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What most law firms don't know about their clients, Part 2

December 6, 2014

In October I revealed an important fact regarding what most law firms don't know about their clients.


In this post we publish more findings from our analysis of the data about law firms.We show the very strong correlation between the number of practices groups a client uses and their level of satisfaction does not depend on the size of the law firm or the position of the client. 

To recap briefly. We analysed 7,061 respondents from the ranks of the law departments, c-suite, boards, and senior general and functional management of Australia's public and private companies and governments. These individuals represent the clients of the 35 largest corporate and commercial law firms in Australia. 


In our survey we measure the respondents' reported experience with their law firm in a composite score. This score captures their perceptions of five outcomes, namely overall performance, value delivered, and organisational bond, and their intentions in respect of re-use and recommendation of the firm. The scale on which they provide their answers ranges from 0 (extremely poor) to 10 (excellent). In the course of the survey each respondent is also asked which practice groups of the firm they have experienced in the last 12 months. 


By combining these two results we are able to analyse how clients' overall experience varies with the number of practice groups to which they have been exposed.


Size of firm does not affect the correlation



The first chart maps the overall experience score of the clients of the 10 largest law firms in Australia against the number of practice groups they used in the previous 12 months on the horizontal axis.


The correlation coefficient for the 10 largest firms is 0.92 – very close to a perfect 1.00 – and for all intents and purposes no different to the coefficient of 0.99 for all firms reported in Part 1 of this analysis.


For these firms, the more practices of a firm a client uses, the more satisfied they become.


For the other 25 (smaller) firms the correlation is not unexpectedly 0.98.



Position makes no difference


The second chart shows for in-house lawyers the correlation is 0.94. For the record, the correlation is 0.95 for c-suite managers.


What this finding means


As we argued in the previous post, it's clear clients benefit from cross-buying, i.e. procuring multiple services from one firm. Why might this be so – remembering we are showing correlation, not cause and effect? Some possible explanations include:


  • A client's transaction costs are lower if they work with one provider; less time and fewer people with whom to deal.

  • Clients have greater purchasing power and are able to extract bigger discounts and most MFN pricing status from their supplier.

  • The deeper the relationship between firm and client, the more the firm learns about the client's business and the industry in which the client operates. Beaton's research is emphatic on this point – a major attribute in why clients choose firms and what they value in the service they receive is how firms "understand my business/industry"

 The findings raise many questions which we posed in Part 1. Readers are invited to comment on this post as many did on Part 1.




Our next posts on this dataset will examine the same analysis in Accountancy and Consulting Engineering firms. Watch this space in January 2015 – or write to me if you'd like a pre-publication summary.



Further reading


If you enjoyed this post, then you may also want to read these:


+ Price is positively correlated with the value perceived by clients


We'd like to publish your comments on this and other posts on Research.Reveal. If you'd prefer to be anonymous, just let us know by emailing your comment to George Beaton at george.beaton@beatonglobal.com.





This post was written by George Beaton, a director of Beaton Capital and Beaton Research + Consulting with the assistance of my colleagues, Daria Radchenko and Eric Chin.

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