When a key partner in a large law firm moves to a competitor, do his or her institutional clients tend to leave too? The answer might depend on how much internal conflict there is at the firm left behind.
Michelle Rogan of INSEAD recently published ground-breaking research on the relationships between large, multi-unit advertising agencies and client firms. These relationships are very similar in structure to those between law firms and institutional clients, where services in several areas of professional expertise are provided through personal connections developed over time.
Most of us believe that the more ties between people at varying levels of the firm and people at varying levels of the client organization, the less likely it is that a client will follow a departing star lawyer – be it a rainmaker, a client team lead or other relationship partner.
Rogan’s research uncovers deeper aspects of institutional relationships that you might not have considered.
Reduce internal conflict.
Clients consider the quality of relationships between people within the firm in question, not just between the firm and their organization. Rivalries between partners within the same practice group or between groups, inconsistent service delivery and poor internal communication are all easily detected.
Perceptions of conflict within your firm reduce loyalty, regardless of the length of the relationship or the number of people involved on both sides of it.
Solution: rally the troops and present a sincere, united front.
Distribute control throughout the relationship.
Let people know which decisions are acceptable for them to make, and who should be consulted and informed throughout the process. Do this across practice groups and within them.
Ideally, involve at least three perspectives from your firm in negotiations with the client (e.g. the relationship partner, an administrative executive and a leader in another practice area) in order to prevent conflict between short-term individual interests and long-term firm goals. The study suggests that this could reduce the likelihood of client loss by 80 per cent.
Solution: blueprint the relationship and review it regularly in collaboration with the client. Don’t wait for an RFP or a crisis to do this.
Look for convergent interests.
Clients are more likely to stay with your firm when there are strong relationships between non-competing groups, such as employment and IP or insurance and tax. They might usually operate in silos, but their combined expertise has a stabilizing effect.
Can you apply shared information to create efficiencies or innovation? Consider the combination of capital within your offices in terms of intellect, experience, process and operations. It cannot be easily replicated by the competition; it lives within your firm and is often the source of true value creation.
Solution: reduce silos through improved communication regarding work for the same client, even if the work is seemingly unrelated.
- Rogan’s research is reviewed in the July issue of strategy + business.
- The complete paper can be found at: Executive Departures without Client Losses: The Role of Multiplex Ties in Exchange Partner Retention, by Michelle Rogan (INSEAD), Academy of Management Journal, Apr. 2014, vol. 57, no.2.
I originally published this article on the Canadian legal blog Slaw.ca on July 23, 2014