Consumer Impact on Legal Industry Trends

By: on November 30, 2016

The legal industry is in the midst of a significant shift in the delivery of legal services. According to Georgetown University Law Center and Thomson Reuters Peer Monitor in their annual State of the Legal Market report:

“Increasingly, clients are demanding more ‘value’ in return for their legal spend, and by value they mean greater efficiency, predictability and cost effectiveness in the delivery of legal services. What once was a seller’s market has now clearly become a buyer’s market, and the ramifications of that change are significant.”

For law firms, this means that to stay viable in the changing marketplace, they need to be aware of and prioritize consumer demands.

To better understand consumer desires, we surveyed the general public about what they look for as they evaluate legal service providers.

This report, which highlights our findings, can be a resource for law firms as they work to restructure their practice to better serve their clients.

Consumer Confidence in Attorney Trust Accounting

Attorney trust accounting refers to how law firms handle client funds. To remain compliant with various state and bar regulations, attorneys must separate client funds from operational funds.

This involves setting up a separate bank account to house client monies to avoid mingling those funds with the attorney’s own. Although attorneys aren’t required to set up a separate trust account for each client or case and instead can establish one account for use for all clients, Thomas Simeone, managing partner at Simeone & Miller, emphasizes:

“The attorney has to keep strict account—to the penny—of the money in the trust account so that it is clear at all times exactly how much is in the account for each client.”

Thomas Simeone, managing partner at Simeone & Miller

This means that attorneys must keep a separate ledger for each client whose money is pooled in the trust account. They can maintain these ledgers using manual methods, such as Excel spreadsheets or using basic accounting software such as QuickBooks, as well as through industry-specific legal trust accounting systems.

According to data gathered from our consumer survey, 32 percent of consumers say that a firm’s use of trust accounting software would impact their decision to choose that firm’s legal services over another.

Consumer Preference in Trust Accounting Solutions

Trust accounting software can provide the transparency and accuracy required to follow state and bar regulations regarding attorney trust accounts. What’s more, clients gain peace of mind knowing that there is a digital record of all transactions regarding client funds.

What this means for your legal practice:

We looked at our proprietary leads data and found that of the hundreds of legal software buyers who contact us each year:

  • 32 percent are currently managing their practice using only manual methods
  • An additional 9 percent have no system in place
  • 19 percent are using accounting software, such as QuickBooks, to manage trust accounts
  • 40 percent are using legal management software either alone or combined with other tools.

If your practice is among the 41 percent of providers who do not have a trust accounting solution in place, consider investing in one immediately. Trust accounting software can impact a consumer’s decision on which law firm to do business with.

Attorney Accountability Is Consumers’ Chief Concern

We asked respondents which qualities are most important to them in the attorney they hire. The top-rated quality is accountability, followed by a high level of customer support.

Qualities Consumers Find Important in Legal Service Providers

Simeone says that the best way to demonstrate a high level of accountability is to keep in contact with clients about that status of their case. This contact also bespeaks the level of customer service that consumers are looking for.

It’s important that the attorney initiates this contact, not the client, Simeone says. Schedule reminders to follow up with clients on your calendar, or set up a recurring task in your legal management system to touch base with your client as needed, e.g., once a week or month, depending on the case.

Finally, be responsive when it comes to client inquiries. Being detailed and prompt shows the client that you are not neglecting their case and, in the end, they money they pay you will be money well spent.

“Overall, clients are nervous that attorneys will take their money and neglect their cases…Thus, the more contact with the attorney—at the attorney’s initiative—and the more transparency about what is going on with the case, the more likely the client will feel comfortable that the attorney is doing his or her job.”

Thomas Simeone, managing partner at Simeone & Miller

Top Technical Capabilities Consumers Want Law Firms to Have

We next asked consumers about the technical capabilities they are looking for in the firms that serve them. The results show that consumers are looking for software features that can increase levels of accountability and customer support.

Top Legal Management Software Capabilities

Most legal management systems, and even accounting software used to manage client trust accounts, will offer a variety of financial reports that can fulfill client needs. (Remember that you must keep a separate ledger for each client and report on each client’s funds separately.)

It’s important to provide clients with a monthly report detailing the following:

  • Amount received and date of deposit
  • List of services rendered and the fees associated with those expenses, plus the date of funds transfer out of the trust account as payment for those services
  • Transaction record of any additional funds, such as those made by credit card, deposited into the trust account after the initial deposit or returned to the customer
  • Balance of funds remaining in trust account

Example trust ledger report in Clio
 

Do you use Clio? Write a review here.

Legal case management software can automate these status update functions and save attorneys vital time and effort. Additionally, a client portal can add an air of professionalism that will reflect positively on both the attorney and the firm.

Consumers Say Referrals Are a Good Indicator of an Attorney’s Competence

Lastly, we asked consumers what action would show an attorney’s competence and earn their business. The largest percentage of consumers say that a referral from a friend or family would be most powerful in earning their trust.

Simeone advises attorneys to take the following actions to encourage referrals from existing clients:

Tell your clients that you want referrals. Make sure you tell your clients that it is OK to call you whenever they or someone they know has a legal problem. If you are unable to accept a case from a referral, you can recommend a colleague (which will still build goodwill).

If you are able to accept the case, provide excellent service on the current matter and show your appreciation to the person that referred your services. These actions will reflect well on both your dedication to the new customer (customer service) as well as your responsibility to your existing clients (accountability).

Make your practice areas known. Simeone says that most people will have legal issues at some time or another or know people with legal issues. Simply stated, if they do not know your practice areas, they won’t be able to make a referral.

To ensure clients are aware of each of your practice areas list them on your website, business cards and anywhere else that you promote your firm. And, mention that if people like your services, it is OK to call whenever they have a legal issue that requires counsel.

Key Takeaways

Based on the results of our research, attorneys should strongly consider consumer needs and wants as they build their firms. While consumers may not exactly be calling the shots, they certainly are taking a proactive role in the digital transformation in the legal marketplace.

To remain competitive, attorneys should consider the following:

  • Invest in a legal trust accounting system
  • Maintain transparency and accountability in client matters
  • Schedule financial reports to be sent to clients once a month
  • Take steps to encourage referrals from clients

If you have questions or would like to discuss the technology available to assist law firms in their practice, please email me at eileen@softwareadvice.com.

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