Printer Friendly

How to Build a Successful Client Relationship Management (CRM) System

By Edward Poll

More on CRM See also – Know What You Know: How CRM Systems Can Turn Contacts into Clients by Janet Ellen Raasch.

Client Relationship Management (CRM) is the latest term for a tried-and-true marketing truth:  The key to business development success is building relationships with potential clients. 

In a law firm, where organizational business development should be the sum total of each lawyer's personal contacts, online technology has the potential to bring consistency and efficiency to what used to be a haphazard process. 

Shared CRM databases on computer desktops can make available to all firm members the personal data and contact history of any prospect—the type of information that used to be stashed away in individual Rolodexes, address books and, worse, only in the minds of certain of the law firm's lawyers.

The problem is that the culture of too many firms does not support the potential that CRM technology offers.  In many firms, territorial partners guard client information rather than share it because compensation and governance remain highly individualized.  Such firms are, as one marketing consultant used to say, little more than "hotels for lawyers"—individuals sharing the same facility, with little stake in each other's success.  For CRM to work, these firms must give up the "my client" mentality in favor an "our client" approach—a task easier stated than accomplished.

CRM Functions

In simple terms, a CRM database centralizes a firm's collective knowledge, wisdom and experience about clients and prospects, and makes it available to all authorized users—from attorneys and marketing professionals to administrators and secretaries.

Every relationship interaction by any attorney becomes an opportunity to add information to the database as a means to track marketing activities, cross-reference practice services, expand contact networks and reinforce contact relationships. 

Two of the most widely used CRM databases are Thomson Financial's Elite system and LexisNexis Interaction.  Both are enterprise software that can be installed on all desktops in a firm.  They are populated by entries into data templates that often are customized according to each firm's needs with data fields incorporating information that covers both clients and contacts.

All entries would have basic information like address (physical and email), phone number, individual contacts, and industry codes.  Client entries would include the name(s) of the responsible firm attorney, fee information, and matters performed. 

Crucial for both client and prospect entries is the history of every business development activity undertaken with them by the firm and its attorneys—lunches and golf outings, seminars and newsletters, personal visits and new business pitches, etc.  Information can be entered and viewed by anyone authorized to do so.  The idea is to free client service and client development from compartmentalization and place the emphasis where it belongs—on the client or prospect.

CRM Implementation

There are obvious technical questions that must be answered at the start of implementing a CRM system in order for it to function with any degree of success:

• What data is to be included?
• What data can be modified (for example, should some fields, such as address, be off limits to change by casual system users in order to maintain integrity of the data)?
• Who is responsible for seeing that the information is kept up to date?
• Who can access, modify and enter information?

These technical questions must be addressed before CRM implementation even begins.  You cannot create data fields haphazardly, see how the process works in practice, and then try to reorganize the information after the fact.  
 
Best practices require every firm, large or small, to create a standard classification system for every item that is inserted in a client or prospect record.  Entering "golf date" does not tell anyone what took place or what it means for the business relationship.
 
CRM Acceptance
 
By far, the larger issue for CRM effectiveness is cultural rather than technical.  Lawyers at many law firms live in a system in which they "eat what they kill" and therefore don't want to share information on clients or prospects with other lawyers who they fear might "steal" business. 
 
Partners in many firms vigorously defend their rights to autonomy and individualism, well beyond what is common in other professions. The problem with this is that clients and prospects want to do business with firms that will serve them with effective cross-office and cross-disciplinary teams.  
 
An effective CRM system will facilitate such service, but the low trust environment in many firms undercuts it.  Consultant David Maister, in a recent American Lawyer article titled "Are Law Firms Manageable?", quoted an unnamed partner who summarized the roadblock attitude: 
 
"It's not that I don't trust my partners . . . It's that I don't want to have to trust them. Why give up any degree of control over your own affairs if you don't have to?"
 
Any firm that encourages lawyers to maximize their individual compensation may have fast short-term growth.  But a willingness to approach business development and compensation as an institution makes for firm longevity.  Perhaps it takes the entrepreneurial spirit to get a firm started; but the ongoing challenge is to change that into a managerial spirit, something that proves difficult for too many firms.  An effective CRM system can smooth the way to that transition.
 
CRM Advantage
 
Here is just one example of how CRM can work in a law firm:

When rainmakers hit 65, they slow down and their referral sources retire. Meanwhile, the next generation of partners has been accustomed to inheriting business and lacks marketing contacts.  
 
Before a senior rainmaker leaves active practice, a law firm can create a huge competitive advantage for itself by proactively using CRM data to encourage succession of clients from older to younger lawyers.  
 
CRM contact records can be used to develop cross-selling opportunities among younger lawyers according to an overall firm strategic plan with opportunities targeted to individual lawyer plans.  
 
Relationship information that might have been hidden away in the retiring rainmaker's files becomes the foundation for a smooth transition.  The firm, the lawyers and the client or prospect all benefit.
 
A CRM system allows contact information to be organized into networks or portfolios. These may include everything from active clients to professional referral sources (bankers, CPAs, consultants) who may not become clients themselves but who can make referrals to those of their own clients with whom a relationship can be built.  
 
CRM thus moves business development from "random acts of golf and lunch" to a systematic process that identifies the people most likely to hire the firm and facilitates communication with them to develop close working relationships.  There is no single personality type necessary to be a rainmaker or to successfully attract business to a firm.  CRM, properly used in the right environment, enables everyone to be a rainmaker.

CRM and Privacy Compliance in the Canadian Context An important aspect of database management in Canada is that all businesses, including multinational firms based in other countries, must avoid infringement on consumers’ legitimate privacy expectations. That requires compliance with the federal Personal Information Protection and Electronic Documents Act, as well as with provincial privacy regulations restricting the way in which companies may collect, use and disclose personal information. Every law firm with a CRM database containing sensitive personal information should develop privacy policies, codes and disclosure statements.  These should effectively document the ways for companies to inform and obtain the consent of individuals whose personal information is gathered in transactions and in connection with marketing or customer care activities.  There are also specialized aspects of privacy policy, including disclosure and consent requirements for active and passive data collection on the Internet.  Every business or firm with a website should develop Internet privacy policies, create procedures and systems to manage access and data security, advise on data retention and use, and draft comprehensive but understandable explanation of policies.

Edward Poll (edpoll@lawbiz.com) is a certified management consultant and coach in Los Angeles who coaches attorneys and law firms on how to deliver their services more profitably. He is the author of Attorney and Law Firm Guide to the Business of Law: Planning and Operating for Survival and Growth, 2nd ed. (ABA, 2002), Collecting Your Fee: Getting Paid from Intake to Invoice (ABA, 2003) and, most recently, Selling Your Law Practice: The Profitable Exit Strategy (LawBiz, 2005).

Comments/Discussion A Postscript to CRM Systems and Privacy By Edward Poll In the above article, I suggested that a key to successful business development is, and always has been, building relationships with potential clients.  I further suggested that technology today has the potential to create both consistency and efficiency in what used to be a haphazard process.  A key part of my analysis was that the culture of most law firms does not support the creation of an effective CRM system despite the availability of technology.  Most lawyers are sole practitioners at heart and refuse to share what they know about clients with their firm.  This means that the next generation of lawyers really must start afresh in re-establishing both the information about clients and the relationships with clients, despite the fact that senior lawyers in the law firm have already developed both the information and relationships. In response to this article, we received a comment from a CBA PracticeLink reader who suggested that I had written the article without appropriate reference to Canadian law; the inference was that my recommendations for creation of a CRM system may even violate Canadian law.  I must admit that I was somewhat taken aback, and undertook additional research to clarify any ideas in my article that might have been problematic in light of Canadian law.    The law of privacy is rapidly developing in both Canada and the United States, and there are some aspects of Canadian law that involve unique privacy considerations and safeguards.  I appreciate this opportunity to offer additional thoughts as shaped by the research I did in connection with Canadian privacy law. In the Privacy Commissioner of Canada's Annual Report several years ago, there appears a "day in the life -- -- or how to help build your super file."  The soliloquy detailed a typical individual’s exit from an apartment building parking lot, with cameras and possibly a card recording the departure at 8:30 a.m. and continuing throughout the day.  It was a compilation of detail after detail on how this person has daily travels and activities noted by others, including logging onto the Internet, until the day ends by actually trailing off to sleep.  Increasingly, the report details, living a modern urban life seems to mean there is nowhere to hide as each person seems connected to an increasingly tight electronic leash. The Personal Information Protection and Electronic Documents Act (PIPEDA) was meant to provide protection in this transparent world, and was phased into effect in stages.  This Act is in full effect and now covers all personal information of customers that is collected, used, or disclosed in the course of commercial activities by private sector organizations. According to the Act, customers have the right to gain access to and correct information maintained by business; in addition, customers are given the right to file complaints with the Privacy Commissioner of Canada. These provisions are particularly useful when dealing with the Internet, chat rooms, and electronic mail fraud schemes.  With the prevalence of cookies, phishing and other technologically advanced schemes, identity theft has become an incredibly serious problem for many people. Many of the provisions of PIPEDA relate to Internet transactions and retail transactions wherein confidential information is being requested for the purpose of further sales promotion.  The Act specifically states certain conduct that it does not attempt to regulate.  Certain governmental agencies are not covered; organizations that collect, use or disclose personal information solely for journalistic, artistic or literary purposes are not covered; and an individual's collection, use or disclosure of personal information for personal purposes ... is not covered. It appears to me that the intent of PIPEDA is to prevent abuses in the use of personal information.  The intent of the Act is not to prevent the recording of information that one has available in one's mind as a result of interacting with a client/customer. The entire focus of a CRM system is to take that information already available to certain members of the law firm, detail that information in an organized fashion, and make it available to other members of the same law firm who may be working on a matter for an individual client.  This process is done for the sole purpose of providing better service to that client in accordance with the client’s needs and desires as to how they wish to be served.  In other words, there is an existing professional relationship that the use of a CRM enhances.  With appropriate safeguards on the privacy of information, safeguards which are already a professional obligation of any lawyer, client service is enhanced and client privacy is not jeopardized. Without the detailed recording of information gathered in the context of personal interaction, each new generation of lawyer will have to re-create that information within their own physical inter-action with the client.  As the law firm grows and expands, this becomes an impossible chore for any single lawyer.  Only technology, with a good CRM system, can create the database information needed to properly address the needs and desires of any given client being served by the full resources of the law firm. I want to thank the writer for bringing to my attention the heightened focus that Canada appropriately places on one's privacy.  I just don't think it applies to the CRM system and the gathering of data referenced in my earlier article.  If any of you reading this article now has additional information on how the Canadian privacy sensitivities negatively impact the gathering of information needed by law firms to serve their clients, please submit your comments below, or send them via e-mail to praticelink@cba.org. By: Edward Poll Posted: 01-02-07 Reply to this Post Back to Top

It is remarkable that the CBA would have a US consultant write a "how-to" on CRM for Canadians. No surprise that he doesn't mention the Canadian privacy laws that firms are subject to and that are implicated by the system he describes. Not a word about privacy infact. By: Linda Chipesia Posted: 08-31-06 Reply to this Post Back to Top

Neither the author nor the CBA should be construed as endorsing any product or website listed in this article. The views expressed in this article are those of the author and do not necessarily reflect the views of the CBA. In this document, any reference to "jurist" or "lawyer" includes, where appropriate, "Québec notary".