For Lawyers as for Athletes, There Is No ‘I’ in ‘Team’
By Edward Poll
If you want to build firm revenue, don’t let individual players steal the show. Working as a team means greater value for the client and greater long-term success for the firm.
Do clients really want to buy legal services from the individual lawyer who does the work? This is one of the enduring questions of legal practice, and there is no definitive answer, but experience suggests that clients ultimately relate to the firm and not to the lawyer. That is in the best interests of firm, lawyer and client alike.
Lawyers who have successfully “branded” themselves as personalities are few and far between. Most clients presume each lawyer is as competent as the next. If clients place primary reliance on the firm, the lawyer benefits as the firm itself maintains relationships and generates new ones. When the marketing function promotes the law firm, even if a lawyer with special skills is the “product” sold, it will most often be the law firm as an institution that will be seen as the service provider in the attorney-client relationship.
Many lawyers, unfortunately, seem to lack an understanding of this institutional concept, and focus solely on their own personal book of business. The broader implications of how individual fees, collections and compensation interact within the firm tend to be depreciated. Yet nothing is more important to the future of law firms than removing the issue of who actually serves the client from the individual context alone, and placing it at the heart of the firm’s financial life.
Defining the Metrics
Partner compensation from hours billed will be governed in any firm by those metrics that define how the firm views itself and how work is done for clients. Such metrics could emphasize origination (percentage of new business that the partner brings in), total hours worked, or hours assigned to other lawyers in the firm (a traditional hallmark of rainmakers).
Some of these metrics will do more than others to increase not only the partner’s compensation, but the firm’s revenue stream – which is, or should be, the ultimate goal. Any firm that encourages lawyers to maximize their individual compensation may have fast short-term growth. But a willingness to approach compensation as an institution makes for firm longevity.
When rainmakers focus only on their own business origination and client service, the idea is lost that clients belong to the firm, not to a partner. Firms that service major clients with teams (not just a single rainmaker) can cross-sell between teams according to a strategic plan, and can give clients a complete and virtually seamless service package. Client billing is simplified, and bonuses can go to those teams that get results.
Steps like these institutionalize client billing, profitability and compensation. The firm doesn’t face sudden disaster when rainmaker partners leave or retire – and clients are better served.
Combating Commoditization
This describes both what clients want from their lawyers today – and what they are willing to pay for. That’s important because in recent years two Cs, convergence and commoditization, have become major concerns for law firms.
Convergence is the trend among corporate clients to reduce their legal expenses by paring down outside counsel firms dramatically. The survivors are expected to provide certain work with relatively steady volume (such as patent filings or employment cases) at fixed rates over a certain period of time, turning these matters into the legal equivalent of a commodity. Commoditization is the phenomenon of clients expecting large volumes of work to be billed at low fixed prices.
Lawyers want legal services to be seen as unique because of the attorney-client relationship, or because of the special skill required to deal with the challenge, or because the client has some constraint that only a few lawyers can accept. Yet, when clients increasingly want to see the dynamic shift toward the commodity model, the momentum can be hard to resist. The best way to do that is through a service approach that emphasizes the firm’s entire range of capabilities and value-added resources. A single lawyer may be seen as a commodity, but it is much harder to view lawyers that way collectively.
Serving clients through teams rather than just a single rainmaker allows the firm to identify and provide needed practice specialties that reflect a full range of client concerns. A billing attorney co-ordinates the service provision according to a strategic plan, and can give clients a complete and virtually seamless service package. The client receives “one-stop shopping” from a group of lawyers who are chosen to address specific needs, both in terms of practice specialties as well as billing rates. And because the team is the portal through which the firm’s counsel is provided, clients are spared the worry that their lawyer might leave or otherwise be unavailable.
Stars and Team Players
Base compensation must be tied to the effectiveness of involving other firm lawyers as part of the team delivering legal services to clients. This allows for blended high and low rates on client work, which maximizes revenue and profitability. Compensation is paid based on what is generated for the organization – not for any one individual – because the organization’s revenue is maximized, and so too are profits, the lifeblood of organizational survival.
One can use a sports metaphor, comparing teams that have one or two self-centered, freelancing star athletes to those teams with no stars, but great co-operative skills. While it is possible for the former to have a good season (often followed by a collapse), it is the latter model that is the more satisfying and longer lasting. The team model provides the greater satisfaction because the collective nature of the achievement allows everyone to stay at the top longer.
The best law firm compensation approach gets away from a star system that rewards only the individuals who stand out from the crowd because they are out for themselves, by also rewarding those individuals who help the crowd perform better. This creates a more profitable firm, from which all firm members benefit. In today’s competitive legal marketplace, it’s the dynamic in which billing, profits and compensation all hang together.
Building Loyalty
Loyalty is a fluid concept in today’s legal world, as clients seem to use RFPs and beauty contests to change law firms with increasing frequency. Many firms, however, continue to maintain client relationships measured in years and even decades. In such situations the client typically gives the law firm the opportunity to respond to changing competitive conditions (whether proceeding from the client itself or from competing law firms), calls the law firm first when new needs arise, and continues to maintain the relationship as new general counsel and newly acquired businesses arrive. Law firms build this kind of loyalty by demonstrating value, not just representing cost. The client service team is the key to doing so.
Whether the relationship between law firms and their clients is a new one or one of long standing, every new matter involves the opportunity to establish a dialogue that can support a collaborative relationship. By making clear all expectations and objectives right at the start, the law firm should obtain as much information as possible about the goals and desires of the client. The information should cover not only issues, anticipated strategies and desired outcomes, but also the nuts and bolts of how counsel should conduct the engagement. Making clear the client’s objectives and setting forth how to meet them through the contributions of each member of the service team are essential to future success.
This goes to the fundamental truth of the legal profession: lawyers should not just practise law, they must serve clients. To remain in legal practice, a lawyer must provide a quality service and work product to the clients’ benefit. If clients do not believe that a lawyer is serving their best interests, they’ll take their business elsewhere.
This is not an issue of cost – most clients recognize the importance of and are willing to pay a fair fee for value. What they do not want to pay for is inefficiency, poor service, unnecessary services, lack of communication, or unreliability. The way in which services are delivered to the client must be in tune with what the client wants and needs to have. The client service team, with billing and compensation oriented to organizational success, is the best way to accomplish this.
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).
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