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Mind the gap – your idea of a successful transaction doesn’t match mine article image

Mind the gap – your idea of a successful transaction doesn’t match mine

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Time and again we hear about law firms claiming success on transactions executed, but frustratingly for them, the view doesn’t necessarily resonate with in-house legal teams with the same enthusiasm. Why might that be?

The fundamental reason for this disconnect is that law firms approach the issue differently. They tend to look at it mechanically – technical know-how, team’s experience and expertise in delivering similar transactions, meeting of deadlines and so on. Undoubtedly these are all very important, but in the eyes of the General Counsel (GC), they are a given. It’s happened on numerous occasions that law firms have happily declared at the end of a deal that the transaction was a huge success, executed on time and within budget. However, their estimation is often limited to the billable hours that the firm spent on the transaction, it doesn’t take in to account the amount of “in-house” time the matter chewed up, nor does it measure the amount of management angst that was expended on it.

Law firms may do well to provision their services by taking a customer’s point of view. It’s about packaging the service correctly, and putting in the development time behind the scenes to ensure that they deliver on the promise that the packaging implies. By way of an analogy, if you purchase an Apple device, it comes nicely boxed up and the process of starting to use it is straightforward. More often than not, it works perfectly. On the off chance it doesn’t function properly, you know help is at hand and quickly accessible. There’s a ‘feel good’ factor associated with the purchase – the device is attractive, it’s a quality product and easy to use with the minimal hassle. Firms would be well served by adopting a similar attitude towards offering services. Think of how clunky most high tech devices were to use 10 years ago, and think of how much more consumer friendly they are today. That is the sort of evolution that law firms need to strive for.

This kind of ‘consumer-led’ approach should also enable law firms to focus more on the ‘softer’ requirements of clients – taking into account things like an appreciation of the challenges of the department, the cultural nuances of the client organisation, documentation that is appropriate and meets the unique needs of the business (e.g. - not unnecessarily antagonistic toward key stakeholders), and so on. A simple example will illustrate the point – no one would assume that legal documentation that a major corporate uses for day to day work is or should be identical to that which a smaller unlisted competitor might use; nor that the documentation used by a health care charity should be the same as that used by a private equity backed financial services business. There is much value in trying to understand these differences, rather than ignoring them.

Knowing the audience (or target market) is another area where law firms could usefully develop their skills. GCs typically have visibility of a wide range of professional services that are offered to the business. This means that often they are well placed to distinguish between the approach that a law firm would typically take in comparison to other professional service providers. They are able to assess each based on a detailed understanding of the merits of their offerings and for this reason they may be more forgiving is certain circumstances. By comparison, Boards and CEOs often base their perception of a legal service provider on the long impenetrable legal documents they see, sometimes accompanied by (short) written reports, but always by (and often large) bills. Given the substantial legal budgets that companies are forced to set aside, it is important that both the CEO and the Board feel assured that they are receiving the ‘full package’ – technical expertise, superior quality legal advice and a flexible service that addresses the unique challenges of the legal department to help them deliver against the strategic requirements of their business.

Getting CEOs and Boards to feel confident about their law firm is not a theoretical exercise. Law firms are in danger of being displaced in some areas if they are not careful. Accountancy firms and strategic advisory organisations tend to be better at articulating the ‘value’ of their services. That is not to say that they represent “better value”, but they are simply much better at the packaging (both in substance and form) and at trying to take a consumer centric view. To put it bluntly, law firms need to watch this gap like hawks and seek to bridge it quickly as they can.

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