Why have 37% of SME clients swapped law firms?
According to NAB’s inaugural Legal Services Industry Survey, many of Australia’s SMEs are changing law firms – often due to issues that are entirely preventable. It’s all the more reason for lawyers to genuinely understand what their customers need and value.
Australia’s SMEs highly value lawyers, yet that doesn’t stop them switching law firms. According to NAB’s survey, over one in three SMEs has changed their lawyer in the past five years and almost one in three has done so within the past 12 months.
So why are SMEs jumping ship? NAB’s survey found that most are concerned about fees being too high (40 per cent), but about one in four reported that their provider didn’t understand their business (26 per cent) or were poor at responding (23 per cent).
Signs of misunderstanding
Many of these issues are preventable – if lawyers are aware of them. Yet, as NAB Customer Executive Professional Services, Brett Moore notes: “The message is clear from SMEs that lawyers aren’t taking enough time to understand them and their business requirements.”
Better understanding what SMEs think about their law firms – and comparing this with what lawyers think about their clients – was the driving force behind NAB’s survey. “We saw it as a wonderful opportunity for law firms to gain valuable insights into their SME clients,” Moore says. “That way, they can aid the growth of their practice and further support and enable the growth of Australia’s SMEs, the engine room of our economy.”
Know your client
NAB’s survey picked up a number of discrepancies between what lawyers provided (or thought they should provide) and what SMEs actually wanted. For instance, almost one in five (19 per cent) SMEs said taxation law was in their top five most frequently used legal services, but just four per cent of lawyers considered this a service that their business customers most use.
Specifically asking clients what they want can help lawyers shape their offering. Then again, meeting your clients’ every need can be problematic, particularly when they’re looking for niche expertise. As NAB’s survey shows, SMEs clearly favour specialist services: almost one in five (19 per cent) “most often seek the services of a specialist” – a higher proportion than any other type of law firm.
Strength in numbers
Matching their needs to a particular provider’s area of expertise might explain why many SMEs are using the services of more than one law firm. Indeed, almost half (46 per cent) of NAB’s SME respondents were using two or more firms.
On the other hand, SMEs are likely to use the same lawyer for their business and personal affairs – about half (51 per cent) do so.
It could be a matter of opting for the lawyer or firm you think you know best. After all, NAB found that very few SMEs (one in 10) were prepared to find a lawyer through social media, the internet or advertising, instead preferring the comfort of a referral (most often the good word of a business associate).
A two-way street
There’s no doubt law firms provide an essential service to many SMEs: lawyers are the second most used professional services provider after accountants, according to NAB. And SMEs do value these services. On average, they rated lawyers 7.3 marks out of a possible 10 in the survey, the second highest ranking after accountants.
With SMEs making up almost one third of law firms’ revenue (31 per cent, according to NAB’s survey), they are an important part of a lawyer’s business. “For law firms looking to grow, these SME customers represent a significant opportunity,” Moore says. “If they can be serviced well.”
To understand more about how SMEs view their law firms, read the full NAB Australian Legal Services Industry Survey 'Key Insights into What Your SME Clients Need and Value'.