Tuesday, 27 March 2012

Buyer be-wary!

The warnings are age-old but still ring with truth today:

~ "beware of Greeks bearing gifts" (no, not Merkel but Virgil)
~ "all that glitters is not gold" (Shakespeare)

In a depressed market, buyers will offer gifts and gold galore to win the prize - or, as far as us lot are concerned the next instruction or that oh so important spot on the panel. 

Law is, currently, a depressed market.  Corporate activity is at a minimum and there is an over subscription of solicitors (it has to be more than the 6,000 RBS claimed?).  Buyers can push panel rates harder than ever and many firms will readily agree: the "yes-men-firms".

This will not serve buyers well in the long run.  By way of example - yesterday, I was discussing this with Proxima a outsouring, sourcing business.  They aim to give clients an honest assessment of the value they will deliver and are prepared to back this up with a measurable commitment.  However, they face competition from those who "low-ball" to win the deal and then ratchet up the costs or ratchet down the service to deliver. 

Ultimately Proxima will win out.  They have to be selective of potential client pitches to ensure that their message will be understood by the buyer.

Some call for "sacking your clients" (Economist-27.3.12) and this can appeal to the macho-billy-big-biscuits element of the legal industry.  This is not what Proxima do, they try to educate using real metrics and, only if having tried to do this and their clients persist with "cheapest is best" do Proxima withdraw.

In legal services today, we have one universal metric - the hourly rate.  It is flawed, totally flawed and should be never spoken of again!  There are alternative metrics that really measure quality and service. Law firms who promise their clients rich pickings in terms of discounts on hourly rates whilst agreeing to service improvement should be eschewed (the result will be cost up or service down, ultimately).

Those of us who want to deliver genuine innovation need to carry on giving clients an honest response to what they are asking.  More for less is possible, "more of the same for less" is not.

It's not a case of law firms "sacking clients" but it is a case of good firms saying "no, that's not possible but this is".  Caveat emptor, buyers be-wary of the yes-men as all that glitters is not gold.

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