Value for money: many firms failing to hit the mark
The big commercial law firms are not delivering value for money and often fail to stick to budgets, a survey of over 800 corporate clients has found – though some are much worse than others.
In all, clients said their solicitors only met or exceeded their expectations on value for money in 49% of cases – DAC Beachcroft was top with 66%.
The report from Nisus Consulting said: “Law firms have existed in a very comfortable place for a very long time. This has seen prices kept high and profits similarly elevated in ways that other industries and professions can only dream of.”
The “downside” of this was that “clients feel they are paying through the nose and that the profits are excessive” and they were not getting value for money.
“Convincing clients that your firm is delivering real value in the context of the legal market is an uphill battle at best.
“Failing to stick to estimates, charging by the hour, not keeping clients informed of changes to estimates and the reasons for those changes, all contribute to a feeling that value is poor and that law firms are only interested in looking after number one.”
Researchers said the scores for the magic circle firms on value for money in Nisus’s annual Brand Promises and Services Realities report were “worth noting”, ranging from 50% and 10th place in the table for Linklaters, to 42% for Allen & Overy, 35% for Freshfields and 26.5% for Clifford Chance.
They suggested the challenge was better communication with clients on value for money, providing them with more transparency on “the profitability of a piece of work”, acknowledging “where pain has been swallowed and conversely where profits were good”.
“We know of no firm doing this and our results point to none doing it. Who is going to grasp the nettle of this challenging and sensitive problem?”
Nisus said there were “glimmers of hope” in the top three firms for value – DAC Beachcroft (66%), Blake Morgan (60%) and Osborne Clarke (58%).
On sticking to budgets, Nisus found firms “rather variable in their ability (or predisposition) to comply with budget or at least to inform the client ‘as soon as’ when an issue arises that will compromise an estimate.”
While it was easy to assume that for the biggest firms doing the biggest and most challenging work would find it more difficult to stick to budgets, the findings did not support this, the report said, with Dentons coming in second and Freshfields sixth.
Clear at the top, however, was Shoosmiths. Not one respondent reported the national firm as being only ‘some of the time’ or ‘never’ within budget.
“Of that 100%, it’s true that 60% scored ‘most of the time’, so there is still room for improvement, but credit where credit is due,” the report said.
Across all firms, 77% of clients reported that they came in on budget all or most of the time.
Herbert Smith Freehills, meanwhile, achieved by far the highest net promoter score – calculated by subtracting the percentage of ‘detractors’, or unhappy customers, from the percentage of ‘promoters’, loyal customers who would recommend the firm to others.
Its score was 58%, with Osborne Clarke next on 41% and Hogan Lovells on 40%; the average across all firms was 24%.
The survey’s overall winner for client service was Herbert Smith Freehills, followed by Shoosmiths and Osborne Clarke.
Allen & Overy topped the table for strength of brand, followed by DLA Piper, Linklaters, Baker McKenzie and Clifford Chance.
Nisus said firms should identify their most profitable, rather than highest billing, clients and direct business developments towards the “most profitable relationships”.
On branding, they said firms should have a “robust” brand strategy that “goes beyond corporate identity”, and was focused on a future of three to five years.
Firms should also align brand perceptions with service experience. “Many firms through websites and other communications make lofty claims about their corporate or brand values. But how many clients would recognise any of those in action based on their experience?”
In a blog on the Nisus Consulting website, founding director Tim Nightingale said the latest survey showed that the top three factors driving client loyalty had not changed – strategic thinking, personal chemistry and problem solving.
Responsiveness, which solicitors time and again said they thought was the most important factor, came eighth.
“Clients want to work with people they can get on with; people who can think strategically – who can see the bigger picture for the client company and how the legal advice works in that context.
“They bring with them solutions to problems, not more problems or reasons why things can’t be done.
“It really doesn’t matter how well a firm is judged to perform on its professionalism or its offices, however new and shiny they are, understanding what’s important to clients in general, and individually, is really the game changer and what we all need to get our heads round because service matters to clients.”
Adrian Samuel 
It is no surprise to hear that strategic thinking remains one of the most important factors when it comes to client loyalty. Value for money isn’t just about the fee you charge – it’s about what you bring to the table. The danger all firms face, but particularly much larger ones, is losing the ability to deliver that high-level strategic advice through the dilution of the offer, and by that I mean the overuse use of junior lawyers. It might make financial sense for a large team of less experienced lawyers to be handling cases on behalf of someone more senior, but it is all too easy for the client to lose the sense that they have a trusted (and experienced) advisor. There are cleverer ways of working, be that as a consultant so you deal directly with clients throughout transactions, as they do at Setfords, or simply by better managing workloads within traditional firms to ensure senior lawyers have the time, and inclination, to offer that extra level of support to their clients.