Gone are the days of task-based work. What differentiates your firm now is how you create value for clients.
The professional services landscape has undergone a number of seismic shifts in recent years; from adopting new tech solutions to finding ways to do more work with fewer staff. But one of the emerging new trends in law, accounting, tax planning, and other professional services is challenging the traditional paradigm of how legal & professional services work is both performed and perceived, by professionals as well as clients. The roles of law, accounting, and tax planning in the corporate world have changed, and clients are now looking for equal and eager partners in their vendors – partners who can serve as expert advisors and help to create new value.
The business of value creation is wildly different from regulatory box-checking or contract drafting. Rather than task-based work, clients today are looking for firms that can respond to business needs, help capitalize on opportunities, and improve core metrics. Here are some of the ways that clients are looking to professional services firms for value creation – and how your firm can set itself apart by fulfilling that demand.
The pressure is on for in-house legal departments and corporate law firms. CEOs and other C-Suite executives have been overhauling departments to be leaner, more efficient, and more productive over the last several years – and now, they’ve come for legal. Mark A. Cohen, CEO of Legal Mosaic and the Executive Chairman of the legal digitization non-profit Digital Legal Exchange, wrote in Forbes that while corporate legal departments have traditionally existed in their own siloes, business leaders are now stepping in and demanding more efficiency and more value from their legal departments. In the face of this pressure, Cohen says, corporate lawyers must ask themselves a number of difficult questions.
“The process (of value creation) begins with a reassessment of the legal function’s purpose from the client/customer and societal perspectives. This requires a paradigm shift…to one that more closely resembles its clients/customers and the broader society.”
Cohen notes that both a technological change and a behavioural one are necessary for legal departments that wish to succeed in creating value; this two-pronged approach is the best way to ensure a successful digital transformation. Legal departments must begin the important work of asking not only how they can leverage new technologies to increase efficiency, but also how they can change their organizational cultures, workplace patterns, and even their own attitudes and behaviours to facilitate value creation.
The work of creating value is very different from simply drafting legal documents; it involves taking a holistic approach to law that redefines legal as an integrated part of a larger whole. Instead of simply ensuring regulatory compliance, double-checking contracts, and operating in isolation, a law firm or corporate legal department that creates value is one that views itself as being driven by, purpose-built for, and accountable to business outcomes.
It’s this mindset that lawyers, paralegals, and support staff must adopt in order to stay competitive in the evolving legal and business market. In November 2021, EDHEC Business School held a value creation seminar for its Master of Laws students led by Associate Professor Antoine-Henry de Frahan, who spent 10 years in legal practice before becoming a value creation consultant.
De Frahan stressed to his students that lawyers are too focused on playing it safe – ensuring regulatory compliance and checking boxes – and not focused enough on providing impactful, client-friendly services. One easy example he gave his students involves legal analysis communications to clients. While most lawyers will respond to client questions about legal matters with their reasoning first followed by their conclusion (as they were taught to answer questions in law school), de Frahan says lawyers can improve client value by simply starting with the conclusion first and adding their supporting reasoning afterward.
But value creation isn’t just a mindset; it’s also a potentially lucrative and impactful service that law firms and in-house departments can provide to their clients. Deloitte, for instance, provides value creation services as part of its M&A offerings. And Appleton, Wisconsin-based Epiphany Law uses a value creation model that helps their clients minimize risk and capitalize on opportunities. These and other firms have recognized that technology has opened up avenues for lawyers to do higher-level work that impacts actual business outcomes, and they’re capitalizing on that innovation as a competitive differentiator. Value creation is one of the ways that law firms and legal departments are staying competitive, even as technology is taking over many of the tasks that lawyers and paralegals once performed.
Engaging in value creation practices is one of the best things your firm or department can do to stay ahead of the market. But value creation doesn’t have to take a significant amount of time or be particularly complicated. It’s simply about finding ways to expand the legal, accounting, or tax planning function beyond your core subject area. Thomson Reuters recommends generating a set of key performance indicators (KPIs) that can demonstrate how your team is creating value. This could involve, for instance, legal compliance metrics, number of contracts signed, time saved through better systems, or some other business-oriented metric that can demonstrate value.
It may even be helpful to come up with a “value creation statement” – similar to a mission statement, but oriented around how you create value. At Appara, for instance, we’ve formulated our own “value creation statement” as follows:
Appara empowers our clients to achieve flexibility and freedom in their businesses. Appara’s products save time, cut costs, reduce errors, increase customer satisfaction, and boost revenues. We achieve this through our unique combination of database/records management, workflow automation, and document automation tools.
But ultimately, value creation begins with a cultural change. It begins by understanding that law isn’t its own separate entity; it’s part of a business ecosystem that is seeking business results. When you can answer the question, “how does what we do help the client achieve their goals?”, then you’ve started uncovering your team’s value.
How does your firm create value for clients and stakeholders? What outcomes are you using to judge your success? Let us know in the comments.
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