[co-author: Yvonne Nath]

In our previous blog post, we noted the emergence in the public accounting sector (and hopefully in the legal profession) of a new era of law firm business development and partnership with clients — Strategic Account Management or SAM-Legal©.

In this post, we explore  expenditures and returns associated with hiring a dedicated businessperson to serve as Strategic Account Manager.

Costs

Most law firms already have invested heavily in the resources necessary to support business development initiatives, including aspects of  SAM-Legal©.  Already on the payroll are competent lawyers with relevant technical knowledge across legal disciplines and client service skills.  Firms have made the investment in extensive research and business intelligence platforms that yield an understanding clients’ industries and the issues they face and must address.  Budgets for lawyer travel and client entertainment often are already in place.  Firms possess sophisticated systems to understand and analyze clients’ utilization of firm services and professionals, engagement trends, revenue and profit…and to spot emerging areas of clients’ needs.  IT departments have invested in secure systems to communicate with clients and to facilitate sharing among client-service and client professionals.  Most firms already have full-service marketing and business development functions that operate Client Relationship Management systems to identify the extent and strength of relationships with professionals at the client, and to map the journey of buyers of legal services.  The in-place marketing and business development function also supports the development of client events, client-specific presentations and collateral, digital and social media connections, proposals, and the like.  These items represent the bulk of what is needed to “do SAM.”  Moving from Client Teams to SAM is substantially funded using existing resources and budgets.

True, there will be SAM-specific incremental costs, but they should prove relatively minor – items such as additional nonbillable attorney hours as SAM teams receive leadership and account training, prepare, organize, gather, conduct client and site visits, and operate generally.

We contend that the only material incremental expense related to the creation and operation of SAM rests with the hiring of the Strategic Account Manager, the high-level business professional described in our previous  blog post.  More than likely, this professional, who must bring a new and enhanced skill set, is not already on staff.  The compensation of such an individual will, of course, depend on her or his experience, existing connections at the Strategic Account Client to be pursued, industry connections, and current and expected compensation.  The good news for law firms is that such individuals exist at compensation levels well below the value they will bring, the revenue they will help to retain and grow, and the support they will provide to partners on sales strategy. Bonuses (since commission cannot be paid to a sales professional in a law firm) are based on a set of goals developed with the SAM professional as key targets are developed and a sales forecast is reviewed.

Returns

What can a law firm expect as return from its decision to invest in and deploy SAM?  If lessons from the Big 4 are a harbinger, the returns include:

• Increased client satisfaction. After all, client professionals are part of SAM teams
• Expansion of services delivered and the geographies where they are delivered
• New introductions facilitated, including at subsidiaries of SAM clients
• Increased client wallet share and/or matter value (grow the client’s trust to earn the right to work on their more complex and valuable matters)
  • Reduction in client attrition (client relationships can be expensive to replace)
  • Reduction in the sales cycle
• Improved revenue at significantly higher than historic rates
• Improved efficiency and profitability
• Increased meaningful tenure of clients working with the firm (increased lifetime value of clients)
• Reduced fee pressure (although fee pressure will never dissipate entirely)
• Improved opportunity win rate
• Additional attorney hours made available from unfocused (i.e. not SAM) client development efforts
• Referrals by delighted clients to new prospective clients in the same industry
• Reduction in the volatility of a SAM client’s legal spend; more predictable, regular legal fees for existing work
• Improved rate realization (client asking for fewer discounts and challenging invoices less)
• Acceleration of attorneys’ sales readiness by being exposed to formal leadership, sales and account management training
• Growth opportunities for members of the SAM team
• Increased attorney engagement and wins in firm’s cross-selling activities

Who should shoulder the cost and reap the benefits of the SAM?

Whether the investment in a SAM should come out of the budget of the primary client relationship attorney(s), other attorneys, or the firm as a whole is up to your firm and will depend on how the SAM’s role is designed based on the expectations the firm has for the SAM. A detailed budget and plan should be put in place in advance of the SAM being brought on board. This will help the firm decide who will make the investment in the SAM and how the rewards resulting from the SAM’s efforts will be allocated.

Conclusion

Firms will be wise to invest in a SAM to build out SAM-Legal©  teams for one significant reason (and many others as we’ve identified in these two blog posts). Firms have individual lawyer plans, practice plans, department plans, office plans and firm plans. A strong, well thought out SAM-Legal© strategy will be an umbrella that is all encompassing of a firm’s offices and practices

For more information about strategic account management, our SAM-Legal©: Beyond Client Teams book will be out in Q1, 2019. Please email us if you would like to order a copy. SCoulter@lawvision.com; SBell@lawvision.com or YNath@lawvision.com for questions, information, thoughts.