Andy Havens, Marketing Management Consultant and co-founder of Sanestorm Marketing. Questions, comments, and criticism welcome. Contact Andy at 1.877.SSTORM1 or [email protected]

Firms looking to implement a useful CRM program may want to consider referral management

Conflicts management (CM) has, in many cases, been the first real CRM (customer relationship management) initiative embraced by law firms. Not only does a good CM system keep you from getting burned, but firms may get a break on malpractice insurance premiums if they have a coherent program in place. Conflict management issues may, in fact, be a major reason many firms have switched to actual billing systems, rather then calculating and sending bills “by hand” using paper time-sheets and/or Microsoft Word.

What other CRM projects might work well at large law firms? Attorneys at large firms will tell you that the most important marketing aspect of their practice is their relationships. The need to maintain relationships in a complex and stressful environment seems like a perfect place to use sophisticated software and systems to make the job even a little easier.

But it’s precisely because relationships are so important that attorneys are deeply reluctant to trust technology to “manage” this resource. A retail business may have thousands or millions of consumers; a mid-sized law firm may owe its success – and survival – to a dozen-or-so highly-placed contacts at their top-tier clients.

The case for CRM has rarely been made in a language that speaks to the primary goals of attorneys and their firms. Conflict management is the current exception to that rule. In other areas – customer satisfaction, lifetime value tracking, account management, touch-point analysis, revenue history – firms have had less success. Why? As in other industries, firms have purchased expensive CRM packages that aren’t necessarily relevant to their business practices. When the software doesn’t have a “magic” effect on results they become frustrated.

As for most marketing issues, the case for any CRM program should start with well-stated goals. If a firm doesn’t have – and state – a good reason to undertake a CRM initiative, the program is doomed.

So what other parts of a firm’s business might be amenable to the powers of CRM?

Pass It On

If a lawyer or firm can’t take a case, they will often provide referrals to capable attorneys. A firm may be “conflicted out” of a matter, too busy to do the work in the needed timeframe, or it may not have the particular expertise the client needs. Whatever the reason, referrals are often considered a “lose/lose” proposition.

Why? Provide a bad referral and your client will be unhappy. Provide a good one and you might be introducing them to a competitor. As one seasoned attorney said to me about referrals, “It’s like paying someone to steal your client.”

So if you can’t do the work, and must make a good referral, there’s no way to win. Right? Wrong. You just need better tools for managing that part of the relationship. And that’s where appropriate CRM can be a huge benefit.

In the old days, when an attorney needed a referral recommendation from his partners, he’d stick his head out the door of his office and yell, “Does anyone know a good plaintiff-side employment lawyer in Pittsburgh?” These days, attorneys at large firms may send an email to all other attorneys asking, ” Does anyone know a good plaintiff-side employment lawyer in Pittsburgh?” Same process, new technology.

What are the down-sides of this method?

1. Time wasted – at a firm of 200+ lawyers, that email may generate an immediate response of 12 emails and 15 calls. It’s a time-intensive process for the requesting attorney as well as those suggesting referrals.

2. Incomplete data – the referral information provided by attorneys is often well-meaning but incomplete. A typical response might be a one sentence email of, “Roy McCheswick is near Pittsburgh somewhere, and he’s fantastic.”

3. Incorrect data – the information as provided is often wrong; people misremember, data deteriorates – all common issues, but ones that aren’t addressed in the “e-shout” method.

4. Repetitive tasks – Attorney John Smith may request the above referral on June 1. On July 7, attorney Julie Jones needs the same information. You’ve just repeated an identical task.

5. Dismissal of process – the “Does anybody know…” emails go out so frequently, that many attorneys begin to regard them as a kind of internal spam. They don’t have the time or interest to respond.

6. Loss of control – this method provides no way of tracking who eventually got the work. As stated before, you give away money – and possibly the relationship – when you make a referral.

7. Loss of value –Suppose John Smith refers a piece of work to Firm B. He recommends them to Julie Jones at some point, and she later sends them another piece of work. Unbeknownst to them, Fred Brown also sends Firm B some work. All this work may go to different lawyers at Firm B, so nobody there realizes that John, Julie and Fred’s firm has sent them more than $1 million worth of work this year.

Better service, faster turnaround

How to improve this system? Begin with goals. They should be:

1. Provide more appropriate, more complete and faster referral information to clients
2. Save time for your lawyers
3. Track and be able to report on which firms get referrals from you

That’s it. Everything else is process. By keeping the goals very short and specific, you can get better buy-in for the program. You just can’t argue with doing something better, doing it faster, and knowing where you’re spending a resource as valuable as referrals.

Your system need not even require a new piece of software. What you will need is a centralized manner of recording, reviewing and providing referral information. My suggestion is that you have a live person be the “contact support coordinator” or “referral administrator” for your firm. The coordinator can gather a standardized data set from attorneys who need a referral, which will give the chance to make sure you have all the information needed to make an appropriate request.

In the early days of the new program it may seem like the system isn’t providing much benefit. If referral information has never been recorded in the past, you’ll need to start from scratch, and that never appears to be an improvement. Over time, as the database grows, referral requests will be met more often with data from past instances. At this point, your system will begin to reap rewards in saved time, improved information and outbound referral tracking.

What information should you gather for a referral database? I suggest:

• The name of the firm and attorney
• All contact information
• A history of who at the firm recommended this referral
• All comments (including negatives) about the referral
• A history of work that had been referred

Over time, as you collect data, you’ll be able to see which firms are the benefactors of your outgoing referrals. This provides a lever when dealing with those firms in the future. In the absence of other compelling reasons, you send work to people with whom you have a good overall relationship; i.e., the folks who reciprocate. If you’re going to give value away to potential competitors, it’s good to know how much you’ve given, to whom, and who has given back.

Vague CRM programs that attempt to collect information for no specific purpose are bound to fail at law firms. Lawyers have very little patience with processes that waste time and produce no real value. If, however, you put a program into place that’s designed from the get-go to save time, produce better results and track a valued firm resource, you’ll be positioned to succeed. It may not be as sexy and fun as advertising and event planning, but data management is an important part of any serious marketing program. Tracking, improving and leveraging your referrals will provide a benefit to the firm, and will help position your marketing department as a more “serious player” in the organization.