While clients from small- and medium-sized businesses highly value professional services from lawyers and law firms, they are not afraid to switch firms due to some disconnect between expectations in the relationship, National Australia Bank (NAB) has found.
The NAB Australian Legal Services Industry Survey, based on the views of 70 legal services providers and more than 750 SMEs across Australia, found that lawyers are the second most used professional services providers by SMEs after accountants. SME clients also rate lawyers highly, giving them a score of 7.3 out of 10, which is second only to accountants.
The study found, however, that 28% of SMEs surveyed have changed their lawyers at least once in the last year. It found that 13% have changed their lawyer once, 11% have done so twice, and 4% have made the change three times.
In the last five years, 55% said they have not changed lawyers, while 14% said they have done so once, 10% twice, 4% thrice, 5% four times, and 4% five or more times.
“While NAB’s survey highlights areas of consensus between SMEs and legal service providers, it also reveals key differences between what lawyers think their business clients want and what their clients say they truly value,” NAB said.
The survey found most SMEs made the switch because fees were too high (40%), firms didn’t understand the business (26%), firms had poor responsiveness (23%), there was a lack of a personal relationship (22%), firms lacked expertise (21%), and lawyers did everything at the last minute (18%). The survey also found that 14% of respondents said that fees charged were different from what was expected, their business started to grow, and they were referred to a new firm by someone they trusted.
Work being done at the last minute showed a high level of disconnect from lawyers’ perspectives, as only 1% identified it as a reason why SMEs changed law firms. Another area of disconnect was firms not using state-of-the-art technology, with 11% of clients identifying this as a reason they switched, while lawyers didn’t indicate the reason at all. A tenth of respondents also said they switched because they found it difficult or complicated to get a quote, but no lawyer said that this was a reason SME clients switched.
More lawyers thought that poor responsiveness pushed SME clients to change firms than SME clients said in the survey. The same was true for trusted referrals, business needs changed, and for lack of proactive advice and giving only reactive service.
“The golden opportunity for lawyers is to truly know their clients,” said Brett Moore, NAB professional services general manager. “It’s not just a matter of acquiring new clients – it’s also about finding ways to better serve existing clients. The message is clear from SMEs that lawyers aren’t taking enough time to understand them and their business requirements.”
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'.