Enhanced Service Innovation (2002)

By Larry Smith

Some people, both buyers and sellers, talk so generally about "value added" that, worse than a shibboleth, the term becomes a catch-all that eventually means nothing. Clients can invoke "value added" to support unreasonable expectations. Law firms can bandy it about in their marketing pitches without ever saying what the "value" they're "adding" really is.

Among farsighted legal professionals, value-added is at bottom of mindset that often has nothing to do with legal services per se. A recurrent theme in today's marketplace is the perceived value achieved when lawyers act more like business partners with their clients than just attorneys. The lawyers may even help conceive a venture in the first place, or, at an early stage, they're instrumental in funding and implementing the project. They're getting capital investors to invest, helping identify the best executives to run it, and contributing their own ideas on the best ways to market the project.

EXTRACURRICULAR PLANE

"New economy" law firms such as Wilson Sonsini, Goodrich & Rosati and Cooley Godward always saw themselves operating on this extracurricular plane. Equally interesting have been the more traditional law firms that, one day, found themselves presented with the opportunity to take client service beyond traditional law-related works - and then jumped at the marketing opportunity that such enhanced service provided.

In the two examples we'll look at, the opportunity arose first as a way to deliver better and more cost-efficient legal services. In both instances, the law firms worked closely with their clients to create technology systems to provide for legal needs. In both instances, it became apparent that the systems had wider uses. And, in both instances, the law firm did not merely say to the client, "Go ahead, run with it." Instead, the firms went back to the drawing board, structured the systems to accommodate nonlegal applications and, in so doing, fused an even tighter relationship with the clients.

Dickinson Wright in Detroit built a document management system for Chrysler Financial Co. called the Real Estate Loan Tracking Database, which allows online review of the latest information on all loan applications, and enables users to add comments or respond to issues in real time. The Texas firm of Haynes and Boone created a system called ClientConnect, which allows for real-time review of, and input on, pending matters by law firm and client - but with other professional service firms serving the client equal online participants as well.

The technologies are, by definition, "client-centric" since all outside users must be using the operating system developed by and for the client. In the case of Chrysler, it was a Lotus Notes-based program. ClientConnect, developed by Haynes and Boone in partnership with Archon Group L.P., a real estate investment and mortgage loan company, is Microsoft based.

The Real Estate Loan Tracking Database evolved after Dickinson Wright won a Chrysler Financial beauty contest in the early 1990s, according to Stephen Dawson, the partner in charge of the law firm's banking/real estate/environmental group. The system was set up only for Chrysler Financial. By contrast, ClientConnect is designed for as many clients as possible to handle all sorts of projects involving all sorts of practice groups.

The Real Estate Loan Tracking Database has a specific single purpose, which is to monitor loans made to car dealers based on their commercial real estate equity and to complete the loan process online from inception to archive. Chrysler Financial's central legal and credit departments, which are based in Southfield, Mich., interact with dealers in around 15 zones. Until Dickinson Wright built the loan-tracking database, a daunting paper trail would typically develop.

TWOFOLD INNOVATION

The innovation is twofold. First, the system allows multiple parties - the dealers, the loan officers, the GC's office and the law firm - to massage the contents and add whatever notes they want. Collaboration equals control. Not only are the records, showing what was actually agreed to, readily accessible, but the chances of future disputes are also decreased because all the parties to the loan worked out the details in real time. There are no decisive telephone calls interpreted differently by different parties. Nor are there lost faxes to search for.

Second, much of the work accomplished here, especially during the preapproval phase, is nonlegal. Of course, everything in the database is potentially useful to legal counsel. But the utility of the system for Chrysler Financial goes well beyond legal documents or legal prophylaxis. The system allows the company to simply organize its business process better, regardless oh whether lawyers have occasion to read this or that part of the data.

Unlike Dickinson Wright, Haynes and Boone has created a system for all its lawyers and practice groups to plug into. Steven Jenkins, the Haynes and Boone partner who spearheaded ClientConnect, acknowledges a lot of resistance on the part of lawyers in the early going to putting their work product and intellectual capital into the database. However, as of this writing, three years later, around half the firm's 400 lawyers are using ClientConnect.

Like Dickinson Wright's database, ClientConnect is as much as forum as a resource, and allows for professionals to work together on matters in real time. ClientConnect includes a virtual library of documents specific to each project handled in the system. Users are alerted when new drafts are input, and they can hyperlink right to them, avoiding printouts and faxes. E-mails are automatically generated when users define specific content as a priority.

As was the case with Dickinson Wright and Chrysler Financial, the willingness to engage in a technological enterprise that would benefit the client on both legal and nonlegal fronts turned out to be a real competitive advantage for Haynes and Boone in its relationship with Archon. Ron Barger, Archon's senior vice president and general counsel, recalls that, in the early stages, the system was still oriented toward the law firm's own technology, mainly to enhance the firm's service delivery capability. But, says Mr. Barger, Mr. Jenkins was soon thinking much more innovatively. He had started to see the possibility of a system that would allow Archon to bring in other professional firms and advisers as well as its own people. ClientConnect would be the client's system, not the law firm's.

As Mr. Jenkins figures it, competitor law firms are pretty smart, too. They'll soon be seeing the need to develop transparent document-sharing systems that provide many of the same benefits as ClientConnect. So why not license it to those law firms now, at a time when their own efforts to evolve something like ClientConnect are still mainly "rudimentary"?

The way for Haynes and Boone to exploit its current advantage is to identify itself as the developer of a cutting-edge resource that competing law firms and nonclient companies have put to effective use. Traditional law firms cannot be differentiated on the basis of what they traditionally do, agrees Mr. Jenkins. Most efforts in that direction deteriorate into hollow platitudes. But ClientConnect ostensibly achieves differentiation for its law firm creator because neither the technology itself nor the underlying client-service strategy is at all traditional.

In some instances, being first, or among the first, to do something, results in a decisive marketing advantage because it does achieve some differentiation. In other instances, being first is an overrated advantage if it sends no other message besides, "Boy, weren't we clever!" From a marketing standpoint, the substantive message is that being first says something about our ability to better serve our clients. Based on that, Haynes and Boone deserves some mileage for this innovation. If nothing else, the nonexclusivity that defines ClientConnect bespeaks a strong client service sensibility. The message is: "We want you, our client, to have all the options that you could possibly need."

The presumed marketing advantage for law firms like Haynes and Boone, which have pioneered client-centric products or services, clearly bespeaks the transformation of the inside/outside relationship from one where law firms monopolized a client and defined the relationship, to one where the guiding instinct is to benefit the client by being as open to new ideas as possible. No doubt, many law firms have been dragged kicking and screaming into such a brave new world, but the proverbial writing is on the wall.

Copyright Larry Smith - 2002

Larry Smith is a principal of Levick Strategic Communications and the author of The Business of Law and Inside Outside: How Businesses Buy Legal Services. He lives in North Bergen, New Jersey.

 
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