October 23, 2012

Is CRM Worth It? The Pros and Cons of Client Relationship Management

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January 2008 Issue | Volume 34 Number 1 | Page 51

Law Practice Case Study

Is CRM Worth It? The Pros and Cons of Client Relationship Management

A partner needs help deciding whether investing in a CRM system would be wise for his firm.

THE SCENARIO  Charlie gazed at his administrator while holding the memo from a group of partners who were advocating for a client relationship management system. The administrator was explaining that CRM wasn’t so much a software product, but more of an approach to how a law firm deals with its clients. A CRM system, she said, was much more than an expensive electronic Rolodex. Among other things, it would allow the firm to track clients’ needs and expectations and cross-sell services accordingly.

Charlie was all for a centralized system that would finally help the firm’s 70 lawyers keep better track of clients and bring in more business. He’d read about the new technologies and believed there was plenty of  potential. But he’d also done an informal survey of his peers—managing partners at other midsize firms—and despite the hype surrounding CRM, not one could honestly say their firm had successfully implemented one of these systems. On top of that, no one he’d talked to seemed especially sure about what components these systems needed to contain to succeed. That wasn’t likely to help in answering the tough questions he knew his partners would have about why they should support this initiative, especially given its potential cost. Even the firm’s most successful rainmakers relied on marketing techniques they’d developed 25 years ago. The majority of the firms’ lawyers thought marketing meant doing good work and waiting for  clients to call if they needed new services. To them, cross-selling was telling the client that the firm had a litigation department on another floor. Convincing them that CRM was a worthwhile investment would take some doing. Before he agreed to support the initiative, he needed to talk to a few people and get up to speed—quickly—so that he could answer his partners’ questions and make the right decision. He wondered who he should talk to....

The Experts

Doug Cornelius, Knowledge Management Attorney

Ross Fishman, Strategic Marketing and Positioning Consultant

Simon Chester, Law Firm Partner and Business and IT Lawyer

Connie Crosby, Law Librarian and Knowledge Management Speaker

Explain the Value Proposition and Make the Case for Contributing

Doug Cornelius -The first step is to convince the firms’ lawyers that who they know is a valuable asset. This step should be easy. Many lawyers consider their knowledge about their contacts and their networks to be as valuable as their knowledge about the law. The second step is to convince the lawyers that sharing their knowledge about who they know will create tremendous value for themselves and the firm. This step will be hard. Some lawyers find this value proposition to be diametrically opposite to the value defined in the first step. These lawyers believe that if they share their contacts, then they are giving up some of their value as individual practitioners. They may also worry whether the knowledge about a contact will be misused or misunderstood by others.

Charlie, one way for you to begin generating buy-in is to demonstrate to these lawyers how they will benefit from a CRM system on a very practical level. Browse through some of those attorneys’ contacts lists with them. This will very likely reveal duplications and inaccuracies, including out-of-date information for contacts who have moved to new companies, gotten promoted, changed their names or died. You and the firm’s administrator can probably also show some examples of marketing dollars being wasted because materials got sent to the wrong addresses or included misspelled names, wrong titles and wrong companies. It should not take more than a few of these to convince people that something should be done to centrally manage each lawyer’s contacts and, by addition, the firm’s contacts.

However, while they may see the advantage of centralizing and thereby sharing contacts, they still may not be willing to contribute their contacts. You need to figure out how many of the firm’s lawyers are going to fall into this category, because if the percentage is large, a CRM initiative has little hope of success. The first two steps are essentially the thresholds in evaluating whether the firm has enough interest and commitment to even consider starting a CRM initiative.

Assuming you can get past the second step, the start of the CRM initiative itself will be figuring out what problems the firm is trying to address by implementing this system. Remember, a CRM system by itself is not going to increase the sharing and leveraging of contact information. Nor will a CRM system by itself allow the firm to cross-sell its services. Again, the lawyers must be willing to share information about clients, prospective clients and marketing initiatives with others in the firm. But a CRM system cannot “force” that information sharing. Lawyers are cautious of how their legal expertise is shared and are similarly cautious of how their contacts are shared. That being said, the firm and the CRM system need to respect privacy issues, and you will have to be careful about addressing that factor as you move forward in investigating the system’s implementation and convincing your partners of its feasibility.

Moving on, you and your team will need to figure out where the information that should ultimately be housed in the CRM system currently resides. In addition to the client contact information that lives in individual lawyers’ Rolodexes, Outlook files and e-mail address books, associated information will reside in the firm’s billing system, in internal and possibly external marketing mailing lists, and most likely in a motley collection of spreadsheets, documents and distribution lists scattered about in multiple systems, too. Most likely there will be some conflict as well as outdated information throughout.

After seeing how this information is scattered about, you and your people will probably be more committed to doing something that will bring it all together in one system. And you will also begin to get a clearer idea of the potential scope of the project and how you might tailor CRM to your firm’s purposes. One of the best uses of a CRM system is certainly to better centralize and manage contact information across the firm. The next level of use is being able to wrap so much more information around the contact that you can see what business you are doing with the person currently and what business you want to do with the person going forward.

However, the fact remains that generally the problem with CRM systems succeeding in law firms is that lawyers don’t like doing the activities that make a CRM system work. Most do not like the concept of “being in sales” and they do not like using things such as the lead-tracking features of a CRM system. They are spending most of their time e-mailing or telephoning their clients and referral sources, so too many believe that the only contact information they “really” need is the correct e-mail address and phone number. So even if a law firm can get past the other hurdles, adopting a CRM system is still tough and often unsuccessful.

Look at Your Firm’s Culture and Business Development Strategies

Ross Fishman - If you read the articles written by system vendors and others in the CRM industry, you’ll find that CRM is easy. But you find something completely different if you talk to those who’ve actually tried to implement it—as you did when you talked to your colleagues at other law firms, Charlie. CRM is hard. Very hard.

It is hard for any type of company, but it’s even harder for professional services firms. Making a CRM initiative truly succeed requires several critical things:

  • Trust
  • A real focus on marketing
  • Good technology support
  • A willingness by the rainmakers to share a wide range of information about their clients
  • Lawyers willing to learn new software
  • The time to regularly update the information housed throughout the system

That combination of factors doesn’t sound like life in most law firms.

That is not to say it’s not possible, or that it can’t, or doesn’t, work in some firms. It can, and it does. But in my opinion, it doesn’t usually work, and certainly not in most “hunter” firms. In firms where the lawyers like to own their clients and keep them portable, there will be serious reluctance to share this information, and any attempt at CRM will fail, which can be a costly, time-consuming debacle.

There are a number of other barriers as well. The point is, don’t believe the hype. You have to take a cold, hard look at your particular firm and its culture, and make a realistic assessment of what you’ve done well, or badly, in client development up to this point. Consider what it will really, truly take to make a CRM system successful and whether your firm is up to the challenge. Are you ready for this? It’s not a panacea; it won’t fix a broken firm or selfish culture.

Implementing a CRM system is not a step for beginners. CRM is a valuable tool for firms with strong leadership that have already mastered many client development tools and are looking for the next step forward. The question is, Charlie—is that your firm?

Remember the Time-Tested Values While Thinking Forward

Connie Crosby - It strikes me that the partners who have brought this issue forward are really pointing out to the administration that they would like to see the firm as a whole adapt to the changing times. No doubt most senior partners have been in the firm their entire adult working lives, and over the years they have gotten to know in detail the complexion of each other’s practices and rosters of clients. Twenty-five years ago they would have known who was on board as clients of the firm. Today, though, both clients and law practices have changed immensely.

With far-reaching international corporations, it is difficult to keep track of who owns whom much less which clients are related to each other. Moreover, it is easy for clients to be tempted away by flashier, more innovative firms down the street. Meanwhile associates are no longer necessarily staying around for partnership, and lateral hiring is on the rise. How can new associates and laterals become quickly familiar with the firm’s clients? At 70 strong, Charlie, your firm is just reaching that size where it is no longer small enough to allow all the lawyers to get to know each other, much less each other’s client lists.

Today’s marketing philosophy, however, still rests on some time-tested values. It is still about developing and maintaining relationships with clients. It is still about engaging a client in an ongoing conversation, focusing on that client’s business and needs. And in truth it doesn’t matter what technology you use. What matters most is how you use the tools you do have to communicate, regardless of whether you have a full-blown CRM system or just an e-mail contacts list.

Of course, implementing a CRM system is a great excuse to clear out old information and start fresh. While you are at it, look at the features available in whatever CRM software you are considering so you can make sure data is input in a way that will really make it work for you in future uses. You don’t want to just put in client contact names as a whole. Instead, you want to break them down into title (Dr., Mr., Ms., etc.), first name, middle initial and last name all in separate fields. This segmentation allows for more flexible use of the information later. For example, you can use a mail/merge sort to send out e-mails automatically addressing clients by first name or, for more formal messages, by full name and title. Or you can address formal invitations with different configurations of the names in different places depending on whether they are on the envelope address or the greeting of the cover letter. It is also useful to create a system of keywords that describe the category or business of the clients. That way, for example, you can run searches to find all financial services-related clients when you wish to invite them to listen to that government official you have lined up to speak about changes in the banking industry.

Of course, by now everyone in law firm practice management knows that most new client work is going to come from existing clients. So why not use that CRM, too, to track the status of those relationships? Who last talked to the client? What did they talk about? Has the client received the firm’s latest e-mail update about changes in estates legislation, which conveniently mentions the firm’s estates services?

Getting buy-in and then setting up the system is all easier said than done, of course. Use those partners who originally brought the suggestion forward as your pilot-project group to test the system. Have them serve as your champions to help sell the idea to the others. Convincing the partners who may resist these changes will mean showing them the benefit they will directly receive from the CRM system in terms of two central things: helping them organize their own clients, and allowing the marketing department to take some of the load off of them by sending periodic updates to the clients on their behalf.

Since it is not really a selling point for those partners, what about holding off on demonstrating the collaborative organization-wide functionality until later? They may not use it all that much themselves, at least at first.

As with any internal process, of course, deciding on the governance in advance is important. After all, once the system is set up, it will only be genuinely useful in the future if it is kept up to date. Who is going to oversee the updating and maintenance? Is the firm committed to updating the system, and how will that be accomplished? These are tough questions that should not be ignored if CRM is to be successful. No wonder reports from other law firms are middling!

Charlie, you will have to take care that the firm does not just blindly throw money after some fancy software application. You and your team need to think about what is really needed. CRM is just one piece of the larger marketing strategy. And the strategy is really about applying a set of principles that will lead to the desired effect—better client relationships and therefore more work coming in from existing clients. The firm and its lawyers may have to step up to the plate in other aspects of marketing as a result, such as communicating with clients more often and also making those communications more targeted with specific, focused messages. As your forward-thinking partners have recognized, times are changing, and clients are demanding more from their professional services. Considering CRM as part of a larger communications and marketing strategy will be a step in the right direction.

Build Rainmakers into the Planning Process and Know the Touchstone Tests

Simon Chester - As my colleagues have pointed out, this is not just about the technology, Charlie. You may think that you’ve found the magic bullet, and that the CRM system will be a panacea for your firm’s marketing malaise. Sure, it’ll be nice to have a common Rolodex, but your firm needs to look beyond the technological toys and work at helping your partners help each other. The technology isn’t the tough part—engaging the marketing mind-set is much tougher.

Planning and thinking through how the CRM system will actually work will be key. This won’t work if it’s implemented top-down, or seen as an imperative imposed by management. The planning should involve your main rainmakers, who will have their own ideas about how an organized system can help them. The technology will need to be coupled with a marketing plan that reaches down and includes the individual lawyers. Get them to complete individual marketing questionnaires and look carefully at the responses to see what common sectors, contacts and goals your lawyers share.

But don’t just think of the partners. Remember that your associates may be excellent champions of both technology and marketing. (The younger generation is generally more technology-savvy and more open to business-oriented ideas.) They may well end up being effective advocates to the older lawyers—reverse mentors, if you will. And you’ll need two champions from your technology and marketing groups who will take ownership of the project and feel deeply committed to its success.

In addition, you will need to figure out how many of your partners are actually organized in their marketing. Talk to their assistants and find out how the lawyers’ contacts are maintained. How are holiday cards sent out? How many contacts does each have? How many are using the advanced information features in Outlook or GroupWise?

While it may be tempting to build your CRM system by exporting the e-mail system’s contacts into the database, you’re going to have to plan this really carefully to ensure that the fields match up and that your lawyers have common protocols for storing information. In fact, hiring some after-hours support staff who can go through and clean up lawyers’ contacts to standardized formats will pay huge dividends. Involve them more fully in the process and see whether they can develop some macros to make it easier to batch through the needed changes. This is a good project for the latter half of summer if your practice means that the weeks before Labor Day are less busy.

One of the fascinating things we see when we contrast American and European firms is that American firms are much more willing to write fat checks for sophisticated software, just as long as the lawyers’ hours aren’t interrupted. European firms (perhaps because of lock-step compensation systems) are much more likely to make longer-term capital investments that also require behavioral changes—which won’t be undercut by compen-sation mechanisms. So recognize that implementing a CRM system will take your lawyers’ intelligence, insight and time to implement—and they shouldn’t be penalized for the time that takes.

I don’t want to sound too cynical, but the touchstone test will be whether this project effects sufficient behavioral change that it’s still going to be updated and employed three years from now. The test for the lawyers taking the time to update the system will be whether they find it easy to use and whether it gives them practical, useable information. Look very carefully at the user interface and design standard reports that can give the lawyers snapshots of the client relationship with each individual in the system.

Think hard about privacy. Lawyers are not terribly good at recognizing that the laws also apply to their firms. You need to be sensitive to the fact that you are collecting and using personal information. Privacy and data protection laws in many jurisdictions will give the data subjects rights to inspect any records that your firm may maintain on them. CRM software can track every contact and record birthdays, hobbies, family details and foibles—the technology can make it easy for someone coming back from a client lunch or a golf game to do a gossip dump, which may be deeply embarrassing if the client sees all that gory and inappropriate detail. So train the lawyers to complete the profiles as if the clients are looking over their shoulders—because data protection laws will give them that right.

If you plan this carefully enough, it’s going to be profoundly useful, but you must take time to think how your lawyers work individually, what they’re comfortable with, and how they work—and play—together. You can’t implement the marketing vision without a solid technology backbone. But rest assured, tough as a CRM implementation is, the technology will be the easy part. Good luck.

About the Authors

Doug Cornelius is a knowledge management attorney at Goodwin Procter, as well as the author of KM Space, a blog on knowledge management, legal technology and enterprise 2.0.

Ross Fishman is CEO of Ross Fishman Marketing and a Fellow of the College of Law Practice Management. A former commercial litigator, he develops differentiation campaigns and Web sites for law firms.

Connie Crosby is a law librarian, blogger, writer and speaker on topics such as knowledge management, change management, law librarianship and new social media.

Simon Chester is a partner in the litigation and business law groups of the Toronto office of Heenan Blaikie whose practice focuses on knowledge management, research and legal opinions. He is also President of the College of Law Practice Management.