Best Practices: Investing in the Client Relationship

April 30, 2000

John Irving is an independent legal IT consultant and JointChairman of SCL. He can be contacted at

Basic business principles dictate that investment should be made in those assetsthat produce the greatest return. Not surprisingly, law firms have traditionallyinvested most heavily in their fee earners, in the form of fee earner salariesand partner drawings. For decades this system has worked well and, in return,when profits did not meet expectations, fee earners were expected to make up thedifference by increasing their billable hours.

But today’s globalised economy has changed everything.First, there’s no longer a glut of fee earners on the market, which hadpreviously enabled firms to simply replace the brains that didn’t produce withothers waiting in the wings for an opportunity. Secondly, in this present boomeconomy, there is more work to be done than fee earners to do it. Moreover, theintroduction of multidisciplinary practices (MDPs), coupled with the increasingtrend toward consolidation and mergers, has created an unprecedented level ofcompetition for good staff and, therefore, fee earner mobility as firms vie fortalent wherever they can find it.

Another consequence of globalisation, even visible atnational and regional levels, has been a transformation in the law firm/clientrelationship. In the past, clients seldom changed their legal advisers unless anundesirable outcome or a severe clash in personalities occurred. This is nolonger the case. Large corporate clients increasingly are seeking to reduce thenumber of outside advisers managing their legal affairs. Individual clients havealso become more sophisticated, and are expecting a higher level of service thanthat traditionally received.

Indeed, the legal industry has hit a metaphorical wall. Feeearners are already working as hard as individual stamina will allow, andbilling as much as they ethically can. In fact, some astute clients now requirea reduction in working hours to maintain freshness, and not tired thoughts fromworn-out legal minds. With increased competition and declining client loyalty,the prospect of stagnant, if not declining, profits seems a strong possibility.

Harnessing Another Firm Asset: The Client Relationship

Law firms in America have started taking a closer look atother assets they hold in which they can invest more profitability. The mostobvious one identified was the client relationship.

The notion of relationship management is fuzzy in the mindsof most fee earners, regardless of which side of the Atlantic they are on.Intuitively one knows that clients are attracted to firms with good reputations- and good reputations are built upon a foundation of competent legalrepresentation and strong relationships. But the vexing question remains, howcan one manage the relationship more effectively to provide a greater return?

American law firms are turning to relationship managementsoftware (as have an increasing number of UK firms). Relationship managementtechnology does for the client relationship what document management technologydoes for fee- earner work product – it takes a previously chaotic, unorganisedand inefficiently managed asset upon which everyone relies, and restores orderto it.

To understand how this can be, let’s start by breaking downthe process of relationship development into essential components, and thenexamine how relationship management tools can be brought into play during theprocess.


Every firm has at least one fee earner renowned for bringingin new clients – often known as ‘the rainmaker’. These valued individualsgenerally have a way with people as well as an uncanny ability to remember thedetails – who knows whom, who’s involved in which deals, the names ofclients’ children, and the like. Rainmakers are revered and highly paidbecause they represent great sources of revenue generation.

Clearly, relationship management tools cannot create peopleskills in a fee earner where none previously existed. But what they can do isprovide quick access to all of the other information that rainmakers are able torecall naturally and use for business advantage. For instance, the success orfailure of deals depends as much on the parties brought to the table as it doesthe substance of the transaction. Rainmakers know many people, understand whatthey bring to the bargaining table, identify links and comfort zones, and bringtogether the right individuals to make a deal a success.

Via a centralised relational database, relationshipmanagement tools enable fee earners to access this same type of information.These systems provide a variety of features that will reveal relationships amongfirm contacts. For example, what is the relationship of contact A to contact B?Do the two know each other? Have they worked together previously? Does anyoneelse in the firm know these parties? What notes and firm activities existregarding those relationships that will be helpful? What expertise do they have?

Cross Selling

It is much more costly to find new clients than it is toderive more revenues from existing ones. Some recent studies show that it costsas much as seven times more to get work from a new client than it does to‘farm’ more work out of an existing client. By focusing more intensely onthe existing client relationship, American firms have found that they are ableto uncover more opportunities to cross-sell services. Relationship managementtools have been critical in this process.

Successful cross-selling depends upon two critical factors:

  • having adequate client information to identify cross-selling opportunities

  • having proper information about your firm’s resources to respond to those opportunities.

Or, in basic economic terms, matching supply and demand.

The first point is obvious. The firm must understandcorporate clients’ businesses and their varied requirements. Frequently, whenrepresenting larger institutions, different fee earners will work with a widearray of individuals from the client company. Without a central repository inwhich to store the information coming in from so many different sources,spotting opportunities is difficult, if not impossible. Relationship managementtools provide an excellent means to store and categorise this information. Whatare the client’s business specialisations? Who is responsible for makingdecisions on outside legal advisors? Who holds the purse strings?

For individual clients, information remains the key forspotting new revenue- generating opportunities. Is marriage being contemplated?A new business venture being planned? An addition to the family expected? Has aclose relative just passed away? Has the firm won a case that would be of valueto particular clients? Will a market shift or new piece of legislation impact onthe client’s affairs? By maintaining close contact and having the ability tostore client information where it can be easily shared and accessed, the processof cross-selling becomes greatly simplified.

The second factor for successful cross-selling, however, isnot nearly as obvious. Even when client needs are identified, not all firms areprepared to respond. The primary reason is usually that knowledge of internalfirm resources is not broadly known or easily accessible. Relationshipmanagement tools can offer a centralised repository of all essential firminformation. For instance, these tools are frequently used to create‘expertise encyclopedias’ – easily retrievable data detailing the broadspectrum of expertise the firm can offer clients. An expertise encyclopediamakes it easy for a fee earner to determine if the firm would be capable ofrepresenting a client on a matter when the opportunity arises.

Frequently clients seek fee earners who have worked onparticular types of transactions which meet very specific criteria. Relationshipmanagement tools can catalogue individual matters on which the firm has workedas well as the unique characteristics of that matter that might be of value toother clients.


A reliable, up-to-date database of all client contacts isstill beyond the capability of many firms. Good relationship management toolswill include marketing databases to support client development activities. Animportant aspect of client development is providing a polished, intelligentimpression to the prospective client. With the ability to include detailed textnotes about every contact the client has had with your firm, it becomes possiblefor almost anyone on the staff to field a new call from the same clientintelligently. That can be deeply impressive, as anyone who has had dealingswith First Direct bank will know.

Add in details about an individual client’s interests -from sport and music to industry sectors and special subjects – and it becomespossible to target new marketing approaches very precisely indeed. Captureanniversary details as they surface in conversation – from birthdays tocorporate budget cycles – and it becomes possible for the system to alert staffto make calls at particular times to win maximum gratitude. The biggestdifficulty with such systems is getting them up and running. The common reactionamong professionals tends to be: ‘I’ll start using it when it’s of use tome.’ One or more of several devices may help to overcome the resistance.

Consider, for instance, removing the donkey work by using anoutside agency to log the basic details of your clients, then invite staff toflesh out this core with notes from their individual stores of knowledge (thesenotes are usually a database’s most valuable element). Make the workload moremanageable by asking staff initially to type in only the details of their 100most important clients; lesser clients can be added later. Introduce a standingrule – which can be easily policed by a system manager – that each member ofstaff should add ten new contacts to the database each week; in a 100-strongfirm, that adds up to 50,000 contacts a year. Finally, consider shifting thebasis of remuneration away from ‘you-earn-what-you-kill’ towards rewardingteam, departmental and firm-wide performance – that gives each professional moreincentive to share his or her personal collection of business cards and notes.

Client Service

Clients have become considerably more sophisticated in recentyears regarding their selection of legal services. Clearly, their objective isto choose a firm that will provide outstanding legal counsel for an affordablefee. But increasingly, this only represents the beginning of their assessment,not the final determining factor.

As firms continue to grow, merge and consolidate, clients arefinding it more difficult to distinguish between the players simply on terms ofquality of services alone. Accordingly, service has become a majordifferentiator in the United States. We are starting to see this trend in theUK.

Relationship management technology has proven to be anexcellent facilitator of better client service. For instance, with client datascattered to the four winds, it would be difficult for any fee earner to fieldany question asked by the client. Client billing information is kept in thepractice management system. Client contact information is stored in contactmanagement systems, perhaps on Palm Pilots, or in paper Rolodexes, possibly evenin a ‘little black book’. Matter information is stored in paper files, inword processing documents or in document management systems. A robustrelationship management tool can consolidate all of this information and make itavailable through a centralised database. Thus, when a client calls asking foran update on a matter, the fee earner can quickly retrieve this information andanswer most questions on the spot.

UK Predictions

The trend towards client relationship management in theUnited States is growing strong. Approximately 40% of the largest firms (the‘AmLaw 100’) as well as 40% of the ‘Global 50’ have already implementedsome sort of relationship management system. The large and medium-sized firmsare also investing heavily in this technology. Early signs indicate that thistechnology is quickly penetrating the UK legal community as well. Some of thelargest firms here are already successfully using relationship management tools,including Berwin Leighton and Cripps Harries Hall. It is gaining popularitythrough both technical channels, and word of mouth.

Cripps Harries Hall purchased Interface Software’sInterAction. Although the firm liked the idea of contact management software, ithad some concerns about the extent to which it would become a key tool on thedesktop. According to Cripps’ IT Director, Jon Gould, ‘Initiallyrelationship management was really not part of our invitation to tender. Butwhen Tikit proposed it, it dovetailed so nicely into the architecture that itseemed an integral part of the system. The partnership took to it very much aswell.’

Gould says that as his firm’s multi-disciplinary practicegrows, relationship management is increasingly becoming the centrepiece to keepthe information flowing throughout the firm. ‘Often we’re acting on behalfof the client in several different practice areas. It is vitally important thatwe avoid a client being asked for the same piece of information more than onceby two individuals from within the firm. We are now identifying all the relevantpractice areas in which fee earners might interact. The relationship managementtool will make this core information easily accessible to professionals fromthose practice areas.’

Berwin Leighton was already familiar with the concept of acentralised contact and relationship management, and actively sought to purchasea system when they upgraded their practice management software. IT DirectorJanet Day recalls that the firm had three primary considerations when selectinga product, ‘First, the system had to be customisable in order to fit the waywe worked – we didn’t want to change our working practices to fit the system.Second, whenever possible, the tool would have to integrate with our existingsystems and share common information. Finally, it had to be easy to use.’ Shereports that users at Berwin Leighton are leveraging their relationshipmanagement technology to conduct more sophisticated marketing and clientdevelopment campaigns. ‘A lot of them now are using it as a marketing tool,helping them to do targeted mailings, and to manage the result of those targetedmailings. We are also using it to run a number of quite large events this year,and to generate reports looking at the progress and impact of those events.’

I predict that, increasingly, UK firms will take stock oftheir inefficiencies as they relate to client relationship data, and start todevelop strategies to leverage relationship management technology to help themstreamline their operations, compete more effectively and service their clientsbetter.

Return on Investment (ROI) is a key business success factor.Many firms haven’t been able to unlock their biggest investment effectively -their client base. Relationship management systems, used correctly, provide akey.