[Top tips] Getting the scope right

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In part five of the series ‘the seven habits of a commercial adviser’ Ben Kent and Adrian Furner discuss how getting the scope right is fundamental to meeting client expectations and delivering commercial advice. [Habit 5]

Getting the scoping right is the fundamental foundation for delivering a profitable project. As the recent PwC law firms survey 2014 puts it “The ability of partners to agree profitable terms with their clients and carefully manage the scope of agreed work is key”. A few extra hours of planning up front can save time and often hundreds of thousands of pounds.

Whichever industry you are in, planning and scoping are hard to get right, as they are often subject to changing dynamics that are difficult to predict. The professions are no exception, but generally don’t have a reputation for spending sufficient time at the scoping stage.

The bigger the project, the harder the fall. The McKinsey/Oxford study shows some startling statistics: half of IT projects with budgets of over $15million run 45% over budget, are 7% behind schedule and deliver 56% less functionality than predicted.

What can advisers do to avoid pitfalls and keep on top in the scoping process?

Be disciplined and align expectations up front

Time invested sitting back and focusing on a few key areas at the start of the scoping process can have a huge impact on the end result of a project. Having put lots of time and energy into winning the pitch, there is a temptation to dive straight into the project work to prove to the client that you are enthusiastic and efficient. The tough part is that the client will often not push back on this because from their point of view, it’s great to see immediate progress. However; being able to create, articulate, and agree a clear scope helps to avoid mis-communication and mis-aligned expectations. Crucially, It also gives you a higher probability of creating better outcomes for the client and allows you to measure and quantify your success at the end of the project.

Matching the approach to the client

Advisers often switch into auto-pilot at the outset of a project without realising. It is easy to see a piece of work that looks familiar and make conclusions about the approach, the pricing structure, the timeline and a host of other factors. Clients value their adviser’s experience of working on similar projects and approaches, but this should form the basis of a discussion, not a set-in-stone methodology. We called this habit ‘agreeing the scope’ because it should be a collaborative exercise defining an approach that works well for both parties.

Including flexibility to deal with risks and contingencies

Almost inevitably unforeseen issues will crop up over the course of a project and usually it is difficult to account for these when defining the scope. Clients tell us time and time again that they want their advisers to approach them proactively to tell them about any changes to the scope as soon as they arise. The ability to anticipate risks and difficulties ahead of time and plan possible responses is gold dust to clients. For this very reason, it is important to build flexibility of resources in, so that you can respond effectively to any changes that are required by quantifying them in terms of the implications for the cost and the timeline.

Demonstrating value for money

Value for money is inextricably linked to commerciality in most clients’ minds. In the professional services world the default pricing model is based on time and materials, despite the fact that this may not represent the best value for money for clients. In this traditional approach the client bears the majority of the risk in terms of cost. By contrast most clients live in a world where their customers expect them to bear the risk. Therefore to provide greater value for money and reduce risk for the client, advisers should be prepared to have a few options of well thought-through pricing models to offer.

Advisers should also look to actively demonstrate in the scope where they can save money for the client over the course of the project. A client receiving value for money is largely a subjective concept and so in the client’s mind, the message from advisers at the scoping session should be ‘these are all the things you are getting, and this is where we can save you money on them’.

Fundamentally, scoping forms the crucial platform on which commercial advice is delivered. Fail to assign it  sufficient importance at your peril.

[This article originally appeared in professional marketing magazine. For further details go to www.pmforumglobal.com. In the next issue: Habit 6 – Build practical solutions]

Brave New World? The legal sector in 2025

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Alastair Beddow, Associate Director at Meridian West, attended the  Law Firm Leadership Forum 2014, a conference for law firm leaders debating the future of the legal industry and the forces that are going to radically change the profession over the next ten years. Alastair writes his thoughts below:

Across a day of very wide-ranging debate, discussion and ideas-sharing three things stood out.

1. The days of the partnership model are numbered. A straw poll among attendees revealed that almost everybody predicted the demise of the partnership model by 2025. The rise of ABS, the need for more agile decision-making and sustainable governance in law firms, and the potential to raise capital for long-term investment were commonly cited as factors accelerating this trend. Even so, the strength of feeling and consensus on this point was surprising.

2. Technology is a fundamental disruptor to legal services. Keynote speaker Richard Susskind put forward technology as one of his three fundamental forces shaping the sector over the next decade. We have yet to really realise the potential of automation and innovation for the delivery of legal services he argued. Technologies such as IBM’s Watson will radically change the way we think about what a lawyer does and should do.

3. In-house legal teams are grappling with business risks, not just legal issues. For somebody who regularly interviews General Counsel at leading corporates and banks, this point isn’t new. However, a panel session with contributions from in-house counsel at Barclays, Unilever and thetrainline.com really brought the point home. They are looking at commercial problems through the widest possible lens – not just a legal one – and are reshaping their internal teams accordingly. They want external lawyers to innovate too, but to do so quickly.

Whatever your role it’s an exciting time to be in the legal sector. Do you agree with these three trends? How are they playing out in your firm? What other things should law firms watch out for over the next decade? Leave your thoughts below.

Alastair will be sharing more views and insights about the future of the legal sector and how firms can respond to these changes with Ben Kent during a breakout session at this year’s PSMG conference on 19th November 2014.

[This article originally appeared on LinkedIn.]

[Top tips] Understand the people

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In part four of a series of PM Forum articles on ‘the seven habits of a commercial adviser’ Ben Kent and Adrian Furner discuss how relationships drive business success. [Habit 4]

What was the last big business decision you made? Even when we believe we are making logical decisions, the very point of choice is arguably always emotional. Understanding people in business is critical to success; business is a social activity and relationships are fundamental. Professional firms are knowledge based businesses providing advice, in this type of people-based industry the importance of relationships is enhanced. The impact of advice, and the value that it can create depends on how it is delivered, and crucially, how it is received.

Being able to understand the people, their styles and drivers is fundamental to being able to successfully navigate the complex world of business and deliver success in terms of the desired outcomes. Whether we like it or not business is mainly about managing people and politics.

So how can advisers do this? A traditional approach is to perform some form of stakeholder analysis mapping the client team that we interface with, and potentially their internal stakeholders. This is a good starting point, but client expectations have changed. Clients now expect advice built on a deeper understanding of the context in which they operate and of their desired outcomes.
Advice must often be dovetailed with that of other advisers and stakeholders, both internal and external to the client. Not only who they are and their personal objectives, but how they work: what their processes are; how they will be using the advice; and how they will interpret it.

Stakeholder mapping

Carry out your stakeholder analysis, mapping the client team that you interface with and their internal stakeholders as early as possible after the kick-off meeting. Keep this updated as a live document and most importantly share it with your team.

Dig deeper

Find out about all aspects of a business situation. It is easy to think of a particular client as a collective represented by your main point of contact, rather than individuals with different views, motivations and thought processes. What does it mean not just to your clients business, but to them personally – does their promotion depend on it?

Do your research

The ‘soft’ more personal aspects of a business situation can have a significant impact. Build up profiles of each team member.  There is so much information at our finger tips spending time googling individuals or using LinkedIn is time well-spent. It can be really useful to capture initial observations from meetings and keep track of any side conversations that have happened. Don’t forget to ask if anyone from your organisation has worked with members of the client team before.

Think ahead

If you have a good idea of the position other advisers will take in a negotiation, use this information to anticipate and resolve issues that may arise ahead of time. Be open and collaborate with the client exploring scenarios together that drive the negotiation towards the desired outcome more quickly.

Simple actions

Understanding people is an art not a science. Simple actions such as taking time to meet individuals off the project for coffee can often be the most effective way to find common ground and build trust. This will set you apart as a friend or partner to the client, rather than a stumbling block to the client’s desired outcomes. Take a moment to think about relationships with your own suppliers, who are you more likely to work with and why?

A ‘trusted adviser’ is not someone you meet once a quarter in a meeting room. By getting to know your clients, you are much more likely to deliver advice that meets their expectations and achieves their outcomes.

[This article originally appeared in professional marketing magazine. For further details go to www.pmforumglobal.com. In the next issue: Habit 5 – Agree the scope]

[Top tips & case study] Understanding economics

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In part three of a series of PM Forum articles on ‘the seven habits of a commercial adviser’, Ben Kent and Adrian Furner discuss how advisers need to demonstrate an understanding of economics. [Habit 3]

What does ‘economics’ mean to you? Traditionally it is a difficult term to grapple with. A formal definition would be ‘the study of the production and consumption of goods and the transfer of wealth to produce and obtain those goods’. For many, the definition of economics goes much wider than this which is why it can be hard for advisers to grasp what it really means to their clients.

Understanding financial documents such as the balance sheet and the profit and loss account is only part of it.
‘Understanding the economics’ means not only understanding how your client makes money, but how the advice that you are providing will impact on this.

Three main steps to economic understanding:

  1. Organisational economics – understanding how your client’s company is structured, how and when it reports its financials, the internal reward structure.
  2. Macro and market level economics – understanding how your client fits into the wider world/their market, now and in the future.
  3. Transaction economics – understanding the economic drivers and implications of the specific opportunity.

A commercial adviser not only has a good grasp of these areas, but is able to articulate them clearly to the client. They are able to identify and articulate the value that they have brought, as well as any potential risks to the client, in financial terms.

To achieve this, numeracy is a key competency. Numbers are the language of business, but many professionals are tongue tied. A lack of financial fluency can put professionals at a grave disadvantage. It excludes them from the serious c-suite conversations and makes it difficult to justify the value of their recommendations. “If you can’t quantify what impact this project will have, why should we pay you £100k?”

In my 25 years of doing this I have met two lawyers who can add up which means it’s difficult for them to be commercial. They delineate between that which is a commercial point and that which is a legal point and shouldn’t. I’m not paying £1000/hr to make all the difficult decisions, I’m paying for someone else to not just advise, but to make a decision. Dr. Robert Easton – Managing Director, Carlyle Europe

A useful way to understand this is by looking at a typical M&A transaction. Ben Kent shares his experience and tips.

M&A economics

I started out my career in the corporate department at a Magic Circle firm. I worked on a series of acquisitions, but  my understanding of finance was limited. I now realise that a better understanding of M&A economics would have really helped
me deliver better quality, more focussed advice.
At its heart M&A economics is quite straightforward. Financiers generally value a business by analysing three factors:

  • The value of its assets
  • Its ability to generate future profits. Many will use a Discounted Cash Flow model (DCF) to do this
  • The value of comparable companies.

This will give you a base price, ie. the price of the business if it was sold as a standalone business.

Financiers then look at potential synergies to calculate the benefits of two businesses merging (on the principle that one plus one should equal three). This will push the price up:

  • Cost synergies include savings from sharing head office costs, rationalising property or shedding staff.
  • Revenues synergies are the additional revenues you achieve by crossselling additional services to each firms’ customers.

It is critical that lawyers understand the valuation model and which synergies are driving the price. It enables the lawyer to
focus due diligence and negotiation of the sale and purchase agreement on the issues that really matter. For example, if
the deal is driven by revenue synergies it is critical to review contracts with customers and make sure that the sales teams are locked in. If the sales teams leave then the revenue synergies will be nearly impossible to deliver.

Unfortunately many lawyers are not given enough financial training to understand these points and as a result focus on points that are commercially irrelevant.

[This article originally appeared in professional marketing magazine. For further details go to www.pmforumglobal.com. In the next issue: Habit 4 – Understand the people]

[Seminar] How to take account management to the next level

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Account management is sometimes neither well understood nor systematically applied. When done well, it helps advisers better understand and service key clients, but it is also a lever for more stable and profitable client-adviser relationships.

David Maister, a professional services expert, writes: “The best news is that key account management is in everyone’s interests. Clients want it, and it benefits the firm by growing relationships and generating new fees. Done properly, it can provide career-enhancing opportunities for every professional involved. Studies in many industries have proven the economic benefit of creating customer loyalty, and my own work with professional firms over the last 15 years have convinced me that there is a clear link between profitability and success in nurturing key accounts. It’s hard work, but it’s a clear path to economic success.”

So, how about learning to take account management to the next level?

RBS, Meridian West and the Account Managers Network invite fee earners and marketing professionals to share a rarely seen perspective on how both industry experts and client side see account management evolving.

A unique guest panel will share their experiences and tell us how the next level for account management will unfold. Also Ben Kent (Managing Director at Meridian West & industry expert), and Alastair Beddow (Consultant at Meridian West), will discuss how leading firms are advancing to better meet their key client demands.

We will also hear from Neil Parker, RBS Market Strategist.

The panel:

• Bruce Macmillan – GC at Legal Practice Technologies and formerly Senior Commercial Legal Counsel at VISA – representing the client’s voice
• Eddie Bowman – formerly Global Marketing Director at EY – representing the accountancy sector
• Michael Michaelides – Associate Director of Marketing & Business Development at Allen & Overy – representing the legal sector
• Greg Bott – Head of the Client Development Centre at Addleshaw Goddard – Greg is currently writing a PhD thesis on account management in the legal sector
• Ian Bennison – Marketing Operations Director at TMF Group and formerly BT Global Services – representing professional services and the telco sector

For more information and to book your place, please see our Events page.

[Infographic] Top tips on how to be an active listener

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Build a better understanding of your client’s needs through active listening. Check out our practical top tips on how to became an active listener.

Active listening

Active listening

[Top tips & case study] Commercial understanding

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In the second of a series of articles, Ben Kent and Adrian Furner discuss how advisers can better understand the context of their clients’ businesses [Habit 2].

How much do you really know about your clients? In our recent study, Effective Client-Adviser Relationships, 52% of clients cite a lack of understanding of their business by external advisers as the factor which is most likely to derail the client-adviser relationship.

As we discussed in the Summer 2014 edition of pm, understanding the business context in which a client operates is one of seven core habits that commercially-savvy advisers exhibit. Commercial understanding is now a major factor clients consider when they commission work. When looking to instruct advisers for complex work, 40% of clients place an understanding of their business as among their top three selection criteria. The professional firms that have been most successful in this area have managed to turn their more commercial approach into a brand differentiator: “You must constantly educate yourself otherwise
you can’t deliver successful advice.” Mike Strong, Executive Chairman EMEA, CBRE.

So what exactly do clients expect from their advisers? Reading financial statements and annual reports is useful, but no longer sufficient. Clients are demanding much more: 75% say they expect their advisers to know about their organisation’s strategy and business plan, and 67% expect knowledge of industry sectors and trends. As clients raise the bar, professional firms are expected to jump higher and higher to demonstrate commercial understanding.

Three steps to demonstrating better commercial understanding:

1. Research the style and culture of your clients

Each client has their own language, jargon and way of doing business. Communication styles and risk appetite vary between organisations and individuals. Understanding the personal and emotional factors involved in any piece of work will inform how to best position advice to ensure it gains traction. Top tips:

  • Map out the key stakeholders for any engagement, and meet with them to discuss their personal views and objectives.
  • Keep in touch throughout the duration of an engagement and afterwards. Informal meet ups work well, particularly at the client’s premises.
  • Be inquisitive about a client’s strategy. Don’t be afraid to ask for strategy documents that would help contextualise your advice.

2. Share best practice and case studies

Clients want to know from their advisers how other organisations, especially those in the same sector, have undertaken
similar engagements. Sharing insight on what does and doesn’t work, and how pitfalls can be avoided, is a key attribute
of trusted advisers. Top tips:

  • Capture the knowledge that you build up from different clients. Write down the key learnings and actively share with junior colleagues.
  • Develop a checklist of questions to ask when attending initial meetings with a new clients.
  • Prepare relevant case studies to show clients ahead of meetings, and talk to colleagues to gather more examples.

3. Keep one eye firmly rooted on the future

Clients also highly value foresight on trends likely to reshape their sector in the future. CFOs and GCs are time poor and so look to external advisers to offer a view on the issues that might impact their business over the short and long-term. Top tips:

  • Read blogs and thought leadership, and attend industry events and networking sessions to keep abreast of sector developments and issues.
  • Attend seminars and workshops delivered at client organisations to understand the in-house dynamic.
  • Send short, personalised emails to clients drawing their attention to issues you think are relevant to them.

Case studies: fostering business understanding
The talent management strategies of professional firms are at a turning point. Firms now recognise that business understanding
is as important as technical understanding. Sector groups, key account plans, and knowledge managers are a good starting point. However, more innovative firms have taken further steps to build business understanding into their culture:

Simmons & Simmons has created a highly successful mini-MBA for trainees joining the firm that teaches young lawyers essential business skills.

Thomas Eggar, a law firm based in the south of England, sends its lawyers to do a day of work experience at their client’s retail outlets.

The Big Four accountancy firms and large consultancies have high developed knowledge management systems that allow fee-earners to share insight and collaborate across practice areas.

[This article originally appeared in professional marketing magazine. For further details go to www.pmforumglobal.com. In the next issue: Habit 3 – Understand the economics]

What keeps your clients awake at night?

What keeps your clients awake at night?

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If you had to write down the top 3 things that keep your client awake at night could you do it?  Before you read further write them down …

If you were able to do it, then question yourself whether you have tested your view, and if you couldn’t then you are not alone.

In a recent meeting with a FTSE CEO we asked what were the big decisions that he had to make this coming year.  In his mind, there were only two, and they could be articulated in an elevator pitch.  That’s not to say that these were the only vexing decisions that he and his board would make this year, but the two were the ones that were fundamental to the future success of the organisation.

Nothing we were told was confidential or secret, but by asking the question, we were able to get an insight that is immensely valuable. An insight that not many people, probably including most of the organisation’s employees, would have access to.

So why is this insight so valuable?  In short, as a professional services adviser, it gives us contextual insight which will, if we use it well, allow us to provide more ‘commercial’ advice.  For example, if we were advising on the structure of a new business venture for the client, then we may be able to use this insight in recommending which solutions would support and hinder the strategy.

The secondary value in the above example is that whilst you may have been able to identify the same issues from other publicly available material, having it from such a direct source adds credibility to the knowledge.

In addition to the direct benefit of allowing for more ‘commercial’ advice, there is also an indirect benefit. If we know the most important issues for our client and if we marry this with our ‘thirst for knowledge’ discussed in an earlier article [Do you have a thirst for knowledge?], then we can make connections between knowledge that we gain and our client’s needs, which may allow us to build the client relationship outside of specific engagements with relevant knowledge and discussions.

So when was the last time that you asked your client what keeps them up at night?

Do you have a thirst for knowledge?

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There has been a fair bit of research done on the behavioural and intellectual traits of professionals and in particular lawyers.  One of the traits that often rises to the surface is that there is a high level of intellectual competitiveness.

Professional training both leading towards, and post, qualification leverages this to ensure that qualified individuals have a deep and robust technical understanding.

Increasingly, the progressive professional services firms, in particular legal firms, are marrying this up with investments in putting lawyers through ‘mini-MBA’ programmes to help provide a wider context to the business world.  Whilst this is a major help to increasing the commerciality of practitioners, it isn’t the whole solution.

In the world of L&D there’s a much used ratio of 70:20:10, in that raising competency comes from:

  • 10% – courses & reading (formal learning)
  • 20% – from people – mainly the boss (peer to peer learning)
  • 70% – from taking on tough tasks (experiential learning)

In successful people, one thing that runs through all three of these is an inquisitiveness, and a ‘thirst for knowledge’.  It’s this that drives them to deliver success.

Having undergone a formal piece of training, they will look for people and opportunities that will allow them to apply and test their learning.  Or maybe if they get put on a new client account, they again look for people and knowledge that will build their understanding of the sector or the client.

For these people gaining knowledge is something that never stops, they are always looking for new insights and opinions, making connections, and questioning.

This ‘thirst for knowledge’ is a key attribute of commerciality, the world in which we live and work in is constantly evolving.  Irrespective of whether your clients are: individuals; corporates; or 3rd sector organisations, they all inhabit dynamic worlds and for you to be able to give advice in context, ‘commercial’ advice, you’ll need to understand their worlds as well as they do.

Arguably, you need an even greater ‘thirst for knowledge’ as you have to remain a technical expert as well as a client context expert.  It’s lucky therefore, that as a professional you’ll have a relatively high level of intellectual competitiveness.  If you can focus this and balance it between the professional/technical, and the business/client context areas, then you stand a good chance of success.

The challenge is can you unleash your inner thirst for knowledge?