Top 7 Reasons Firms Are Leveraging Experience Data
By Jason Noble
This article originally appeared in Law Journal Newsletters here
The competition for outside legal services has never been more intense. 50% of buyers have adjusted their law firms in the last 12 months, and that will continue through 2023. See, 2023 Thomson Reuters State of the Legal Industry. Shrinking demand translated into a productivity loss totaling, on average, a $98,000 loss in fees per lawyer as compared to a similar lawyer in 2007.
Add to this an expanded playing field of competitors that now include an array of midsize law firms, boutique and specialty firms, accounting firms, new law companies, and the proliferation of other, well-funded alternative legal services providers who are taking significant client and market share away from traditional law firms. See, 2023 Alternative Service Legal Providers Report from Thomson Reuters.
Looking forward, firms appear to be counting on rate increases to maintain profitability, but there are signs that clients are likely to be more resistant to further rate hikes as payments slow down and realization was in decline at the end of 2022. See, 2023 Thomson Reuters State of the Legal Industry.
Should firms face these challenges as threats or opportunities?
It depends. As competition heats up, the top way firms can now differentiate themselves in 2023 (behind enhanced client services) is expertise and relevant experience. In fact, clients are citing that the comparable strength of just one or two lawyers at mid-size firms can drive favorability in the RFP process. Competitiveness is not based just on cost. “Clients want the most ‘bang for their buck,’ and not just the lowest sticker price,” ibid. — to ensure the most favorable outcome.
Expertise is the lifeblood of a successful law firm. It’s what clients are buying, after all. Too many times, however, the firm’s expertise is locked inside silo’d systems or trapped in a chain of manual processes so labor-intensive, that the firm cannot access their own expertise to leverage it to their own advantage.
In these instances, legal marketers and other law firm staff are relying mainly on Excel spreadsheets and Word documents to track, compile, use and update information about the firms’ lawyers’ expertise for winning new business and client development.
This manual reliance on static binary spreadsheets and documents to maintain, track and utilize the firm’s expertise is time-consuming, is likely not complete or accurate — and is costing the firm money.
A LexisNexis survey found that approximately 54% of RFP responses take law firms — on average — over 20 hours of administrative and non-billable time to complete, with much of that time spent on producing relevant experience. So if a law firm responds to 50 RFPS in a year, the total amount of administrative/nonbillable time spent is approximately 1,000 hours which, at an average hourly rate of $300/hr, amounts to $300,000 in non-billable time.
Top 7 Benefits of Experience Management
Law firms need to better leverage their own data — specifically their experience data — to get better at this. In fact, procuring and implementing an experience management platform is a must for any law firm that wants to flip the market challenges from threat to opportunity.
Here are top five competitive advantages firms can expect from implementing an experience management platform:
- Win more business with less labor (or not adding headcount)
- Respond to more RFPs in less time with better data
- Drive strategic account planning
- Increase attorney productivity by gaining quick visibility to availability
- Streamline business development workflow
- Surface diversity statistics of teams effortlessly
- Substantially reduce time needed for Chambers and Legal 500 submissions
An experience management platform helps centralize everything the firm has done — and who did it — into a single location to help with myriad use cases, from pitches, proposals, to cross-selling, staffing, and more. The platform will pull in data from internal systems (DMS, CRM, Time & Billing, HR and more) to automatically populate employee, client, and project profiles. Firms can continuously improve experience data by allowing SMEs to actively create and validate experience records.
And experience then becomes more than the sum of its parts. Capable of searching and synthesizing huge volumes of data from multiple sources, an experience management platform produces more insightful results more quickly and cost effectively than humans. Data driven law firms will be empowered to support both tactical goals and big-picture growth objectives. Drive BD, marketing and KM efforts by improving the accessibility of the firm’s expertise.
While the obvious use of experience includes creating best in class RFPs and preparing for pitches, proposals and other marketing and business development outreach, there are other possible strategic uses such as:
- Improve later hiring/integration. An experience platform can be used to identify and spot patterns and trends in workflow, hours, cases and matters by lawyer, by type, by industry, by location, by jurisdiction. This information can be used to assess where work is growing and where to focus investments and where additional lawyers might be needed. Once additional lawyers are hired, an EMP can help identify which of the firm’s current lawyers beyond practice group leaders may have similar clients or experience and introductions can be made to facilitate synergies.
- Firm operations. Because EMPS can be tied to a firm’s time and billing systems and financial platforms, law firm leaders and marketers can quickly see which lawyers may be working too many hours and which lawyers could use more work and act accordingly.
- Strategic planning. An EMP vastly enriches the strategic planning process because most firm-related information is available within the emp in an easy to use dashboard format. An EMP allows law firms to detect possible issues that could negatively impact client relationships and firm income. An EMP can show revenue patterns for key clients over time, so if a key clients’ work or realization is decreasing, identifying that fact is quickly critical so that the firm can act or adjust as necessary.
As clients are increasingly focusing their search for outside counsel based on expertise, competitive firms will be able to respond in kind and demonstrate the expertise when and where clients want it. Buying expertise has always been the approach for clients to take to reduce their risk — a track record of relevant experiences reduces their risk of less-than-favorable results. In fact experience and track record are the primary ways clients develop the short list of law firms from which to make their final selection.
As technology becomes more sophisticated, all of this becomes possible: clients will only continue to ask more sophisticated questions and demand more sophisticated answers. While the competition for outside legal services has never been more intense, the strategic approach firms take — including a strategic approach to technology — will define whether the market pressures are a threat or opportunity.