August 08 National Newsletter   Standing Naked in front of your client   Why would you do it? Peter C. Ross, The Report Factory   Meet Peter

 

 

Standing Naked in front of your client

Why would you do it?

 

Using a phrase coined by a client of ours, it seems interesting and useful to discuss this concept. It is clear that both from a client demand as well as an innovate firm marketing approach, the trend is on the increase.

 

What does ‘ standing naked’ mean for you and your firm, and should you resist?

 

What does ‘standing naked’ mean?

 

Simply put, you are exposing what you have and what you know directly to the client. At this stage in the development of this phenomenon it is likely to include some or all of the following being ‘exposed’

 

1. Provision of electronic bills (EBilling) data
2. Work in progress balances, debtors balances, trust balances, Cost estimates
3. Detailed time entry data for both billed and unbilled transactions
4. Historical billing data
5. Documents
6. Task lists and project plans
7. Detailed work plans, Rates, employee qualification and skill levels
8. In some cases, precedents for clients to do their own work and reduce your fees

In general it would be expected that these details would be exposed electronically via a web portal or similar. What we have seen to date has involved client specific portals or mini websites containing details for that client. So whilst you’re naked, at least it’s in private with one client at a time!

 

In one extreme case of a major corporate (not in Australia), we have seen ‘panel firms’ being asked to provide, on a DAILY basis , all timesheet data for that day related to the client's matters. To us, that’s not just naked, that’s being asked to be an exhibitionist.

 

In most cases, particularly where clients are demanding an electronic feed of data, there are very specific requirements requested which categorise legal (and in some cases support) staff into the clients categories, and time and disbursement coding to similarly be ‘mapped’ to the clients own standard list.

 

Why is it being demanded by clients?

 

It is clear there are a number of reasons why clients are requesting this level of detail. Clients are:-

 

1. Using the data to actively manage the legal work they have outsourced
2. Compare charge rates, success rates and time occupied by Panel Firms
3. Manage their overall expenditure on legal services
4. Participate more directly in the management and activity of the legal processes
5. Review the legal work being done whilst it’s being done rather than wait for any shocks and surprises as the work is concluded.
6. In the case of larger clients with many instructing parties/departments , manage and measure the internal performance of their claims management teams.
7. Gain an understanding of the legal management processes being undertaken by firms and use this as a knowledge gathering exercise for moving to an ‘insourced’ legal services model
8. Overall value assessment.

Clients are clearly needing to see you naked to see what they’re getting, so to speak, and whilst it’s uncomfortable, our sense is that you may as well get used to it and try and enjoy it.

 

Is this a problem or an opportunity?

 

Like most things in business, these challenges can be seen as a threat or an opportunity. The threat is of course that you are ‘shown up’ for overcharging, being slow or inefficient compared to your competitors, or your assertions to clients about efficiency and quality.

 

The opportunity, and this is business, so that’s where we should focus, is providing superior systems, information quality and process participation to your client which ‘binds’ them to your firm, your services and service methodology.

 

There can be little question that when the client is embedded into the service provision process, the tendency to stay there rather than leave for another provider, is heightened. It is also highly probable that the service provision will be enhanced on multiple fronts:-

 

1. The lawyers will have more direct access to the client and the clients own expression of the issues, rather than having that passed on second hand (or not at all) from the partner initially taking instructions.
2. The lawyers will feel a more direct sense of duty and expectation given the more direct interaction with the client.
3. The participation of the client during the process will greatly enhance the clarity and efficiency (in most cases) of the work being done.
4. In general, billing pressures will be reduced where the services are genuinely being provided in a value form as the client will see and understand the full extent of that service provision and the times occupied, something not always properly conveyed in billing documents.

So there’s an opportunity here to seriously impress the client by showing how efficient, organised and focused your firm is in its task assignment and service delivery, so what’s the threat?

 

We all know that not every matter is perfectly handled, sometimes documents get deleted or lost, sometimes the wrong documents are drafted and sometimes inappropriate people end up working on matters where they just don’t belong. It’s even possible that someone might leave a note on a file that’s less than complimentary about the client or their staff, and that might get exposed. It might be in a document or just in a filed email of cross traffic communication within your firm.

 

Maybe a task doesn’t get completed on time or a courier is charged to the matter (to be written off later) because we were running late or made a mistake and had to re-do or re-deliver a document. It could be as simple as a document or email being filed to the wrong matter, which exposes information to the client which we shouldn’t be doing.

 

Simply put there are countless examples of things which can and do go wrong, and we’d all probably rather hide from the client, not in a deceitful way, but it’s just not necessary for them to see. In the ‘naked’ environment, they are likely to have seen it, regardless. So the simple message is, if you’re going to be naked, keep yourself neat all the time and you won’t be too embarrassed.

 

These are real threats to our client relationship if we don’t manage them.

 

There is a further BIG danger hidden here as well. And this one we’ve definitely seen in the real world. Lawyers, for whatever reason, don’t like sharing as much as we’d like to think they do, and have been known to produce documents, emails and file notes ‘outside the system’ in order that they are kept away from others eyes. In my mind there is simply no legitimate reason to allow this to happen, yet it does happen and in some firms with automated workflow environments it does seem to be tolerated. It’s highly probable too, that when faced with being naked, many will opt to avoid the risk and hide in the background.

 

It shouldn’t be.

 

How the hell do I do that anyway?

 

There are a number of ways to ‘stand naked’ and they all have differing levels of ‘exposure’ if you will. The examples I’ve talked about above, are predominantly contemplating ‘real time’ access paradigm, where the client actually participates in the firms day to day management systems and processes.

 

In most cases these ‘live’ environments are secure portals housed within a practice management system or workflow systems environment. Whilst these environments allow for filtering of what gets exposed to the client, in general the whole matter (documents, tasks, emails etc) will be made available. In addition, the security components of these portals are ‘integrated’ to the practice management system. It’s clear that many people are concerned about this level of ‘nakedness’.

 

A different approach, albeit not one I favour personally, is the secondary publish approach. In this model, a portal or mini site is established distinctly from the firm’s management system, and selected documents and reports are published to it at the discretion of the lawyers involved in the matters. It’s like publishing a photo of you naked, rather than really being there. It allows you to make sure you like the photo first. It sounds safe and friendly but in my opinion has a number of distinct problems from a ‘reality’ point of view.

 

• Takes away the discipline necessary with the live publish model (care, timeliness etc.)
• Typically requires a separate action for the client to see something which will invariably get missed and stale as a process, particularly when the lawyers and support staff are busy.
• Putting distance between the client and the ‘real’ process, perhaps can be taken as an element of mistrust or hiding of reality.
• By not having the publishing to the client as a ‘by-product’ of the work itself (in a direct sense) it is more likely the client might miss the real flow of the matter or a specific item.

My preference, which I’ve yet to see completely executed in a real environment, takes the publish everything approach, but with some automated caveats, and doesn’t seem to hard to achieve. In essence it simply defaults all documents produced internally by the firm to a status of draft (and with a printed watermark automated to that effect). These documents are not made available to the client unless explicitly pushed. Once the document is flagged as final (in order to remove the watermark) it becomes read only and published.  All externally produced documents ‘filed’ to a matter electronically should again be read only and automatically ‘published’.

 

It’s a decidedly simple concept really, and I wish more of the workflow software vendors would get on this particular bandwagon. In my opinion, this read only behaviour is one of the missing links in the ‘electro-file’ concept that many firms are starting to embrace.

 

I guess in this ‘model’ you’re naked once you’re naked, but if , when you’re undressing, you expose some bad under garments you don’t get embarrassed by them as well.

 

Is this ultimately a good or a bad move for the legal business?

That, is a very good question. There is no question in my mind that many corporate consumers of legal and professional services wish to turn their suppliers into a managed supply chain. Whilst that sounds foreign to us as professionals, it’s probably inevitable going forward and a direct result of the way professional services businesses have been managed in the past few years. Whereas once the legal firm was a personal and trusted advisor and money looked after itself, professional service firms have (correctly) been refocused as business units and managed as such, with eyes on strategic markets, profitability and client relationship management.  In addition, due to competition arguably generated by this more aggressive ‘business and profit motive’, tenders for services have become commonplace and corporate and government clients have started comparing these commoditised services as substitutable.

 

In the context of this reality it can be seen that by exposing information to this extent, and complying with the clients requests for standardising the information provided, we are indeed fuelling these head to head comparisons and commoditisation. If, therefore, we view commoditisation of legal services as a bad thing, then this nakedness may not be positive, as it certainly pushes this case along. If, however, as a firm we feel that competition is good and we are good at maximising our ideal work and profit in such an environment, then commoditisation might be our friend and the naked behaviour in turn is assisting that.

 

So standing naked in front of your client, good or bad?

In the style of a true economist I’ll say,” it depends”

 

Peter C. Ross is a Senior Consultant with Report Factory Pty Ltd (http:/www.reportfactory.com.au) who specialise in independent advices & highly developed automated reporting environments for legal firms and professional services generally.