Any law firm manager who has lost a Partner or key fee earner to the competition will recognise the challenges of using restrictive covenants to retain staff and, more particularly, clients. In the modern world building a strong brand can be a far more successful and, indeed, attractive weapon in the fight to secure clients, referrers and staff.
So why are restrictive covenants of limited use when a key fee earner resigns? A well constructed restrictive covenant can, of course, be useful in buying time to work out how to woo all the staff and clients who may be impacted by a resignation. It will also create useful boundaries for the exiting fee earner by limiting the initial efforts they can make to entice colleagues and clients to move with them. Sometimes these covenants can also discourage people from leaving in the first place. There is no doubt then, that having restrictive covenants in contracts of employment and partnership agreements is useful. However, they are not a panacea for the problems created by departures.
Covenants are often challenged as being too onerous and so unenforceable leading to uncertainty and even litigation. They can create enormous ill-will if handled badly and there are rarely any winners in such circumstances. The real difficulty is that the covenants are designed to manage the actions of the departing individual yet, in the process, become a tool that seeks to control the client. Only when a client calls and expresses their wish to move with the departing fee earner does it become truly clear why a restrictive covenant is a poor way of retaining a client.
Your cherished client can be told that you will not permit their preferred lawyer to act for them for a year, but it is a pretty unpalatable message and does not guarantee that client will stay with you. Whether you are trying to use covenants to manage staff or clients the impact is the same, you may prevent them from following your departing fee earner in the short term, or even permanently, but that does not mean they will remain with you. The likelihood is that they will be disgruntled by your actions and become dissatisfied leading to the inevitable bad feeling, bad mouthing and even complaints about your firm that this produces. They will probably leave anyway and, whilst you may have the satisfaction of knowing they did not go with your exiting fee earner, they have still gone; gone burdened with negative feelings about your business they are very likely to share with others.
Retaining and developing business from these clients is much more likely to be achieved by a long term positive strategy of brand experience rather than the negative last minute enforcement of covenants. This also has the advantage of being part of your business development activity, not just something to focus on when someone resigns.
Brand is still not a concept readily recognised by many law firms but is already a key factor when clients and potential clients are selecting your law firm as their advisors of choice. There remain very few consumers who will be able to name any law firm despite the fact that a number of larger national organisations now run huge advertising campaigns. This is in part because of their irregular requirement for legal services but also because, in many cases, demand remains a very local thing. For Commercial clients the identity of various law firms will be more familiar but still the concept of name recognition remains relatively insignificant in comparison with many other service areas. However, to assume brand is merely about name awareness misunderstands both the meaning of brand and its importance. Used correctly your brand becomes the key differentiator between you and your competitors and is the best way to develop real client loyalty. Developed correctly it can override the loyalty a client feels to one fee earner and instead create an increasingly strong relationship with the firm as a whole.
In todays legal market clients increasingly select their lawyers on the grounds of service and trust with much less influence placed on the products and benefits a firm may offer. Whether it is a referrer, in house lawyer, or commercial client they will all have in mind your reputation when choosing or recommending you. Decision makers will look at whether their peers use you and what people say about you as they will want to be confident they will not be criticised for choosing you. In a similar way the consumer invariably selects there lawyer using trust sites and recommendations. Developing a strong brand helps you influence the stories told about you and helps you stand out from the competition.
So what do we really mean by brand? It is not about your logo or visual identity but is all about the experience your clients, and indeed all your stakeholders have when they deal with your organisation. The more consistent that experience becomes the stronger your brand position, good or bad, will be. In short your brand is how people feel about your business and will be the biggest single factor in deciding whether to use or, in this case, continue to use your law firm. Perhaps most neatly described by Jeff Bezos, founder of Amazon, “Your brand is what people say about you when you are not in the room”.
Your business has a brand, whether you recognise it or not. In some cases that brand has been built by many years of hard work and attention to the delivery culture of an organisation, but for others it is the accidental consequence of a series of individual actions and inactions. In every case it is the amalgam of experiences each client has had which, in turn determines how they think about you. If those experiences are broadly consistent across your clients then that brand grows in strength.
Brand then is the overall instinctive feeling that a person has when they think about your business built on every single interaction they have with your business from receptionist to Managing Partner. The challenge for professional service businesses tends to be that they are ‘selling’ individuals, the specialist lawyer in the case of the legal sector, and as a consequence have tended to assume that those individuals can and should build the relationships with the client. All professionals, but arguably lawyers in particular, are hard to control and like to offer their own unique approach to handling work and clients. Allowing them to do so can have huge benefits in that they create strong relationships with their clients. In turn that will deliver great fees and repeat business. With this though comes the inherent weakness that those clients see themselves as clients of ‘the fee earner’ and not of the organisation. They come to believe that the service they receive is unique to the lawyer, and perhaps their immediate team, irrespective of the firm they work in. So, should that fee earner decide to leave, it is little wonder if that client takes a view that they need to follow them to continue to receive the service they have come to expect. What is actually happening is that the experience or brand the client recognises is that of the individual and not of the firm.
For any professional services business to become as strong and successful as possible it is important that the business does not rely upon any one individual too much. The killer bus argument is well understood, but in the same way it is important that everyone understands and acknowledges the risks to a business of an individual leaving. There should be an expectation of the need to work to reduce those risks together as part of their commitment to the organisation. This means helping create a consistent brand at team and organisational level and not seeking or accidentally creating any difference between the two.
This is not easy at a time when the culture of the individual has become increasingly prevalent. In many cases the latest generations of lawyers and partners see life as a series of segments and are much less likely to consider they will be working in one firm for their whole career. Instead they start with the goal, consciously or subconsciously, of developing their own brand which will help them move from place to place. Interestingly, with this mind set, they are not inclined to accept the restrictive covenants organisations have been used to relying upon because they expect to be moving on. In recent years they have been many instances where the very best individuals have had the confidence to refuse to entertain such restrictions in their contracts.
It is not going to be possible to persuade these talented people that they will want to stay with you for years to come. Instead, in the same way as you have to show clients they would be foolish to go anywhere else, you have to show your people the same holds true for them. Over a period of time a great brand experience will work on both your internal and external markets to create the loyalty and passion you require in your people and your clients. The ultimate success comes when both groups become brand ambassadors for you.
Breaking the cult of the individual also requires an organisation to succeed in getting fee earners to share their clients and not just with their immediate team but more widely across the organisation. There is often talk of cross selling services to clients to maximise the revenue from each and every client you have. A more positive and long term approach to each client is to look to building the brand experience for the client by creating an ever stronger organisation wide relationship with the client. This then means that your business becomes the natural first port of call when that client has an opportunity or challenge that they want assistance with. In essence you will be creating a dependency on your organisation which your client accepts and welcomes because of the support they receive.
Unfortunately in many firms there is a great reluctance to ‘share’ clients and there can be a variety of reasons for this. The most obvious problem can be where the reward and recognition systems put in place act in competition with the stated aim of sharing clients. Thus, by way of example, if reward is directly related to individual targets it is easy to see how this will discourage sharing. These sorts of problems can be easily overcome by increasing the sophistication of the measures of success for your people to include, for instance, introductions.
The more challenging problem that is often seen is where a fee earner is reluctant to refer a client to another department or office because they are not confident in the service their cherished client will receive. Whilst in many instances this manifests itself in an inertia to meet cross selling targets it is not unknown for fee earners to refer a client to another firm for a particular service they do not believe is done properly in their own organisation. For any business where cross referrals and client sharing is limited an early and urgent investigation as to why this is happening is crucial. What should be plain to see is that by working together on the brand and then succeeding in delivering a consistent experience this reluctance to refer clients will disappear.
So if your brand has the power to secure both your clients and your people it is important that you take control of it and make it is as attractive as possible. To do this it is important to begin by deciding what experience you want all your stakeholders, internal and external, to have and then ensure you take steps to deliver that experience. Your brand will begin to gain momentum if you ensure that your chosen experience is delivered by every person, across every office, every day. Consistency is what builds a brand and with it the loyalty that begins to tackle the very essence of client and staff retention.
Determining what experience you seek to offer your clients and staff is not something that should be lightly decided upon. It must begin with a careful look at the existing culture of your business and what elements of that approach have been delivering the most success for you. Seeking the views of your stakeholders should always be the next and most important step. Your long established clients will usually be delighted to be asked to share their views on what will improve their experience when using your firm. When they see some of their recommendations being implemented it will only strengthen their relationship with you. Be sure to also seek the views of some of those clients who have expressed some dissatisfaction with their experiences with you. As Bill Gates observed “Your most unhappy customers are your greatest source of learning.”
Now is also a good time to review what lines of work are most successful and what clients most desirable for your business and to make sure that the brand experience you create is designed to meet their expectations. It is best not to try and be too many things to too many people as your brand will become confused and risk being ineffectual. This can be a real challenge, for example, for those law firms trying to offer commercial and consumer legal services using just one brand.
This is also the moment to ask yourselves why clients do leave, both generally and to follow a particular fee earner or partner. An honest appraisal of what is it that has failed to ignite their loyalty to your organisation will really help to counter the issue going forward. It is the time to really truly understand what your clients want and go on and deliver it. Similarly exit interviews for your people can help to inform how the internal culture needs to be addressed to reduce unwanted departures, and build staff loyalty and energy.
Consulting your own people generally on what they like, dislike and wish to improve about the way the firm delivers legal services will vastly increase the strength of the offering you ultimately decide upon. They will generally have the best ideas because they are dealing with the challenges every day. However, if your people genuinely feel a part of the decision making process they will develop some ownership in the building of the brand which is vital if a consistent brand is to be created. Perhaps even more importantly, they will find the firm reflects their own desires and aspirations for delivering a great legal service. This then helps bind the very best people to your business in a much stronger way than any financial incentives ever can because they see something both unique and attractive that they wish to be part of.
Having established what you wish to be famous for, the experience that defines you, then comes the hard part of making that a reality. This does not come about overnight but is a hard slog and requires great attention to detail. In general it is not the big things that cause the problems because everyone focuses on them. Instead it is the small things that can make all the difference, good or bad, to the perceptions people are left with. In a law firm your client will take for granted that the legal advice they receive is going to be right, but if they have difficulty finding the building, or are left hanging about in reception that can undo all the previous good work.
Creating a powerful successful brand needs the engagement of all your people and so you need to spend time talking with everyone about what you are trying to achieve, seeking their ideas and getting them to implement them. This is a great opportunity for empowering your people and reaps rewards in itself with increased staff satisfaction. Your organisation will feel invigorated and your clients will notice.
No part of the process includes external publicity. It will be years before you are sufficiently confident that your brand is embedded and so can begin talking about it is a brand promise. In the meantime seek client feedback and use that to begin to publicise how people feel about your organisation. Word of mouth will do the rest.
No amount of work will stop every member of staff or partner or indeed every client from leaving your firm. In some cases there is simply no point in fighting to retain them, indeed there can be circumstances where it is better of the client does leave. However, really working on your brand experience should help you retain the clients and staff you really want. If, when determining who you want to be, you have decided this by reference to the needs of your chosen target market you should be meeting their expectations and securing their loyalty. The clients and staff who then choose to leave are much less likely to be the ones that you want to work with or, indeed work successfully with.
Building a great brand is really about building a great business. By deciding who you can best service, determining what they want, working as a team to deliver it and then working together to become consistent in that delivery you will be answering all the questions necessary to be successful. People, be they clients, referrers, suppliers, partners, or staff all want to work with great businesses. Deliver on the right brand and you will create passion and loyalty to your business and not the individuals within it. You will stand out from the crowd and your points of differentiation will be what makes clients select your firm. You then have little to fear when, very occasionally a partner or fee earner decides to leave because your key client will not, for a moment, consider going with them.