The Differentiation Paradox

In our conversations with in-house counsel about what law firms can do to strengthen and deepen their relationships, we often seek a short and sweet answer to the question. The answer is easy, but following through is very, very hard.

The answer: Understand what it means to differentiate from the competition in the eyes of each individual client.

Clients work with outside counsel because the lawyer is talented, has experience, fills a need and does something in-house counsel can’t do (or can’t do efficiently). The bar for service and adding value is very high. In addition to legal skill and experience, clients expect outside counsel to add value through strategic advice (often off the clock), training sessions, discounts and custom fee arrangements, updates, briefs and entertainment. While most firms think those offerings make them stand out, they really don’t.

What makes a firm stand out—and what takes so much time, effort and coordination—is an understanding that each client has a different definition of what it means to stand out and a different set of priorities. And this is true for each individual client at each company, not a company as a whole. Treating every individual at a company as if they are undifferentiated from a peer in the same company is not only wrong but disrespectful.

In countless conversations with outside counsel, I hear versions of this comment: “We asked ‘them’ for their preferences when we got the engagement.” Or far worse, “I know they will tell us if they want something done differently.”

To the first comment: Circumstances change. Without a feedback loop (regularly asking the direct questions about needs and value to an individual), firms run the risk of making decisions on assumptions, not reality.

To the second comment: That attitude is flat-out wrong. Clients only complain about the very big things and never have the time, rarely the inclination and even less often the forum to address the small things that really stand out and make their lives easier.

The individual level of differentiation is what causes a client to want to work with outside counsel and, more importantly, is what causes them to make changes in who they work with.  This is good for the firm that seeks feedback on a regular basis but bad for the one that doesn’t understand the power of listening.