If information is power, then the influx of information into law firms packs the punch of an avalanche – the trick is to manage this information effectively in order to avoid being buried. Many of today’s firms face the challenge of translating what the firm “knows” into useful information its members can apply to existing relationships, and as the firm grows, so too does the avalanche.
For example, if a law firm is small enough, its lawyers and staff can all sit around a table once a week to discuss business. If one lawyer is interested in contacting XYZ Corp., the others can pitch in with valuable information about “who” they know at the potential client and “what” they know about it.
‘I saw in this morning’s paper that they are thinking about opening a new facility,’ says one lawyer.
‘I sit on a hospital board with the CEO, and I could introduce you,’ says another.
‘My brother-in-law works there, and I can ask him what’s going on,’ says the secretary who is taking the meeting minutes.
Without a doubt, this kind of information can turn a cold call into something much, much warmer.
As a law firm grows larger – subdividing into practice groups, moving onto more floors or into additional facilities, merging with or acquiring other firms – it becomes much more difficult to reliably tap into the valuable information that is stored in each person’s head. Members of a large firm may not know each other; even if they do, they may not know each other well enough to be aware of each others’ relationships.
The collective intelligence of a law firm – in Rolodexes, on scraps of paper or business cards in desk drawers, in individual Outlook contact lists, in isolated Access, Excel or Word files, and squirreled away in the minds of a law firm’s lawyers – is a priceless resource.
The challenge for law firms is to make effective use of this collective intelligence to maintain the strength of existing relationships and pave the way for future relationships – a challenge that can be answered by enlisting the power of computers and software in the form of contact relationship management systems.
Contact Management
A Client/Contact Relationship Management (CRM) system allows a law firm to manage all of its contacts in a central database with several levels of security. Most current program offerings synchronize with Outlook and other e-mail programs, so that any change made to an individual’s e-mail contacts is automatically synchronized with the central database, and vice versa.
In its simplest form, a CRM system can be used to manage both print and electronic mailing lists. This kind of functionality is a chief factor in drawing firms to explore the potential of CRM systems.
“Even the biggest law firms can struggle with contacts and lists,” said Elizabeth Cordeau-Chatelain of Lexcore Communications in Calgary, who has advised more than 20 firms on CRM implementations. “A firm must be able to institutionalize the information that is in people’s heads and use it – for firm-wide, group and individual business development efforts.”
In the past, when a law firm wanted to mail a newsletter or an announcement, or wanted to invite people to an event, the process involved the time-consuming task of collecting names from lawyers and previously existing lists, checking for duplicates and accuracy, and creating a new list for the mailing or the event.
With a CRM system, each contact exists only once in a database. Fields can be created for any category of information that the firm wants to track – including, but not limited to, mailing lists, event lists, interest areas, attorney and staff relationships and industry codes.
“It is important to determine the pieces of information you want to track and to know how you want to use this information before you even start to talk with CRM system vendors,” said Nancy Manzo, a Seattle-based CRM consultant who has worked with numerous Canadian and American law firms. “That way, you can choose the product that best meets your needs.”
For example, if a law firm wants to send general counsel an urgent update about a new law affecting environmental compliance for public companies in the coal mining industry, a query of the CRM system could create this unique list in minutes. An update could go out almost immediately.
“We are hoping that, soon, someone can subscribe to newsletters and alerts on our Web site, and the information will automatically feed into the CRM system,” said Mark Hunter, manager of relationship intelligence at McCarthy Tétrault LLP (www.mccarthy.ca).
In addition, most CRM systems allow a law firm to manage a mailing or event and track its success in terms of follow-up contacts that might eventually lead to new business.
“When choosing a CRM system, it is important to look for a product that will allow you to associate the cost-per-person of an activity with the results of that activity,” said Cordeau-Chatelain.
Everyone Must Share
One hurdle that law firms must overcome when installing CRM systems is that many lawyers are not comfortable sharing their contacts, whether for personal or competitive reasons.
To address personal concerns, CRM systems allow information to be encoded with varying levels of security. A contact’s business information might be listed as public, while the same contact’s home information, and personal details like the names and ages of her children, could remain private – accessible only to the lawyer who entered this information.
However, the more readily available the information in the database, the better the firm’s chances of negotiating the “six degrees of separation” between a lawyer who wants more business and the potential client who could provide that business. A potential client’s husband, for example, might serve on a board with the lawyer’s sister.
“Competitive lawyers who practice at a firm must get over the issue of sharing,” said Manzo. “An individual contact list is valuable to an individual lawyer, but does not leverage this knowledge to benefit the firm as a whole.” Plus, having this kind of information in a centralized database helps a firm provide continuity of service to a client when an individual attorney is on vacation, on leave, retires, dies, or leaves the firm.
To achieve the goal of 100 per cent participation, a law firm can use the carrot-and-stick method. Firm leadership should strongly support the initiative and let all members know that sharing is expected. More, they should lead by example, by putting all of their own contacts into the system. For lawyers who still have concerns, protocols can state that no-one is to contact a person without first speaking with the “relationship” attorney.
Other firms rely on sticks. For example, failure to participate can be factored into a firm’s compensation plan. Some firms refuse to reimburse an attorney for business development expenses until the contact has been entered into the CRM system. When it’s time to send out mailings or event invitations using the database, non-participating lawyers can be required to send out their own – manually.
Relationship Management
CRM systems can be used to manage relationships as well as contacts. At this level, contacts are integrated with a firm’s other internal systems in order to add meaningful context – or relationships – to an individual contact.
Most CRM systems will automatically download a record of e-mail and electronic fax contacts as well as calendar information and notes.
This makes it possible for lawyer Smith, who is heading to a meeting with a contact at XYZ Corp., to know that the contact received the firm’s most recent mining update, attended a mining-law seminar two months ago, and had lunch with another lawyer at the firm two weeks ago. Smith can look at the brief notes his colleague wrote after the lunch and know that the client expressed a concern about environmental compliance.
Contact management can be integrated with accounting and billing software, human resources software, and document management systems. If this is the case, Smith could see on his screen a link to a list of matters the firm is handling (or has handled) for the client – and whether or not this work has been profitable.
“In addition, a CRM system provides an excellent way to ‘know what you know’ about work that is being done for various subsidiaries of a single parent company,” said Manzo.
Interaction, the most popular CRM system among large law firms, offers a “watch list” component – which proactively alerts a user when there is any firm activity regarding a particular contact or company.
Advanced Functions
CRM systems can also be integrated with sources of external industry data. For example, Smith could see how XYZ Corp.’s stock is doing, who sits on its board, and a link to a recent news article about the company in a major national business publication.
Information of this kind is accessed via links with external sources like Dun & Bradstreet, Standard & Poor’s Capital IQ, Lexis/Nexis, OneSource, Barron’s or Hoovers. It can also be added by a research- and market-savvy data steward.
Armed with this collective knowledge, Smith is well-prepared to meet with the legal counsel of XYZ Corp. The client will be flattered that Smith is aware of all aspects of the relationship as well as the company’s business issues. No matter how large and dispersed a law firm might be, a CRM system can make it look as if each member just left the table after a thorough discussion of the client’s needs.
“I knew that we were successful,” said Trina Joyce, senior marketing specialist at Goodmans (www.goodmans.ca), “when I started to overhear conversations in the hallways. When asked what they know about a particular company, lawyers now respond, ‘Have you checked Interaction?’ It has entered the culture of the firm.”
Thanks to the Internet, CRM systems can be accessed from any location, at any time and by using remote devices. Smith does not have to be in his office to prepare for his meeting.
CRM Providers
A small firm that simply wants to centralize, manage and access its contacts can do this by setting up a public folder in Outlook. This information can be downloaded from Outlook into Excel, Access, Word or Publisher files for mailings and events.
Once a firm reaches about 20 lawyers, however, Outlook is no longer a recommended option. The number of contacts and relationships increase exponentially. “A firm with a strong IT department could create a customized system for about half the cost of a software product,” said Joyce, “but would then be responsible for continuous updates that add to cost over time. A vendor provides these updates.”
The most common CRM system software options for law firms are:
In addition, Microsoft recently launched version 3 of its CRM product – Microsoft Dynamics CRM (www.microsoft.com/crm) – that meshes cleanly with the entire Microsoft Office suite of products. The latest version designed for law firms is available from Client Profiles.
A number of firm management programs offer CRM components. “I have been impressed with the CRM functions of Amicus Attorney (www.amicusattorney.com) and Redwood Analytics (www.redwoodanalytics.com),” said Cordeau-Chatelain.
Plan for Success to Maximize the Value of Your Investment
CRM systems for law firms are not inexpensive. Software licenses can range from $250 to $500 per user and there are additional costs for server license fees, hardware, consultant fees, additional modules, customization and integration, data cleanup and conversion, implementation, user and administrator training, technical and user support, and software maintenance. Total implementation costs can equal or exceed the cost of the software.
When all goes smoothly, the process for a simple contact system can take 12- to 18 months, and then must be updated continuously to preserve the essential integrity of the data. A full relationship system can take years to implement.
When a CRM system is well-conceived, installed, rolled out and maintained, it will be well worth the time and money. Most systems for law firms are priced much more attractively than those priced for businesses.
However, if a law firm thinks that it can simply buy some software, install it and expect success, they’re in for an unpleasant surprise
In its 2005 Technology Survey, the International Legal Technology Association reported that more than half of all law firm CRM implementations had serious problems or failed to go live. Because these firms failed to plan, most of them came to question the value of their investment.
“However, if you can demonstrate value to lawyers – new business generated by cross-selling or relationship connections – you can succeed,” said Manzo.
Some firms feel comfortable embarking on a CRM initiative on their own. Many others rely on consultants – who have overseen literally dozens of successful installations – to help with requirements gathering, user-needs assessment, product comparison, analysis, the proposal process, selection and deployment.
“When dealing with vendors,” said Cordeau-Chatelain, “make sure that the vendor provides you with a demo – using your own data – so that you can make sure that the program actually does what the vendor says it can do – within your firm environment.”
Implementation
“The most difficult part of the implementation process involves data cleansing – where all of the data that are being migrated from a multitude of isolated sources are put into a common database using common standards,” said Michael White of Lynch Marks (www.lynchmarks.com), a CRM consulting firm.
Duplicate information and files are merged during the cleansing process. There are a number of products on the market that can clean about 60 per cent of a firm’s data automatically, leaving the remainder for manual processing by a data-cleansing team. Most firms hire temps for this process, which can take months, then hire a full-time data steward to be responsible for data quality going forward, as well as ongoing data enhancement and enrichment.
Some firms allow everyone to enter data into the system – which is then automatically forwarded to the data steward to make sure that it is accurate and complies with standards. Other firms restrict data entry to the marketing department. “We found that there are errors in the data about 40 per cent of the time,” said Heather Gray-Grant, director of marketing at Alexander Holburn Beaudin & Lang (www.ahbl.ca) in Vancouver, “so we want to review everything before it enters the system.”
Once a year, she sends out a hard copy of each attorney’s contact list. “We usually do this in August,” said Gray-Grant, “so that out database is in the best possible shape prior to the annual holiday-card mailing.”
In-house marketers, consultants and vendors agree that accuracy of the entries is essential if lawyers are to trust and use a CRM system. “Lawyers are very critical people, and the simplest of errors will cause them to lose confidence in the entire system,” said Joyce.
Any new initiative using a CRM system should be preceded with a pilot initiative – working with a small group to make sure that all bugs are worked out before it is launched firm-wide. Business development success with the pilot groups should be enthusiastically publicized in order to increase anticipation among other groups.
Every law firm, group and lawyer needs a usable system to track and stay in touch with clients, contacts, referral sources and others who can help retain existing business and attract new business. Regardless of a firm’s size, a CRM system can help law firms enhance client relationships and leverage firm-wide knowledge into new business.
Janet Ellen Raasch is a writer/ghostwriter who works closely with lawyers and other professional services providers – helping them promote themselves as thought leaders within their target markets through publication of articles, books, white papers and rich content for the Internet. She can be reached at (303) 399-5041 or jeraasch@msn.com.