First thing’s first: how legal departments define ‘service’ from law firms has fundamentally changed – so fundamental, in fact, that it no longer always includes the key object ‘from law firms.’ Change doesn’t get bigger than that, and it has triggered an onslaught of new behaviors (think RFPs, LPOs, AFAs, ALSPS and even more acronyms) that have resulted in shrinking demand for law firm services and the acceleration of competition to win and maintain business that accompanies shrinking demand.
If ‘from law firms’ is no longer even in the definition of client service, it begs the question, then what is? Is it tickets for a coveted suite at the next Super Bowl or something else? This is a 3-part series investigating the answer to this question—in this first installation, our aim is to understand what clients want, which means understanding their pain points and how we, as law firms, can solve them best. In other words, client service.
Most noticeably, legal department spend has remained effectively constant over the last 5 years while managing increasing workloads, putting Chief Legal Officers are under tremendous budgetary pressure. Efficiency of service delivery and controlling costs have, therefore, become clients’ number-one priority.
This internal pressure explains the multitude of new tactics legal department professionals now deploy: growing their own departments and insourcing work (6% growth in 5 years); shifting work to lower cost firms (31%)’ sending work to non-law-firm-vendors (6% and growing); and—when work does got to law firms–leveraging outside counsel guidelines (79%) to influence process, security, detail an increasingly complex array of pricing and billing arrangements, and more.
While these tactics are “new” they in fact are outcomes of the clients’ own budgetary pain points and the clear signal as to what they want: efficiency and lower costs. Clients are, in fact, saying very clearly the new definition of service.
Law firms, however, have not historically been known for their efficiency and ability to control costs; this left them vulnerable to losing some lower cost work—which they did (as seen above) as well to some automation platforms (i.e. contract review work).
There’s good news for firms here, though: this is not a story of doom and gloom. In fact, many law firms are posting record breaking revenues and the industry’s overall revenue growth is strong. Combined, shrinking demand and high revenue growth means leadership has the opportunity to make some strategic investment choices.
For the industry’s most financially successful firms, this has meant investments in technology. Over the last few years, there has been mounting evidence that law firms that proactively address the needs of their clients by making better use of innovative technologies—are posting higher than average profitability margins than those which do not.
Seeing these results accumulate, law firms have gone on a hiring spree. According to Bloomberg law, 50+ major firms now have chief innovation officers, and as of 2019, CINO roles have been added in 57 of the top 200 law firms by gross revenue, up from 32 one year ago, a near 50% increase.
Great news, right? Client service = innovation. Firms with innovation officers, therefore, are de facto delivering client service utopia. Right?
Not so fast. There’s just one problem—it’s called data, and it happens to be the number one concern of Chief Legal Officers. And there’s no innovation without a data strategy—but more on that in part II.
 2018 Thomson Reuters State of the Legal Department
 Altman Weil Law Firms in Transition
 TR Dynamic Firms Study