What is value when it comes to the delivery of legal services? Whether you, as a corporation, a law firm, or a vendor of legal services, are a buyer or seller of legal services like litigation or M&A, you may have never asked yourself that question. More importantly, you may have never asked yourself what value means to you as a customer, or what value means to your customers. This article is the first and an introduction to a series that will explore the question of “What is value?”. We will explore the ways to define value, the ways to measure value, how to communicate your value, how to discover your customer’s value, and how vendors and customers in the legal industry perceive and measure value.
Ways to Define Value
Value as sought by customers, in the legal vertical market or in any industry, falls into three categories, none of which are mutually exclusive with one another. In each category of value, the customer will have what we call “table stakes”. “Table stakes” is the minimum value that the customer is looking for; a vendor that comes in below the table stakes isn’t likely to be considered by the customer. “Table stakes” also include an acceptable level of qualification and expertise in the vendor – not only knowledge and experience but also a track record of success in the customer’s matter.
The first way to define, which is relatively self-explanatory, is price. – of course, price as a value does not mean money, but instead is a measurement of the exchange of value. A customer who values price is generally seeking the lowest price, and is generally willing to compromise on other factors to obtain that low price. Think of a person who generally flies on so-called “no frills” airlines such as Spirit, Frontier, Ryanair – customers of those airlines are typically willing to compromise on things like customer service, amenities such as checked or carry-on luggage and in-flight food and beverage service, and even the overall comfort of the flying experience, simply to fly to their destination for the lowest possible price. For price, “table stakes” is usually the customer’s budget and/or price expectation – a customer isn’t going to consider a vendor above the customer’s budget or what the customer considers the market price.
The second way to define value is specialized or unique goods or service capability. To be clear, when we talk about specialized or unique capabilities, we aren’t talking about “table stakes” competency – we’re talking about competency, experience, and/or knowledge that is far beyond the general level of competency required in the field. As an illustration of what we’re talking about, imagine you need brain surgery. Normally, many brain surgeons with a track record of success could perform your surgery. But perhaps your condition is especially dire, or you need a complicated or experimental procedure – in that case, you may want to seek out a surgeon who has the specialized knowledge, training, experience, and skill to successfully perform the particular procedure you need and give you the greatest chance of successful recovery. Thus, while a board-certified brain surgeon might be the “table stakes”, a particularly dire health condition may cause you to value having a world-leading surgeon.
Finally, the third way to define value is customer service, particularly the extremely attentive variety. When we talk about extremely attentive customer service, we’re not talking about a server at a restaurant who recommends a great bottle of wine, makes sure your water glass is always filled, and perfectly times the clearing of plates and serving of the next dish from course to course. Instead, we’re talking about customer service that goes far above that, that is not only there whenever (and I mean whenever!) you need them and able to do whatever it takes to accomplish what you need, but can even predict what you need before you even realize it and have it ready for you when you do realize you need it! That kind of customer service is probably best exemplified by the English-trained butler, who is on-call at a moment’s notice but is also able to predict in advance when you will and what you will need them for. Again, “table stakes” customer service is timely and responsive; a customer who values service that goes above and beyond is looking for something far more attentive and predictive of the customer’s needs and wants.
Again, it should be noted that all three types of value are not mutually exclusive, particularly when it comes to specialized/unique goods/service offerings and exemplary customer service versus price. Although one can expect to pay more for a specialized or unique good or service offering or for extremely attentive customer service, a customer might be willing to compromise to a certain extent on those two types of value to stay within a budget, or might be willing to bid out to the limited universe of vendors who can provide those two types of value to obtain the best price possible.
How Can We Measure Value?
Customers and vendors alike in the legal industry can best measure value in several ways. The first measurement is the importance of the good or service being acquired – is this a bet-the-company matter for the customer (high importance), or is it significant but not world-ending (important); is this a one-off yet mundane (not so important), or is it routine and repetitive (maintenance)?
The second measurement is the categories of risk the customer is seeking to mitigate or eliminate. These categories can include financial (how much is this going to impact the bottom line?), reputational (what will others think of us?), executional (will this project be successful?), and legal (can we stay within and/or not break the law?).
The third measurement is the customer’s prioritization of the value that the vendor provides. These values can include cost (we’re the cheapest price!), promptness (we address your requests in an hour/24 hours/etcetera), responsiveness (we can turn around your project in a day/a week/a month), and expertise in the customer’s industry or vertical market and understanding of the customer’s business – think of those brokerage/financial planning firm advertisements that tout how the firm makes it a point to learn about you and your family.
The final measurement is the customer’s desired outcome. Is the customer looking to win at all costs or adopt a scorched earth policy, or are they willing to give to resolve their issues quickly? How much are they willing to give to achieve a resolution? And which risks are they particularly interested in minimizing?
All these measurements sit on sliding scales, rather than being a series of checkboxes. Think of the settings on your car’s climate control – there are sliders to control temperature, fan speed, vent openings, which vents receive air current, and on some luxury cars even the ability to filter the outside air or add fragrances! All of these sliders allow you to set your car’s climate just the way you want it. Similarly, the axes of measuring value allow a customer to pinpoint the specific value they seek from the three definitions of value.
Each of these measurements, and where along the scale the customer measures, can illuminate the type or types of value that a customer seeks. A client who has a bet-the-company litigation or is looking to win a legal dispute at all costs may – like a patient needing a complicated or experimental life-saving medical procedure – prize the value of specialized or unique goods or service offerings. Or a customer with a routine, repetitive legal matter may value price above all else to keep costs down, or may value exemplary customer service so that the recurring matter will be taken care of without the customer needing to spend any time or thought on it – think of a business that must regularly file legal applications in the ordinary course of business.
In later articles in this series, we’ll do a deeper dive into the methods for quantifying and measuring value. It should also be noted that there are plenty of tools for customers in the legal vertical market to help them measure and communicate their sought value to current and prospective vendors.
Communicating the Customer’s Sought Value
“But,” you might be asking now, “as a customer, even if they know the value I or my company or firm seeks, how do I communicate it to my service providers, and how do I make sure they understand?” You or your firm have probably had to move on from a vendor whose prices no longer matched their service offerings, or who displayed an inability to handle your work, or who simply started treating you like just another disposable customer.
The request-for-proposal, or RFP, process is an initial way to communicate to prospective vendors the kinds of value your firm seeks. Not only should your RFP indicate to vendors the axes by which your firm measures and perceives value, but it should also include questions to measure the vendor’s values and whether they can meet your firm’s values. Will the vendor charge you the best market-competitive price? Does the vendor even know the market prices? If you the customer need a specialized or unique good or service, does the vendor have the resources and experience to provide that good or service? Or if you need exemplary customer service, does the vendor have the manpower necessary to provide that level of customer service? There are RFP and vendor procurement platforms for the legal industry that allow customers to utilize a transparent, repeatable RFP process to define and clearly communicate the customer’s preferred values to prospective vendors. These tools bring real clarity to all parties.
After your firm selects a vendor, vendor management tools can help keep the lines of communication open and clear. Not only does this facilitate the working relationship, but it also allows the customer to repeatedly emphasize its sought value or values to the vendor – for example, if price is the primary value, a well-functioning vendor management process can help keep work on-schedule and on budget. The customer can also communicate to the vendor changes in sought value. Maybe a significant matter becomes a bet-the-company issue, or maybe financial issues force price to become the driver of value. The vendor management process provides a channel for customers to consistently communicate their sought value to vendors.
Finally, effective communication of sought value should enable customers to compare expected results with actual outcomes. Was the vendor under budget? Did they mitigate our risk concerns? Did they possess the knowledge and resources required to complete our project? Were they responsive to our requests? Measuring your sought value doesn’t have much use if you cannot use it to evaluate whether your vendors are providing that value.
Hopefully this introduction has inspired you to think deeper about how your company or firm defines, measures, and communicate value. Through the rest of this series, we will drill down further into the ways to define value and the ways to measure value. We will also discuss how those definitions and methods of measurement interplay with one another. And we will explore how corporations, law firms, and legal services vendors each perceive value in their unique way.
We will explore the intricacies of communicating value between customers and vendors. What information should each side be providing the other, and when in the sales process should certain pieces of information be shared? In the legal industry in particular, the obligations for confidentiality and the risks for conflicts of interest make these questions especially important!
Lastly, we’ll also present the viewpoints of customers and vendors in the legal industry regarding value – how do they define, perceive, measure, and communicate value? What is the value their firms offer or look for? Do they think value as a concept is broken, and if so, why and how can it be fixed? We hope you look forward to the rest of this series.
About the Author:
Cash Butler is a seasoned legal technology innovator. He has over 18 years of experience in the legal vertical market, primarily working in eDiscovery, litigation & compliance. Cash is an expert at legal vendor and project management and is the founder and CEO of ClariLegal, a preferred Litigation/Legal vendor management platform that matches corporations and law firms with the right vendors who have the right service offering at the right price. The ClariLegal solution saves time and money. ClariLegal also improves, quality and project transparency which helps corporation and law firm customers gain more in control of the litigation.
Cash practices and believes in continuous business process improvement through the smart application of technology to provide better, faster, less expensive, more secure legal service delivery that improves outcomes.
Cash is also an avid hockey, baseball and football fan with a strong affinity for Boston College and the University of Michigan.