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Evolve to Win The Growing Role of Technology in Law Firm Business Development A Thomson Reuters Elite Report September 2014 Evolve to Win: The Growing Role of Technology in Law Firm Business Development EXECUTIVE SUMMARY In an increasingly competitive and consolidated global legal marketplace, the quantity and quality of client relationships—both old and new—is ever more crucial to a firm’s success. Likewise, technology is playing an increasingly important role in nearly every market around the world and within every type and size of firm as part of the quest to better understand how those crucially important relationships can be identified, maintained and cultivated through marketing, communication and business development (BD) activities. Whether through solutions designed for customer relationship management (CRM), marketing automation or e-communications, technology is rapidly moving front and center in the battle to get ahead, innovate and differentiate. In order to gain new insights into how law firms are utilizing technology for marketing and BD—and some of the challenges being faced—Thomson Reuters Elite collected the views and experiences of legal business development and marketing leaders across North America, UK and Continental Europe, and Asia Pacific. Q: Overall, how extensively have you adopted technology solutions to support the business development and marketing function at your firm? 3% 8% 5 13% 8% 29% 39% In summary, the results indicate that: • 90% of firms are employing BD and marketing-focused technology solutions in order to get ahead of the competition in the legal services marketplace Significant adoption (more than 75% of the firm) Little adoption (up to 25% of the firm) • Successful implementation of cross-selling initiatives is the main tangible, measurable benefit from their use of technology in the BD arena Moderate adoption (50-75% of the firm) No adoption yet, but planning to do so Some adoption (25-50% of the firm) No adoption, with no plans to do so • Firms are planning further investment in technology-based platforms, particularly in relationship management, to help support BD and marketing over the next three years • There are a number of challenges which stand in the way of fully realizing the potential and power of technology in the BD context, both cultural and technological Gaining traction, but full potential not yet realized Although the legal sector has been somewhat slower to adopt technology solutions for BD and marketing challenges than other industries, such solutions appear to finally be gaining significant traction. Among the law firms surveyed, an overwhelming majority (90%) have already adopted some form of technology-based marketing or BD solution, ranging from e-marketing tools to comprehensive CRM systems. Indeed, the prevalence of these solutions is significant throughout many firms, with just over half of respondents (53%) reporting ‘moderate’ or ‘significant’ adoption of technology solutions. “When looking at conflict between existing and potential clients, CRM can give a key piece of early intelligence. It turns up old relationships— who knows who.” Chief Marketing Officer Global law firm 4 11% However, despite being used more frequently and more widely than ever before, law firms do not yet appear to have fully realized the 32% potential of technology when it comes to marketing and BD. In fact, 19% nearly unanimous in their belief that their firm respondents were still has further value to gain from their existing systems, with none feeling that their firm has yet realized the technology’s full potential. “Any CRM solution must be an integral part of 14% 24% systems [that] attorneys already use.” IT Director UK Top 100 law firm These views may be explained by the fact that a majority of respondents believe that, BD aside, their firms are not yet fully ready—culturally, technologically or operationally—to adopt or utilize new technology-based systems, giving their organization an average rating of only 3.09 (out of 5) in this regard. Interestingly, 11% 18% (3.41 out of 5) when it respondents rated their firms a little higher came to readiness to prioritize and implement strategies for BD more generally, highlighting the distance which exists between overall tech readiness and BD savviness for many law firms. Still, respondents noted a range of areas where technology could 10% potentially make substantial contributions in terms of BD. More specifically, notable proportions anticipated positive impact in the 40% 5% areas of contact and relationship management (32%), client and account insight (24%) and market and competitive intelligence (19%). 16% 1 7 Little adoption (up to 25% of the firm) 29% 39% No adoption yet, but planning to do so No adoption, with plansFirm to do so Business Development Evolve to Win: The Growing Role of Technology inno Law Q: In which of the following areas do you feel that technology can make the greatest contribution to drive marketing and business development for your firm? 11% 32% 19% 24% 14% The impact of having a “repository of data”—which technology has now made more accessible and functional—was particularly acute for several firms. As one Chief Marketing Officer at a major global law firm explained, “When looking at conflict between existing and potential clients, CRM can give a key piece of early intelligence. It turns up old relationships—who knows who.” One business development director identified the importance of systems which 4 facilitate easy “knowledge transfer to an unwilling, unable and time-strapped population management of salespeople—our lawyers.” Contact/relationship When it comes to how firms(e-marketing, are using these systems and data in Marketing automation client alerts) general to measure and report the success of BD activities and & account insight initiatives Client to management, a majority of respondents believed that performance metrics—such as tender success rates (45%), client Market & competitive intelligence feedback (31%) and invitations to tender (17%)—were the most valued and soughtmanagement after indicators of success. Interestingly, about Experience one-third of respondents said that they were not required to provide any evidence or fixed metrics in this regard. “The most important thing is to keep the attorney population happy.” Contact/relationship management Client & account insight Marketing automation (e-marketing, client alerts) Market & competitive intelligence Experience management Tangible benefits11% and new measures of success 18% Even though firms may feel that they have not yet realized the full value of their BD and marketing technology solutions, the benefits (both tangible and intangible) from their deployment and utilization are being felt, according to survey respondents. 10% Among the top benefits reported were implementation of crossselling initiatives, identifying and building client relationships, and easier or40% more customized client communication. In addition, 5% many firms also reported that these solutions had proven useful in spotting untapped opportunities or relationships, and for providing new metrics and data to support BD within 16% their firm. Table 1 Top Benefits Observed from BD Technology Platforms Overall rank Benefit 1 Facilitation/implementation of cross-selling initiatives 2 Identifying/building client relationships 3 Easier/improved/more customized client communication 4 Providing metrics and data to support BD 5 19% Spotting untapped relationships or opportunities 17% 3% 3% 11% 5% Chief Marketing Officer Global law firm In addition, many respondents also noted the role and importance 7 of partner feedback. This more informal—but culturally important— metric underscores the pivotal influence of fee-earners in assessing Yes, once the value and impact of marketing and BD strategies and activities, and the technology platforms which Yes, more than once but less than support three timesthem. “The most important thing is to keep the attorney population happy,” noted than three times one CMO Yes, of amore major global firm. No but we are debating doing so Cultural barriers prove challenging No, never Despite the benefits already being realized by many law firms, We don’t use a CRMchallenges solution there are still significant which remain when it comes to deploying such platforms, encouraging their utilization and realizing their full potential. Firstly, nearly a third of respondents indicated that they had been required to redeploy their existing CRM solution at least once, with an additional 15% or so contemplating doing so in the near future. Among the reasons cited were overall lack of adoption, poor implementation, data issues, lack of business support involvement (ie secretarial or administrative staff) or poor system design. “The3 lawyer population is immune to technological innovation and has little time System design/interface/usability nor anyIntegration interest in understanding it.” of existing data/databases Integration Chief Marketing Officer with other existing systems (ie practice management) Global law firm Adoption by partners and fee-earners Adoption by BD/marketing team and other business support Flexibility 42% 2 Data quality Experience management 17% 3% 14% 24% 3 19% Evolve to Win: The Growing Role of Technology in Law Firm Business Development 3% 11% 4 11% Q: Have you ever had to redeploy your CRM solution? 32% 19% 11% 18% Contact/relationship management 5% When asked about potential reasons why the technology had not been adopted by partners and fee-earners, respondents reported a Marketing automation (e-marketing, client alerts) ‘lack of understanding’42% of the individual benefits of using it (34%) or Client & account insight that the lawyers ‘don’t perceive that it delivers value to the attorney role’ (29%). In contrast, only 9% indicated there was a lack of senior Market & competitive intelligence 7 management buy-in, and only 3% cited the need for ‘more training’ to understand howmanagement to use the system. Experience Yes, once Yes, morehas thanbeen once but less than threecause times of partners/fee Q: What, if any, the leading 14% 24% earners’ failure to adopt the technology? Yes, more than three times 10% No but we are debating doing so 40% No, never 5% 6% 9% We don’t use a CRM solution 6 20% 16% 3% 11% 7 18% Yes, once No but we are debating doing so Yes, more than once but less than three times No, never Yes, more than three times 28% Yes, once We don’t use a CRM solution Yes, more than once but less than three times Yes, more than three times 10% However, the majority of the challenges identified proved to be cultural rather than 17% technical. Only 19% 19% of respondents pinpointed 40% 5% issues with the system design, interface or usability as their most significant challenge, compared with nearly 42% who highlighted 3% adoption by3% partners and fee-earners as the single greatest barrier 16% to the firm’s full realization of the technology. 11% Q: Which, if any, of the following challenges has proven the most significant when it came to implementation of these 5% systems within your organization, and realising their full potential? 42% 17% 19% 3% 3 34% No but we are debating doing so No, never System design/interface/usability We don’t use a CRM solution Too difficult to useof existing data/databasesDoesn’t deliver value to the Integration Users need more training attorney role Lack of senior management buy-in with other (ie practice management) Lack ofIntegration understanding of theexisting systems benefit to him/her We haven’t had this problem Adoption by partners and fee-earners 3% Adoption by13% BD/marketing team and other business support Several respondents also referenced perceptions among the attorneys Flexibility that use of the system would be ‘time consuming’. In the words of one marketing leader, “the lawyer population is immune Data quality to technological innovation and has no time nor any interest in understanding it.” This perhaps perfectly underscores the continuing need for and importance of educating the firm about the efficiencies 50% 3 to be gained and individual benefits from system utilization. At the end of the day, “people only use software if there’s something in it for them,” as System put34% bydesign/interface/usability the IT Director of one UK Top 100 law firm. 9 Integration of existing data/databases 3% 11% 6% 9% 20% 6 Adoption by BD/marketing team and other business support IT Director Too difficult to use UK Top 100 law firm Flexibility 5% 42% 3% 28% System design/interface/usability Integration of existing data databases Integration with other existing systems (ie practice management) Adoption by partners and fee-earners 9% existing systems (ie practice management) “PeopleIntegration only with useother software if there’s something by partners and fee-earners in it forAdoption them.” Adoption by BD/marketing team and other business support Flexibility 34% Data quality Users need more training Data quality Lackaoffeeling understanding of the benefit toshifts him/her Some noted that generational would have a key role to play in overcoming some of these cultural challenges, as more Doesn’t deliver value to the attorney role technologically-savvy junior lawyers continue to rise within the 18% 15% another ranks of firms. addition, respondent felt that the key to Lack ofInsenior management buy-in adoption lies in making CRM platforms “an integral part of systems haven’tuse,” had this problem attorneys We already such as financial management platforms or even Microsoft Outlook. 18% 6% 6 20% 3 3% 34% Too difficult to use Users need more training 9% 16 Integration of existing data/databases 6% Integration with (ie practice management) 9% other existing systems 20% 3% 11% 6 Adoption by partners and fee-earners Evolve to Win: The Growing Role of Technology in Law Firm Business Development Adoption by BD/marketing team and other business support 3% 5% Flexibility 42% Data28% quality Structural challenges remain What lies ahead Given the relatively recent widespread adoption of technology within the legal sector (and previously limited solutions available), it is perhaps not surprising that a number of firms also report some structural and technological challenges with their existing platforms. The pace and scope of technological innovation within the legal services market overall continues to grow, and this is also proving 34% true when it comes to the future role that technology will play within the BD and marketing sphere for law firms. Indeed, respondents cited a number of wider trends—both technology-related and overall legal industry dynamics—which they feel will significantly impact the role, function and operation of BD and marketing in the future. In particular, respondents noted significant difficulties when it came to how integrated or compatible their existing systems were with each other, with a majority (nearly 59%) reporting that their existing array of solutions—CRM-focused or otherwise—were ‘not 6% very’ or only ‘somewhat’ compatible or integrated with one another. 9% 20% No respondents reported ‘seamless’ compatibility, and one law firm Marketing Director noted the ongoing effort required “to get systems to talk to each other and not compete.” 3% Another significant issue which was reported related to the need for ‘data stewardship’—non fee-earning staff time or even whole teams dedicated to data maintenance—for some existing solutions. 28% The vast majority of marketing leaders surveyed (84%) indicated that ‘moderate’ or ‘significant’ amounts of staff time and resources have been necessary to update and maintain their CRM systems. In 34% contrast, only about 12% said that little or no data stewardship had been required. Q: For your existing CRM solution, to what extent have resources dedicated to ‘data stewardship’ been required? (ie non fee-earning staff time/roles dedicated to data maintenance) 6 “Integration is key in a law firm.” Too difficult to use IT Director 3% UK Top 100 law firm Users need more training 13% 9 Lack of understanding of the benefit to him/her Foremost among these was the impact of legal industry market Doesn’t deliver value to the attorney role consolidation and competitiveness, noted by one-third of respondents as havingLack the of largest influence. In addition, the ‘growth of big data’ senior management buy-in and ‘increased reliance on technology’ were both highlighted by 50% We haven’t had this problem nearly one-fifth of respondents, while nearly 10% cited the impact of mobile and flexible working on the future of the BD function within 34% a law firm. Somewhat surprisingly, only 6% said that they believed cybersecurity and risk would have the biggest impact, indicating that such risks are perhaps viewed as more systemic across the entire firm rather than specific to marketing and BD. Q: Which of the following technology-related trends is, in your view, likely to have the biggest impact on your firm in terms of the role, function and operation of business development? 3% 9 13% Significantly (large amounts of time or multiple team members) Moderately (small amounts of time or a few team members) 18% Limited or none15% (insignificant amounts of time or no team members) 50% We don’t use a CRM solution 34% 18% 34% Significantly (large amounts of time or multiple team members) Moderately (small amounts of time or a few team members) Limited or none (insignificant amounts of time or no team members) 4 9% We don’t use a CRM solution It also appears that there are a number of needs which are currently 18% 15% technology solutions not being met by available within the BD and marketing arena. Aside from the growing range of overall platforms designed for CRM, marketing automation, experience management or business intelligence, respondents expressed a desire for new tools to assist with strategic planning and budgeting, quantification of client feedback, and end-to-end event management, to name 18% just a few. However, all indicated that any new capability in the areas above would need to work seamlessly with their existing 34% systems, so as to avoid the challenges and frustrations related to the lack of integration and compatibility noted previously. 6% 6% 9% Growth of big data Cybersecurity and risk Increased reliance on technology Market consolidation/ competitiveness Mobile/flexible working 16 Growth of big data Fee pressure from clients Encouragingly, firms report that they are planning to continue to invest in new or expanded solutions within the Increased reliance on technology-powered technology marketing and BD area over the next three years. More specifically, Mobile/flexible working that they particularly plan to invest most respondents indicated further in Cybersecurity platforms in areas and risk such as relationship management (61%), market and client intelligence (55%) and contact and company Market (data)consolidation/competitiveness management (55%). Fee pressure from clients 16 Evolve to Win: The Growing Role of Technology in Law Firm Business Development Table 2 Top Five Areas of Future Investment for BD and Technology (next three years) Area Response Relationship management 61.3% Market/client intelligence 54.8% Contact/company (data) management 54.8% Experience management 48.4% Marketing automation (e-marketing, etc) 41.9% This robust level of investment comes despite the many challenges—whether cultural or technological—which exist, and thus appears to underscore overall understanding of the significant potential advantages to be gained by further harnessing the power of technology within the area of legal business development and marketing. However, most still feel that law firms have quite a way to go before matching their counterparts in other industries. As one Business Development Manager noted, until BD is led by future trends and truly embraces technology and its full potential, the legal industry is likely to continue to remain “on the back foot.” With an increasingly pressurized business climate and ever growing demands to demonstrate the value and effectiveness of marketing and business development within law firms, technology clearly has a significant role to play when it comes to improving efficiency, unlocking opportunity and strengthening relationships with clients, both current and prospective. In the words of one seasoned legal marketer, “technology is just such a big part of our lives these days, you either adapt… or get left behind.” About this report For this research, Thomson Reuters Elite commissioned an independent research organisation—UK-based Spada Research (www.spada.co.uk)—to interview and survey a wide range of senior business development and marketing leaders from firms across North America, Europe and Asia-Pacific. A total of 38 survey responses were received, supplemented by four in-depth qualitative interviews from additional firms. “Technology is just such a big part of our lives these days, you either adapt… or get left behind” Business Development Manager Leading Australian law firm The vast majority of survey respondents (77%) came from firms with a head office located in the US, with the remainder being based in the UK (15%), Europe (6%) or Canada (3%). The size of respondents’ firms ranged broadly from under 50 to over 1,000 fee-earners, with about half of respondents coming from firms with 250 fee earners or fewer. The total annual revenue of the firms surveyed also represented a similarly large range, with the vast majority of respondents (61%) from firms with revenues of between $10 million and $250 million. An additional 6% of respondents came from firms with revenue smaller than $10 million, with 16% representing firms with total revenue of more than $1 billion each year. About Thomson Reuters Elite Thomson Reuters Elite offers an end-to-end enterprise business management solution that allows law firms and professional services organizations to run all operational aspects of their firms including business development, risk management, client and matter management, and financial management. For over 60 years, we’ve demonstrated we understand the business and financial aspects of firm operations, with proven tools that streamline processes to increase visibility and workflow efficiency across the organization and provide the flexibility to change and grow your business. For more information, please visit elite.com. © 2014 Thomson Reuters 9-14