Are Law Firms Talking to Clients about what Really Matters?
In a rapidly evolving legal sector, the conversations that law firms have with their clients have the power to mitigate business risk and build stronger relationships. However, a recent global survey of the legal sector by LexisNexis, global provider of legal and regulatory intelligence, found significant misalignment in the perceptions of law firms and their clients when it comes to a range of topics impacting business. The research showed that firms and clients often differ in their expectations particularly around technology, pricing and response times, or where a firm provides ‘value add’ services. Firms that fail to identify their clients’ needs risk losing. How can law firms bridge this communication gap?
“In the legal sector, we have seen more change in the past decade than we have seen in the past 100 years,” said Sharon Glynn, director at Travelers Europe. “Against that backdrop, it’s important for conversations to keep pace with the changes. When firms are confident that they and their clients are on the same page, they can more readily manage surprises, mitigate risks, and ensure a business has the protections it needs to succeed.”
Using AI with transparency
One of the biggest communication gaps identified in the survey concerns AI usage. The survey found that in-house counsel supports their panel firms’ use of the technology: 71% feel that law firms should already be using generative AI trained for the legal industry. Only 7% of general counsel oppose the use of AI in legal work, so most clients not only accept AI but expect it to be part of processes to enhance efficiency and reduce costs.
However, transparency remains a key concern. While 59% of law firms believe their clients want to be informed when AI is used, the reality is that 77% of in-house counsel expect full disclosure. This misalignment underscores the importance of clear communication about AI.
Takeaway: Although the use of technology is supported by clients, transparency in respect of usage is critical.
Action: Do you have a clear communication strategy in respect of AI so clients know how it is integrated into legal work and for what purposes?
Meeting client needs promptly and responsively
The use of AI has naturally led to more discussion in firms about the growing demand for faster legal services. About 83% of lawyers surveyed report that clients expect quicker response times nowadays, while 20% of in-house counsel express frustration with delays. As legal matters become more complex and strategic, clients are expecting law firms to leverage AI and other efficiency tools to streamline work and expedite decision-making.
Firms that fail to meet these expectations may find themselves losing business. In fact, 33% of firms reported losing clients due to uncompetitive pricing, and 34% of in-house counsel are actively reducing their panel sizes.
Takeaway: Failing to respond to client concerns in respect of billing may cost you clients.
Action: Consider how your firm can enhance responsiveness and demonstrate value by providing innovative services to help client retention and create competitive advantage.
Managing different expectations on pricing and billing
If law firms can use technology to work faster and more efficiently, what is the impact on pricing? Pricing remains a contentious issue – and firms and their clients have different expectations about how it’s evolving. The survey found that 86% of firms are planning to increase their rates, while 80% of Fortune 1000 general counsels anticipate reducing their legal spend. Despite this, only 9% of law firm partners report that clients have raised concerns about billing.
Takeaway: The discrepancy between firm and client expectations suggests that firms may not be engaging in necessary discussions about cost expectations.
Action: Asking some questions can help them mitigate risk and prevent client attrition. For example, what pricing structures would work for both parties? Should alternative fee arrangements be made? What strategies can help with cost savings? Understanding client concerns around billing will enable firms to offer solutions that align with corporate legal budgets and expectations.
Taking action to strengthen client relationships
The LexisNexis survey paints a clear picture: law firms need to engage more actively with their clients to manage expectations on both sides.
“Having open and transparent conversations will help firms align with client priorities, build trust, and ultimately mitigate their risk of losing business,” Glynn said. “In an increasingly competitive legal market, effective communication is a strategic necessity.”
This article is provided for general informational purposes only. It does not, and it is not intended to, provide legal, technical, or other professional advice, nor does it amend, or otherwise affect, the provisions or coverages of any insurance policy issued by Travelers.
Travelers operates through several underwriting entities in the UK and Europe. Please consult your policy documentation or visit our websites for full information.
