From allegations of sexual misconduct, accusations of money laundering and assistance in state capture, breach of professional rules, pursuit of questionable client matters, potential conflicts of interest to such obscure examples of poor judgement, such as the illegal dumping of a family dog’s carcass in a suburban street, partners of large law firms try their best these days to make headlines for the wrong reasons.
From London via Johannesburg to Wellington, the series of incidents hits a profession and industry, which holds itself to a higher behavioural and ethical standard than the rest of society and, as importantly, whose stock in trade should, after all, be good judgment. Why is big law paying so little attention to its reputation in times where everyone invests vast amounts in building their brands? Is there a correlation between brand and reputation? What would be the consequence of losing your reputation for your brand?
Out of sight, out of mind?
The ultimate worst scenario has materialised. The immediate reaction to any incident described above seems to follow a similar pattern: Fellow partners and spokespeople quickly try to ringfence those scandals and misdeeds with statements such as “We discussed the matter with the individual concerned and have satisfied ourselves that this is a personal matter that does not involve the firm”. Law firms are in simple terms always in denial of the damage done to corporate reputation. In the further course of the incident handling, those firms attempt to either completely neglecting the actual issue, banking on the public domain’s short memory or cutting ties with the respective partner or staff member. Out of sight, out of mind? The damage has been done but do any of those law firms know what the magnitude is, whether the damage is irreversible and what could be done to avoid further misdeeds? Before discussing potential prevention and protection mechanisms, the relationship between a brand and the firms’ reputation requires further exploration.
Brand is about relevancy and differentiation, reputation about legitimacy
While almost all law firms have embraced the notion of branding, protecting and enhancing the reputation of the firm has not yet gained a place amongst the top priorities. This is even more astonishing in today’s society with its increased emphasis on business ethics and corporate responsibility. Perhaps, one reason for the absence of proactive reputation management is the struggle to differentiate between reputation and brand. Etterson and Knowles (2008) [1] have introduced a simple, but very effective distinction between the two concepts, which appear to be relevant in this context. According to the two authors, a brand is “client-centric” and “proactive” in nature, it focuses on the service promise and commitment to its clients, wheras reputation is “firm-centric” and rather “defensive”, reflecting the degree of credibility and respect a firm has gained amongst a broad range of stakeholders, including employees, clients, media, regulators and local communities. Di Somma (2015) [2] recognises the brand’s functions “as a multiplier generating desire and differentiation”. In comparison, reputation is the “sum total of a firm’s track record” and “the accumulation of its actions and statements to date”. In essence, a firm’s brand is about relevancy and differentiation, whilst its reputation about legitimacy.
Albeit inevitably independent, brand and reputation are correlated
A strong reputation is driven and affected by a number of factors, such as management strength, sustainable financial performance, and, not to forget, fair and transparent remuneration and performance management, living and nurturing diversity, environmental consciousness and corporate ethics. In return, a strong brand is about the provision of excellent legal services embedded in client-centric relationship management services, uniquely addressing the needs and expectations of clients.
Albeit inevitably independent in their specific roles, brand and reputation are highly correlated with correlation scores ranging from 60% to 90% (meaning that perceptions of both tend to move in the same direction), according to Research + Data Insights (2016) [3] discussing research conducted by Hill + Knowlton Strategies. The brand is not separated from reputation at all, as many tend to believe.
Balancing brand and reputation is crucial to a firm’s long-term success. Just imagine a strong brand driving the perception of excellent client service in terms of responsiveness, global reach, sector focus and tailored fee arrangements, whereas its internal management may not live up to ethical employment practices. For instance, if we take the current investigations into KPMG’s audit matters in the UK and South Africa into consideration, it has not just been damaging to their reputation but devalued brand equity as a whole, which has a direct impact on shareholder value. On the contrary, a law firm with a solid and indisputable reputation in terms of integrity, and exceptional diversity management, may simply fail to convince clients of its service excellence due to its lack of delivery on the brand promise. This can be observed particularly in traditional partnership structures of law firms and many other Professional Services Firms, where a high degree of individualisation results in often careless handling of the corporate brand and the relevant quality of brand equity.
Undoubtedly, both share the necessity of creating perceptions amongst its separate (though sometimes overlapping) constituencies. However, opposed to common belief it is not the sole responsibility of the marketing team to look after both, as explained in the further course of this article.
Identification, prevention and protection against the ultimate worst-case scenario
Coming back to our initial observation of all those “incidents”, processes to identify, prevent and protect the corporate reputation move into the lime light. These days, we notice a strong focus on building brands and differentiating client services by means of increased allocation and sophistication of non-fee earning staff to business development, marketing and communications. More and more partners are exposed to sales methodologies and accordingly trained. Sophisticated new fee arrangements coupled with responsive relationship management processes, everything being enabled by contemporary technology platforms, result in unprecedented client experiences. But who is looking after the reputation of the firm?
As a first step, any risk – and losing your reputation is a risk – must be identified and agreed upon by a firm’s leadership. A composite risk index, common in corporate environments, is one way to explore how and on which situational context, the law firm’s reputation may be at risk. It aligns the risk of reputational damages with other potential risks and forces the leadership of a firm to look at it more integrated across functional barriers. Reminding ourselves, that nurturing the corporate reputation is a defensive measure, only clear descriptions of potentially risky situations and behavioural patterns as well corresponding implications assist the further process. Subsequently, identified reputational risks ought to be addressed by sufficient mitigation interventions, such as internal communication activities to refresh the partners’ awareness for corporate values and strategies (partner or employee engagement). Does the law firm have a communication plan and stakeholder engagement strategy to ensure that responses and messages are well thought-out in advance?
Have HR, Marketing, Communication and the executive leadership collaborated to cover all angles?
Consequently, prevention should be based to a significant degree on continuous and institutionalised client feedback processes to detect developing unwanted behaviours at an early stage. This process can be conducted in parallel to a brand health assessment optimising involved resources.
Finally, protecting the law firm’s reputation is everyone’s responsibility, as Keri Calagna, leader of Deloitte & Touche LLP Advisory’s brand and reputation management practice rightly observes. There is no ownership by a single person or department. Leading practices are based on a holistic approach driven by an oversight committee which bundles the various pools of expertise within communications, marketing, brand, strategy, risk and crisis management in a firm.
The last word on reputation belongs to Warren Buffet who observed that “a great reputation is like virginity – ‘it can be preserved but it can’t be restored.” We should better look after it.
Notes
[1] Etterson, Richard and Knowles, Jonathan (2005) ‘Don’t confuse reputation with brand’, MITSloan Management Review, Magazine: Winter 2008 – Opinion and Analysis, 1 January 2008. Available at: https://sloanreview.mit.edu/article/dont-confuse-reputation-with-brand/?use_credit=54fda78aa8a09b4d77b5aaec57b75028 [6 June 2018]
[2] Di Somma, Mark (2015) ‘The differences between brand and reputation’, Branding Strategy Insider, 2 February 2015. Available at: https://www.brandingstrategyinsider.com/2015/02/the-differences-between-brand-and-reputation.html#.Wx0F1UiFNPY [10 June 2018]
[3] Research + Data Insights (2016) ‘An Executive View of The Difference Between Brand and Reputation RDI’, Thought Leadership, 27 May 2016. Available at: http://researchdatainsights.com/an-executive-view-of-the-difference-between-brand-and-reputation-rdi/ [9 June 2018]
[4] Interview with Keri Calagna in The Wall Street Journal (2016) ’Protecting Brand and Reputation: Getting It Right from the Get Go’, 19 September 2016. Available at: http://deloitte.wsj.com/riskandcompliance/2016/09/19/protecting-brand-and-reputation-getting-it-right-from-the-get-go/ [10 June 2018]
About the author
Ignaz Fuesgen is a management consultant and business coach assisting Legal and other Professional Services Firms in Europe and Sub-Saharan Africa. Based in Johannesburg (South Africa), his focus is on value-based strategies, service portfolio optimisation and client service excellency. He is the founder and director of KOHMAP Consulting and Avuka Training and Coaching, both dedicated to the Professional Services sector. His more than 18 years’ executive experience include executive positions at leading European and African firms such as KPMG, BearingPoint, Clifford Chance, Allen & Overy and Webber Wentzel.
He holds a Master degree in Social and Economic Sciences from Vienna University of Economics and Business (Austria) and an Executive MBA from Carlson School of Management, University of Minneapolis (US).