Banks Use Star Rating to Force Law Firms to Compete
Posted By Rob Millard - 0 Comments -
The trend down the S-Curve towards wholesale commoditization of the legal services that external lawyers provide to banks just accelerated dramatically. That is: if the tough new strategy that has been instituted by ANZ (Australia and New Zealand Banking Group Limited) to select its external lawyers takes hold in the market.
According to an article titled Banks Force Firms to Fight for Work and Fees in the Australian Lawyers Weekly, the new system has a few marked similarities to the user rating system used by the on-line actioneers eBay:
A 'sound-byte' from the article:
"In a system not unlike eBay, about 300 regular users of external legal services within ANZ go onto an internal site and input what type of legal work is needed. The site will bring up the firms accredited in that area, based on prior selection by the company, as well as their star rating.
A rating is achieved based on the previous work that each firm has done with the company, and will give their costs. 'It is about giving our internal people better information at the time when they select a law firm,' said Margaret Harrison, deputy general counsel at ANZ."
This is EXACTLY the kind of development that one should expect in a world where technology is making it extremely easy to share information. Setting up an organized system to share real-time feedback on service providers internally in an organization is dead easy with technology that is already freely available (and rapidly evolving and improving) and is likely to become widespread as this becomes wider understood.
The impact is likely to be profound.
In the first instance: firms will have to pay a great deal more attention to comprehensive client satisfaction than ever before, because negative feedback will be recorded instantly and possibly forever. (On eBay, if negative feedback is posted it cannot be retracted. The only way that a user that has negative feedback can try to negate it, is to 'dilute' it with subsequent postive feedback.)
Users on eBay are understandably reluctant to trade with users that have negative feedback and it does not take too many negative scores to render it almost impossible for a user to trade at all. As readers who use eBay will know, this makes most users very focused on getting positive feedback.
In the second instance: once the client has evaluated the feedback and selected a couple of likely candidates, the question moves immediately to price.
In this universe, marketing strategy needs to evolve away from conventional avenues to being aggressively focused on (1) getting onto panels and (2) making sure that everybody in the firm is focused on making sure that the internal feedback from the client is consistently positive. The latter being a function of striving for maximum client satisfaction at the minimum price!
Wow! Does anybody else hear the sound of an approaching tsunami?
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