for some product lines are flat or declining.

Your law firm is a business, so get over your angst about the use of words like price, and product, and sales. It's not a matter of if, but when your services will be over-monetized. So get there before your clients and you can reinvent your product offerings, and your business, before the disruptive new entrants and your fast-moving competitors dictate your future.

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, and is a member of the Hall of Fame and was 2014 president of the Legal Marketing Association. A former CEO, Tim guides law firm and law department leaders through the profitable disruption of outdated business models. A sought-after speaker and writer, he also authors Corcoran’s Business of Law blog. Tim can be reached at Tim@BringInTim.com and +1.609.557.7311.

Law 2023: A Look Ahead for the Legal Profession

The future of the legal industry isn’t what it used to be. Or so says a report issued by Law2023.org, a group of industry insiders -- including this writer -- who spent a year studying the trajectory of the legal marketplace. The approach and the findings are surprising in a number of ways, but also refreshing. The future presents both disruptive change and extraordinary opportunity, for both incumbents and newcomers. Most views of the legal industry, particularly those posed by insiders, naturally adopt an inside-out approach, or, in other words, an approach that assumes the industry will have a say in how the future develops because we can see it coming. However, reality often presents obstacles or opportunities that are unforeseen by those deep inside. New entrants to evolving markets often have very different perspectives, unaffiliated with the status quo, allowing them to create disruptions and carve out new opportunities. But even this approach assumes there’s a clear view of the future, with different parties simply having different vantage points. What if we ignore the current state and look at the future under a different lens, envisioning how global economic, technological, and cultural change will be manifest a decade from now, and then envision a law firm built to address this world?

The group of legal market insiders, including lawyers, law firm managers, consultants, and legal service provider executives, led by the experienced provocateurs at Insight Labs, interviewed numerous experts in a variety of fields, including technology, design, economics, culture, and, of course, legal innovation. Their collective insights described a future that builds on today’s trends, with a recognition that each trend influences, and is influenced by, the others. Here are the findings.

Technology will enable lawyers to bill for real value. Many law firms embrace technology, but not typically as a means to drive efficiencies. A substantial component of lawyering is knowing where to look for an answer amidst a cacophony of sources, say, finding a relevant regulation or law. Another is knowing how to address a situation that others face infrequently, such as incorporating the right provisions in a contract. Powerful new technologies will make this information far more accessible, and some law firms will incorporate these tools to provide high-demand answers at a much lower cost, potentially broadening their offering and client base while generating handsome profits. Other law firms may eschew these services and focus on premium services where clients require creativity and imagination, and are willing to pay for it. New technologies themselves will present new legal frontiers, as with driver-less cars.

Firms will develop offerings that transcend jurisdiction. Globalization is gaining momentum. Businesses have to navigate a maze of laws and regulations, and increasingly will have to choose among them. Advising a global business means not only staying abreast of all of these jurisdictions, but offering counsel so that clients maximize their opportunities. Just as businesses today adopt structures to address taxation concerns, they will face similar choices based on various jurisdictions’ approaches to environmental, trade, labor, IP protection, and other practices. Furthermore, as businesses continue to operate more globally, rather than as national businesses selling to global markets, governments and regulatory bodies will need to adapt, and it will require top legal minds to ensure fairness in the global arena.

Demand for responsive institutions will create new markets for accountability. Citizens, armed with technology, demand greater transparency from businesses and governments – many of whom are caught off-guard when their practices are exposed and questioned. In a world influenced by Wiki-leaks, institutions will need not just good public relations, but they’ll also need new tools to remain credible and trustworthy. This mindset, often referred to as the “triple bottom line,” factors social and environmental results alongside financial performance, and influences businesses and governments to operate in a sustainable way in the markets and communities they serve. Law firms can help not only help repair trust in other institutions, they can do so not merely by erecting walls around institutions’ secrets but by developing policies and practices that help these organizations remain transparent and credible.

Firms will tap new talent and enable new pathways to practice. Just as many businesses have adapted to a world of cultural and demographic diversity, a remote or far-flung workforce, an increasingly mobile and younger workforce – even as their markets demand faster responsiveness and capacities – so will law firms. It has always been true that relatively few lawyers achieve the status of Biglaw partner and yet the culture within many law firms assumes this is the ideal objective. As law firms embrace different operating models, it becomes less important to adhere to outdated standards of what it means to be “in the office” and more important to deliver quality work in flexible ways. Global clients with diverse footprints are increasingly urging law firms to mirror these ideas. Some work will be delivered by non-traditional roles, and roles like project managers, client managers, analysts, and others will become more common in the delivery of legal services. And quality will not be singularly associated with the partner track. Excellent lawyers at all levels, with different approaches, with varied compensation plans, and with flexible workdays that don’t revolve around a central office, will be considered mainstream.

Transparency will push firms to seek hyper-specific markets. One great challenge in today’s market is differentiation. Many firms offer numerous services, but it’s improbably that they deliver all services equally well. With transparency, particularly in the form of clear, universally accessible metrics, will present new opportunities. It will be far easier for clients to compare the relative expertise of numerous firms, and combine this with information about costs, service posture, delivery approach, and diversity, to select the appropriate firm. Rather than serving all needs for all clients, law firms will be incented to specialize in more specific areas, at once enriching their domain expertise and opening up new markets for their services. Deep subject matter expertise will be more widely exposed, so firms will generate and benefit from client interest far outside their traditional geographic boundaries. This will also decouple the notion of firm size as an indicator of expertise.

Firms will launch R&D departments to create new offerings. With increased access to and reliance on analytics, firms will be in a good position to identify trends and triggers, and offer proactive counsel to clients and prospective clients. And the delivery of legal services will benefit, as firms will focus on approaches that are proven to have a greater likelihood of success than throwing a lot of smart, experienced bodies at each client issue, and treating each issue as if it’s new and unique. For some firms, this mindset will lead to regularly launching innovative new services to address specific trends, many of these developed outside the mainstream legal practice so as not to be influenced by tradition. Whether the innovation refers to an immediate legal issue, the underlying business challenges, or even the delivery of the legal solution, firms can differentiate based on creativity. Some will use such creativity to pursue broad market opportunities; some will rely on hyper-specific understanding of a key issue and develop laser-focused but unique and premium offerings serving a limited number of very targeted buyers.

User research and innovation will shape client experience of products. Just as consumer-facing companies have broadened their approach beyond merely solving a problem to engaging the user so that the experience of solving the problem is appealing, law firms will finally learn how to place client needs first. Clients have long lamented of poor experiences with law firms, even while obtaining excellent outcomes. Law firms will recognize more explicitly the link between client satisfaction and repeat engagements, and even more so that satisfaction is as tightly linked to experience as it is to outcomes. Since it will be far easier to identify which firms have the relevant expertise to deliver the right outcomes, a key differentiating factor will be service. As this mindset expands, firms will seek proactive solutions and move up the value chain, as their counsel will help drive better business decisions, not just deliver better legal outcomes.

What will your future hold? Who knows. While it’s challenging to predict, and predicting the precise future of a specific market segment poses an even greater challenge, the Law2023 approach delivers some excellent food for thought. More details on this initiative can be found at Law2023.org.

Timothy B. Corcoran is principal of Corcoran Consulting Group, based in the US with 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.

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This article was selected as the BigLaw Pick of the Week by the editors of BigLaw, a free weekly email newsletter for those who work in midsize and large law firms.

What's your RSTLNE?

Smart people do their homework, rely on past experience and pattern recognition to guide future behavior, and practice. But really smart people often "wing it," preferring to use their towering intellect to smoothly navigate thorny situations that would frighten lesser mortals. And so it is with many law firm partners who face the same client questions and objections again and again, and who fail to think through, memorize, and practice their responses.

A cultural touchstone in the U.S. and numerous countries around the world is the game show Wheel of Fortune, in which contestants compete for the opportunity to solve a word puzzle one letter at a time. In the final round, the contestant may select several consonants and a vowel, and then the clock starts. Contestants correctly guessing the word puzzle before the clock stops win the grand prize. The odds of winning are largely influenced by the letters a contestant selects.

Over time contestants learned the most common English letters are R, S, T, L, N, and E, so these became the default guesses by every contestant in every episode. Eventually the producers conceded these default letters, so now the final puzzle starts by plugging in these letters and then allowing the contestant to select an additional three consonants and one vowel. The lesson to be learned is that we can increase our odds of winning in any business setting by seeing patterns and understanding the key differentiators. In your world, what is your RSTLNE?

I've managed quite a few sales teams, and one exercise we've always completed for every product or service, at least once a year, is to review our most common client objections. "Your product costs too much" or "You lack feature X but your competitors have it" or "Your organization is too small and we're afraid our needs will tax your support infrastructure" or "We can't secure buy-in from senior management to proceed" and many more. We've all heard the same challenges and one of us, or collectively all of us, can articulate a reasonable response to address each concern.

To be clear, the goal isn't to develop some smarmy verbiage to hide our shortcomings or mask our price point. Our goal is to focus on the value we deliver, how prior clients have derived quantifiable benefits from our offerings, and offer suggestions for how similarly situated clients have overcome these same obstacles. Nothing demonstrates experience like acting as if you've been there before. Pithy responses to real concerns won't cut it. So we work on this, we write simple, accurate, effective responses, and we practice, even role-play, our interactions with clients.

And then there are really smart law firms partners who engage with clients and potential clients as if it's the first time they've faced client concerns:

Corporate procurement officer (interviewing law firm partner, who hopes to win the designation as a "preferred lawyer" for the company's legal needs): "What makes you different than the other lawyers we're evaluating?"

Lawyer: "Well, I have a great deal of experience in this industry segment, we hire only the finest lawyers, and we put our clients' needs first."

Procurement: "Okay, but everyone else we've interviewed says the same thing. What makes you different?"

Lawyer: "Um, we've worked extensively with companies like yours and we really care deeply about our clients."

Procurement: "Thank you, but you've really just repeated your earlier remarks."

Lawyer: "Did I mention that we can offer preferred rates?"

Procurement: "We expect preferred rates from all of our providers. Don't call us, we'll call you."

What's your RSTLNE? In your practice, your business, your domain, what challenges do you face every day? Have you written them down? Do you have a scripted response? If I were to ask each partner in your practice group how to respond to a handful of simple questions about price, quality, communication, service delivery, responsiveness, change management, project management, or billing, would I receive the same response? If not (I'm being gentle, the answer is of course not), I recommend you schedule time to gather the partners in a room with a whiteboard or a flip chart and work on this together. It's a simple process.

1. Ask everyone to list the objections or concerns they routinely hear from clients or prospective clients.

2. After capturing a couple dozen responses, have everyone tick off their top five selections. Add up the votes and focus on the top five, or at most the top ten.

3. For each objection, identify the root concern. For example, "Your rates are too high" could have a number of meanings, e.g., comparable firms offer substantially lower rates for the same services; this is important to us but we have no remaining budget this year; this is not a high priority or we'd find the funds; you haven't proven that you're experienced enough to warrant high rates, and many more. Many objections are smokescreens. What is the real underlying concern?

4. Begin listing elements of your response. Focus on benefits, not features. "We're global" isn't a benefit, it's a feature. A benefit answers the client's question, "So what?" A potential client with a global footprint with similar needs across borders and time zones might find a global law firm offering consistent services and rates to be a cost-effective alternative to hiring numerous local counsel to reinvent the wheel, so position it that way.

5. Avoid statements you can't prove or that everyone else can state just as easily. "We care about our clients" is nonsense. So does everyone. "We care about our client's legal spending, so we've adopted a rigorous approach to matter budgeting with a 5-step process to communicate in the event the scope of the matter materially changes our cost or time estimates" conveys the same sentiment with detail. Capture a handful of statements to address each of the objections or concerns.

6. Delegate the work of writing up a concise narrative for each. Spread the work around. Ten objections can be handled by ten different people, or teams. Ask a valued member of Marketing to be the editor. Every first draft will be too long, too lawyerly, and simultaneously too detailed and too vague. Count on it. Get over it. You write well in legal documents. You're not a good writer for crisp, effective, responses to common objections. This takes practice. Trust that none of the partners is a good proxy for a client's perspective, so whether an individual partners despises the draft or loves it is meaningless. An objective observer, potentially even a valued client, or a friend who's not a client, or of course your credentialed Marketing professionals, have a better ear for this than the partners do. Trust me on this.

7. Reconvene and practice. Set up simple role plays where one partner plays the client and raises the objection and the other partner shares the prepared response. Even better, video record these role plays and review them for brevity, sincerity, and body language. Implement some gamification, set up a Shark Tank panel and vote on who does it best, who's prepared, who's polished, who's sincere, and give prizes for achievement. Then schedule extra help for those who don't get it right away. Most won't. It's like taking a dance class, it feels like you have three left feet until you get the hang of it.

This checklist is a simple process. Yet, sadly, too many practice group chairs will discard the exercise as unnecessary, or too time-consuming, or possibly even insincere. The grand prize in the game show of business development typically goes to those who work the system rather than try to beat the system. Partners are busy people, to be sure, but when there is limited time, budget, and resources to generate new clients and new revenue streams, it's worth putting in the extra effort. Smart people do it. Super smart people tend not to. Which calls into question whether we've been too generous with that label.

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 Fellow, and a member of the Hall of Fame and past president of the Legal Marketing Association. A former CEO, Tim guides law firm and law department leaders through the profitable disruption of outdated business models. A sought-after speaker and writer, he also authors Corcoran’s Business of Law blog. Tim can be reached at Tim@BringInTim.com and +1.609.557.7311.

Collect Your Fees or Collect Your Belongings

The ongoing Dewey & LeBoeuf trial provides endless fodder for observing dysfunctional organizational behavior. Today's commentary was prompted by the quotes attributed to a former Dewey partner in response to nagging from a collections clerk. The partner had apparently missed his monthly collections target of $1.6 million and didn't appreciate being hounded.

"I am the reason you have a job. You obviously have no clue about what is appropriate. I am going to talk to [the Chief Operating Officer] and insist that you be fired if you ever send me an email or call me again. If he does not, I will seek other opportunities at a firm that gets it."

What exactly is a firm that "gets it?" One that allows partners unfettered access to firm resources without demanding anything in return, such as revenue? One that allows a partner to speak and act like a schoolyard bully to a staff person doing her job? One that allows a shareholder to meddle in day-to-day operational affairs, such as the acceptable age for receivables, how our collections clerks should handle their responsibilities, and who gets fired? And exactly what is he threatening? "Don't make me collect my fees, or I'll quit... and forever absolve myself of all responsibilities to collect these fees." We get it. You don't like to collect your fees. Who does? Well, in fact, many do.

Photo: ©iStockphoto/Taphouse_Studios

I've shared this thought with numerous law firm partners: If you are routinely discounting fees or failing to collect your billed fees, one of two things is happening. Either your clients do not believe you're worth the fees you charge, or YOU do not believe you're worth the fees you charge. Actually, it's probably a bit of both.

Every so often, I think it's helpful to offer a bit of tough love to partners who think their accomplishments give them free pass to act however they want, even when their actions are harmful to the business. Allow me to dust off my former CEO hat and offer my contribution.

• If you act like an asshole, you should be fired. Point me to one firm, anywhere, ever, where a perpetual asshole was shown the door and the law firm collapsed. It doesn't happen. We're all replaceable. Being a schoolyard bully to a lowly staff person is easy. Collecting your fees is evidently hard. So if you want to prove you're all that, then collect your fees.

• The top dog rainmaker isn't the reason everyone else has a job. In fact, it works both ways. The top dog rainmaker looks good because there are many people marketing the firm, managing key client relationships, managing firm operations and infrastructure, and doing the legal work necessary to satisfy the client that you brought in. Also, the firm exists because of the efforts of many others who built the brand and paved the way for you to get a job here. Your success wasn't inevitable; it was a result of an extraordinary team effort. If you don't like, or can't understand, the team approach, collect your belongings and leave. If you think you did it all on your own, then go form your own one-man firm and prove you can compete.

• Many partners are not 100% utilized. Many partners do not bill 100% of the time they capture. Many partners offer discounts that erode profitability. Many partners rewarded for billing time do not fully exploit leverage to improve firm profitability because doing so will reduce their hours. Many partners cost too much for what they generate. So after all these deductions to the firm's profitability, when you have the nerve to refuse to collect whatever discounted fees the client has agreed to pay, you are willfully engaged in a conspiracy to screw your colleagues out of rightfully earned compensation. You benefited from a plush office, the firm's powerful brand strength, and all of these lawyers and staff being paid to work on your matters before you collected a penny. Collecting your fees isn't a favor you're doing for the rest of the firm, it's your rightful obligation. If you can't stomach asking clients to pay for your work, then you have abdicated your fiduciary duty to the firm and you have no right to be an equity shareholder.

• Law firms often adopt the partnership model as a business form for its tax, liability, and profit-sharing benefits. But let's be clear: operating as a partnership doesn't convey day-to-day management responsibilities to every shareholder. If you want to engage in firm management, step up and volunteer or run for office. Otherwise, leave firm management to others. If you don't like the firm's collections policies, or business development team, or IT services, or secretary ratio, or compensation plan, or the color of the logo, then communicate these concerns to those in charge and then go practice law. Or start your own firm where you can make all the decisions, drawing on your substantial expertise running a business... though if your insight into collections is any guide, your career as a titan of business will be short.

Law firm senior leadership and practice group chairs, if you're not having this conversation with your partners who fail to collect their fees in a timely manner, then you should question whether you're cut out for your role. A law firm is a business. If every partner is allowed to choose which policies they will follow, you're not running a business, you're operating a holding company of independent contractors sharing a logo. Your failure to establish sound policies and to hold everyone accountable means shareholders are losing money and compromising the quality of the legal services delivered to the clients. Is it any wonder why clients are dissatisfied and seek alternative approaches to addressing their legal needs?

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.

Using Client Engagement Letters to Better Define Services

I was recently interviewed for the Association of Legal Administration's Legal Management magazine on the topic of client engagement letters. Writer Paula Tsurutani gathered commentary from a number of industry leaders and presented a thoughtful article outlining the vast, and largely untapped, benefits of a well-designed and well-written client engagement letter. Here is the feedback I provided:

IT’S AN EVOLVING MARKETING ELEMENT

Timothy B. Corcoran, Owner of Corcoran Consulting Group and [immediate past] President of the Legal Marketing Association says, “I often take firms to task for over-reliance on engagement letters that offer broad, or even no, parameters about how the matter will be handled, aside from the negotiated hourly rates.” He says that the client engagement letter has evolved in recent years as clients have demanded matter budgets and project plans.

The start of a great relationship Use this moment to stand out in the crowd and show how your firm can be responsive, on-point, and client service-oriented. Enlightened firms have taken this requirement as an opportunity to differentiate their services. “Client engagement letter may be a misnomer,” says Corcoran. “The document could be a letter, plus a project plan. The point is that this first communication can demonstrate how the firm can better serve the client by showing an understanding about the client’s concerns and issues. Don’t treat it as a simple letter or a fill-in-a-template document. Treat it as a process — a starting point where you can ask needs-based questions, get a better handle of the client’s concerns, and tailor your staffing, fee structure, and communications plan on the client’s issues.”

Just say no While many firms may be inclined to instantly say yes when asked for a proposal, Corcoran says no often is a smarter response. Instead of automatically responding to a request for proposal, start a richer conversation by saying “if you want us to help, that’s great. But we need more information. Then we can respond.” Those are the firms that are using the client engagement letter as just one element in initiating a relationship with the client — adding other information, including a discussion of project management, proposed project plan, touch points in the engagement, staffing and budget management — so the client is more informed, engaged and involved.

This mindset becomes part of their pitch process. Firms can use it as an opportunity to talk about the firm’s approach to engagement management, project management, how they will communicate changes to budget, how and when they will keep the client informed. “Even if you don’t have all the facts, if there are unknowns or imponderables, you can discuss how you will respond to those variables,” says Corcoran. It’s a clear way to show commitment, customized service and responsive solutions.

Reprinted with permission from Legal Management magazine, Volume 34, Issue 2, published by the Association of Legal Administrators, www.alanet.org.

Timothy B. Corcoran is the immediate past President of the Legal Marketing Association and an elected Fellow of the College of Law Practice Management. He delivers keynote presentations, conducts workshops, and advises leaders of law firms, in-house legal departments, and legal service providers on how to profit in a time of great change.  To inquire about his services, contact him at +1.609.557.7311 or at tim@corcoranconsultinggroup.com.