5 Ways To Avoid Referral Mishaps

When lawyers are conflicted from working on a case, having a good referral system in place not only helps clients connect with attorneys who have the specific expertise they want, it can boost lawyers’ ability to generate more business for their firm in return.

However, referring legal work involves much more than looking up an attorney in the phone book, and if it’s not done right, lawyers who thought they were doing someone a favor could find themselves tied up in a malpractice case, according to an article in Law360.

Have a Referral Plan of Attack

A client who needs a referral can come up out of the blue, but that doesn’t mean the lawyer can’t be ready ahead of time,

“Referrals can be a random event, and what I recommend is that lawyers make it planned. Have lawyers lined up in advance, so you have had a chance to screen them, meet with them and establish a relationship. If they get work that you do, they are going to refer work back.

Do Your Homework

What you need to know is that if you send over a client, the attorney is going to treat that client as well as you would. The danger is an attorney takes the referral and it goes to the bottom of the to-do list.

Disclose Why You’re Making the Referral

Referral fees are commonly paid in litigation and are usually one-third of the amount recovered, but they can also be charged in transactional cases and tend to be one-third of the fee earned. While some states prohibit referral fees, most states permit them as long as they are disclosed to the client and the client signs a written confirmation.

Clients don’t usually care, but all they want is to know. A lawyer should pay attention to how referrals are communicated to clients so they understand they are not being shuffled off, but being specifically transferred to someone who is a specialist.

Consider Your Options

If lawyers don’t have a particular expert in mind, they can always have individuals contact the local bar association or public service referral program, according to Jane Nosbisch, staff counsel for ABA’s standing committees on lawyers’ professional liability.

“By sending an individual to a public referral program, there is no disengagement letter required, and because the lawyers have no economic interest in the program, nothing needs to be disclosed,” she said.

Courts look more favorably on referrals made to a public service network than those made to individual attorneys when examining the issue of negligent referral liability, she said.

“When a lawyer makes a referral to another attorney, the courts are more concerned over what the pecuniary interests are in making that referral,” she said. “They are concerned about the ability of the client to trust that referral.”

Keep Tabs on the Referred Case 

Lawyers who forward a case on to another attorney need to stay in touch to see how the case is proceeding.

By sending a letter to the attorney receiving the work, lawyers can make it clear that they have a right to know what is going on in the matter and can insist on getting copies of all correspondence and pleadings that are issued in the case.

It’s the ultimate insurance. You’re making a lot of work for yourself, but that’s the best way to get the job done right.



Firm Specialization, Cost and Responsiveness Gets Law Firms Hired

According to responses to a new survey, the top criteria corporations use to hire or fire law firms are:

  • Firm specialization (32 percent), cost (20 percent), and responsiveness (18 percent)
  • The top three most serious relationship mistakes reported this year as being made by outside counsel were over-billing (18 percent), lack of responsiveness (18 percent), and over-lawyering (16 percent)

Amidst this news in the new Corporate Counsel’s  2010 Law Department Metrics Benchmarking Survey is that many in-house law departments continue to face shrinking staffs and budgets, while reporting increased workloads.

Almost one-third reported that budgets were cut last year, while 25 percent reported reductions in the size of their law departments.  While these percentages have dropped since last year’s study, they reflect the ongoing impact of the recession on in-house corporate law groups across the country.  The study was conducted by ALM Legal Intelligence, a source of business intelligence for the legal profession.  You can buy a copy of the survey for $620.

Interestingly, "AFAs" or "value billing" propositions are becoming increasingly popular with corporations. 73 percent of fees paid in 2009 to outside counsel were based on billing arrangements other than standard hourly rates or the billable hour, up from 66 percent reported in last year’s survey.

"Law departments have faced increased workloads during past downturns, but this recession is clearly different," said Anthony Paonita, editor in chief of Corporate Counsel "Our latest survey demonstrates that in-house counsel, and their outside firms, are not immune to the ongoing, company-wide budget cuts the current economy has forced on virtually all corporations across the country."

Findings of the survey included the following:

  • 23 percent of the law departments implementing budget cuts reported cuts of more than 15 percent.
  • 80 percent of respondents reported increased workloads in the past 12 months for their in-house staff, up from 70 percent last year.
  • Total law department expenses increased from last year’s median of 0.29 percent of annual revenues to 0.33 percent, but still below the 0.37 percent reported in 2008.

 To read what kind of files are most commonly referred, and to read my Five Tips to Get More Corporate Work, please visit the LawMarketing Portal at www.lawmarketing.com.


90% Expect the Demand for Legal Services to Remain the Same or Increase in 2011

Stephen Younger, law firm marketing, legal marketing.A straw poll of 21 managing partners at New York law firms revealed guarded optimism about hiring trends and demand for legal services in 2011.  Only two of the 21 respondents said that they anticipated legal work would decrease next year, while more than 50 percent expected to hire the same number or slightly more first year associates than in 2010.

The informal poll was conducted earlier this week by the New York State Bar Association at a meeting of managing partners from large, mid-size and boutique lawn firms under the auspices of the Association’s Task Force on the Future of the Legal Profession. 

The Task Force was established in June 2010 by State Bar President Stephen P. Younger of New York (Patterson Belknap Webb & Tyler LLP) to study and recommend ways to create a road map for the future use of technology in the profession, to improve legal education and training, to establish proper work/life balance for attorneys, and to analyze the billing structure in law firms.

“One thing was clear from yesterday’s dynamic and lively discussion – whether from firms large or small, they all agreed that the profession is ready for permanent, positive changes that will allow us to better serve the modern client while shaping a profession that is satisfying to today's lawyers and appealing to future lawyers,” said President Younger.

“Significantly, there was consensus around the table on many issues. Clients want fixed and predictable costs, and lawyers are willing to try alternative billing methods, such as value billing, because this leads to increased efficiency, better trained lawyers and greater opportunity to achieve work-life balance,” Younger added.

Also in attendance at the meeting was American Bar Association President Stephen N. Zack, who predicted that the practice of law will change more in the next ten years than in the past 200 years.

Survey highlights include:

  • All managing partners who were polled confirmed that their firms had experimented with something other than the billable hours system.  Six of the 21 respondents (almost 30%) said their firms “regularly” used alternate billing methods.
  • 11 of the managing partners also said that clients complain about having to pay for the work of first- or second-year associates. Two additional respondents said that clients refuse to pay for such services. 
  • 18 of the 21 managing partners said that their firms expected attorneys to respond to non-emergency emails and phone calls on weekends and holidays.
  • The vast majority (18 of 21) indicated that their firms offer flex policies including reduced hours, job sharing and flex times.  Not surprisingly, more women attorneys took advantage of flex time than their male counterparts.
  •  66% of the managing partners said their firms hired fewer attorneys in 2010 when compared to more typical years. However, the outlook for 2011 was that a little more than half expected to hire the same number of associates as in 2010.
  • 11 of the 21 managing partners said they anticipated demand for legal services to remain flat in 2011; while 8 believed workload would increase modestly.

Of the managing partners who responded, six were from firms of 25 lawyers or less; three were from firms of 26-100 attorneys; six managed firms of 101-250 lawyers; and six were in firms of over 250 lawyers.

Latham Launches Wall Street Jargon iPhone App

Latham book of jargon, law firm makretingIf you don't know the difference between a “bear hug letter” and “accordion feature,” perhaps you should download Latham & Watkins new new iPhone app that defines more than 750 Wall Street terms, including slang phrases used by finance professionals and acronyms used to describe government. It's free.

Latham is a 2,000 lawyer global firm with in 30 offices.  It launched its US Book of JargonTM iPhone app as an interactive glossary of capital markets and banking slang, as well as legal and regulatory terminologies and acronyms. 

“The Book of Jargon app is a user-friendly tool for anyone who works in the finance community. We had a lot of fun putting together this glossary of Wall Street lingo," said Kirk Davenport, Global Co-Chair of Latham & Watkins’ Capital Markets Practice Group. "The Book of Jargon is definitely one of the most useful things we have ever published and the new iPhone app is by far the coolest thing we have ever done. With this app, you will be able to figure out what all the seasoned pros are talking about,” 

Alex Cohen, Global Co-Chair of the Capital Markets Practice Group, added: “The Book of JargonTM app allows for key information to be readily available wherever you may be and whenever you may need it. And it does so in the highly intuitive way we’ve come to expect from the best iPhone apps. That’s what makes it so useful.” 

The app is a digital version of a popular 2008 hard-copy publication distributed to lawyers and clients, the Am Law Daily says. Latham wanted to send a copy to every junior banker and lawyer in Manhattan, but decided the printing costs would be too high. The app was deemed a better and cheaper way to distribute the jargon book.


Top 8 Tactics in Business Development

Michael DowneyI sat next to author and lawyer Michael P. Downey of Chicago yesterday at the West LegalEdcenter Midwestern Law Firm Management Conference in Chicago. We were discussing his new book, Introduction to Law Firm Practice, newly published by the ABA, and we discussed what works in business development.

"There are no clear 'sure-fire' ways to develop clients," he says in the book. "Certain activities, however, are consistently identified as being good ways to develop business."

Michael is a litigator and partner in the legal ethics and risk management practice at Hinshaw & Culbertson LLP. His law practice focuses on advising law firms and accounting firms on legal, ethics, and risk management issues.

He quoted  a survey of corporate law firms by my friend John Remsen on the the business development activities that are most successful. Here's what the respondents said:

  1. Visiting clients - 61%
  2. Organizational involvement - 12%
  3. Other - 10%
  4. Firm-sponsored seminars - 9%
  5. Speeches - 3%
  6. Newsletter - 3%
  7. Website - 2%
  8. Bylined articles - 0%

I agree that nothing beats meeting clients face-to-face at their premises.  The clients love it and appreciate that a lawyer took an interest in their business. I recommend you call a client you haven't seen lately, and ask for a tour of the factory or offices. If the client is 1,000 miles away, call up and find out the next conference they're going to and meet them there.  It really is the best business development tactic there is.


Robin Sparkman Named Editor in Chief of the American Lawyer

Robin Sparkman, American LawyerRobin Sparkman has been promoted to editor in chief of The American Lawyer and will also oversee the company's large law firm content team. 

Sparkman was named deputy editorial director for American Lawyer Media's national publications and executive editor of The American Lawyer in 2008. Previously, she spent six years as editor in chief of ALM’s Corporate Counsel, a sibling publication. She is a noted speaker on legal and journalism issues, and served as a final round judge for the National Magazine Awards.


Before joining ALM, she spent five years as an editor for the business and opinion sections of MSNBC.com, where she was one of the founding members of the website. She is also a former reporter for Newsweek, covering terrorism, the United Nations and politics. 

She replaces Aric Press, who has been promoted to the new position of vice president and editor in chief, ALM. Press will head legal content development and will serve as overall manager of the new editorial structure. He will continue to be deeply involved with all ALM national content, including writing commentary for The American Lawyer and overseeing the national news staff.

“In his new role, Aric will establish the focus for our new content teams and lead our efforts to identify opportunities to serve clients through new products that combine the reporting skills of our staff with the capabilities of new media and technologies,” said Jack Berkowitz, senior vice president of ALM.    

For the last ten of these, Press had been a senior editor in charge of Newsweek's coverage of education, law, news media, religion, science and sports. Before becoming an editor, he served as Newsweek's justice writer for nine years. Under his leadership, The American Lawyer has won numerous national journalism awards from the American Society of Business Publication Editors and the Jesse H. Neal National Business Journalism Awards program. In 2004, Press received the McAllister Editorial Fellowship, awarded annually to one outstanding editor to promote the study of business-to-business media, in conjunction with the Medill Magazine Project at Northwestern University’s Medill School of Journalism. 


Most of ALM’s national news staff, which formerly operated under a brand structure, will now be organized into cross-platform content teams focused on seven topics:

  1. large law firms
  2. in-house counsel
  3. national legal news
  4. litigation
  5. intellectual property
  6. international legal news
  7. legal technology.

ALM, The American Lawyer, Corporate Counsel, GlobeSt.com, Insight Conferences, Law.com, Law Journal Press, LegalTech, The National Law Journal and Real Estate Forum.

Get a Load of This: The Recession Ended in June 2009. Oh Really?

Recessiion, people looking for work at job fairIn a statement that strains credulity, the The National Bureau of Economic Research, an independent group of economists, announced that the Great Recession ended in June 2009.

Who are these out-of-touch nimrods and what planet are they referring to?

Does anyone believe that the recession is over?  I don't, not when I read in today's New York Times:

For the Unemployed Over 50, Fears of Never Working Again

Wall Street’s Profit Engines Slow Down

Fed Expected to Weigh More Stimulus

"The NBER acknowledged the risk of double-dip recession in its statement, but said "The committee decided that any future downturn of the economy would be a new recession and not a continuation of the recession that began in December 2007. The basis for this decision was the length and strength of the recovery to date," CNN reports.

Oh, that's really comforting.

"The committee that made the finding said it "did not conclude that economic conditions since that month have been favorable or that the economy has returned to operating at normal capacity." Rather, it decided that June was when the economy hit bottom, and that it has been slowly but steadily growing since then," CNN reports.

Funny. I didn't notice that things were getting better.  Realty Trac says that 2010 will be a record year for foreclosures nationwide -- so far 1.65 million properties have been hit with foreclosure filings to date. See http://www.realtytrac.com/content/press-releases/

Further 2010 will be a record year for bankruptcies. The total number of U.S. bankruptcies filed during the first six months of 2010 increased 14 percent over the same six-month period in 2009, according to data released today by the Administrative Office of the U.S. Courts. See http://bit.ly/bzHjbQ

If this is what it's like when the recession is over, I'd hate to see what bad economic times look like.

Joshua Fruchter, Esq., author of the LawyerCasting blog has released a new report on law firm email marketing benchmarks for the benefit of the legal marketing community.

"No question, law firms are heavy users of email marketing. But until now, legal marketers had no industry benchmarks to consult to measure how their email marketing campaigns were performing against their peers," Josh said.


"Indeed, our own clients regularly ask us, "What's a good open rate for a law firm email newsletter?" "A good click through rate?" "A bad bounce rate?"" he said.


To address these  questions, he  published "The State of Law Firm Email Marketing: Benchmarks, Trends, and Best Practices." It's a free report that documents benchmarks for five key metrics (e.g., open rates, click through rates) for law firm email newsletters, alerts and invitations.


Anyone interested can download a copy of the report at the following link:


(see also a screen shot of a sample "open rate" chart from the report on the same page).


The report is based on a huge amount of data:  email campaigns aggregating 6,896,610 emails distributed by our top 25 law firm clients during four consecutive 6-month periods running from July 1, 2008 through June 30, 2010.


Oh No! The U.S. News Law Firm Rankings are Out Tomorrow

US News, law firm marketingThis just in: Another meaningless ranking.  Another huge chore for law firms. 

U.S. News Media Group and Best Lawyers released its 2010 Best Law Firms rankings on September 15, marking  the inaugural publication of this pointless analysis. The rankings, including 30,322 rankings of 8,782 law firms in 81 practice areas, are posted online http://bestlawfirms.usnews.com. The national first-tier rankings will be featured in the October print issue of U.S.News & World Report, which will go on sale September 27, according to the publication's flacks. These rankings are the bedbugs of law firm marketing.

We already know that Only 3% of Legal Work is Influenced by Directories

These inaugural rankings, which are presented in tiers both nationally and by metropolitan area or by state, provide an ego boost to 8,782 different law firms ranked in one or more of  81 major practice areas. The publications bray that it's a "comprehensive view of the U.S. legal profession that is unprecedented both in the range of firms represented and in the range of qualitative and quantitative data used to develop the rankings."

Here's some phony-baloney marketingspeak: "The mission of Best Law Firms from the start has been to help guide referring lawyers and clients – from the country’s largest companies needing corporate legal advice to individuals needing to get a divorce or write a will – issues that have a bet-the-company implication (in the case of a corporation) or a potentially life-changing result (in the case of an individual)."  Yeah, right.

The survey got responses from 9,514 clients and 3.1 million evaluations from individual lawyers in firms in the most recent Best Lawyers survey of leading lawyers. 

"Achieving a high ranking is a special distinction that signals a unique combination of excellence and breadth of expertise," they say. That and four dollars will buy you a coffee at Starbucks.

Spot Survey: Less than Half of Lawyers Use their CRM Systems

A majority of law firms are not using their commercial CRM (client relationship management) effectively, according to an on-the-spot survey that LexisNexis conducted at the recent 2010 International Legal Technology Association (ILTA) conference. In fact, six in ten survey respondents (60%) say that less than half of their firm’s lawyers are “active” users of their firm’s CRM system.

This might be due to the fact that many lawyers find current systems in place are too difficult and time consuming, according to the survey.  Seven in ten survey respondents (70%) agree that many lawyers in their firm are reluctant to use their CRM system because they believe doing so is too difficult. In fact, nearly a quarter of attendees (23%) strongly agree with this statement.


The majority of survey respondents (80%) agree that many lawyers in their firm are reluctant to use their CRM system because they believe doing so will take too much of their time. One third of survey respondents (34%) strongly agree with this statement.


"One possible solution could be tighter integrating between CRM systems and email applications lawyers use every day, because the majority of survey respondents feel this would increase CRM usage among their firm’s lawyers and enable lawyers to access and share firm-wide information to help them stay 'in the know,'" said Marc Osborn, Senior Director of Communications for LexisNexis..



Nearly all survey respondents (94%) say that integrating specialized CRM capabilities directly within the e-mail and contact management application lawyers in their firm use every day – such as Microsoft Outlook – would enable their firm to capture more useful CRM data and leverage that data in a better way.


In fact, the majority of respondents (89%) admit they think lawyers at their firm could avoid potentially embarrassing gaps in their knowledge about clients if they were able to more easily share information and updates about contacts between themselves.


The survey respondents are mostly from large firms and operate in a technology-related role. Two-thirds of survey respondents (66%) report that there are over 200 lawyers in their firm. Most respondents surveyed describe their role with their law firm as “Chief Technology Officer/Chief Information Officer/IT Director” (31%) or “other information technology professional” (33%).


The online study was conducted via iPads in August 2010 during the ILTA conference in Las Vegas. Only participants whose firm currently uses a commercial CRM system were included in the study.  The survey findings include the 80 qualified respondents who completed the survey.


The Bad Economic Hits Just Keep Coming

Recession, downward arrowThe good news is that "At best, we may have reached a bottoming out," says a bleak new midyear economic report on large law firms from the Law Firm Group at Citi Private Bank.  It is the other shoe dropping in news last week that 2009 was a bad year for small to mid-sized law firms, according to the new ALM Survey of Law Firm Economics.

In a nutshell, as of September 2010:

  • Revenue was virtually flat
  • Demand was down slightly
  • Expenses have decreased largely due to the layoffs of 5,259 lawyers – 4.3% of the lawyer workforce – who lost their jobs in 2009
  • Billing rates are up 4% but realization (the percentage of dollars collected from hours billed) is down.
  • Laying off equity partners will be a priority throughout 2010.

"Given these results, we see the first six months of 2010 as lackluster from a volume perspective but made palatable due to belt-tightening. However, expense cuts have gone about as far as they can, so firms now need to focus on how to increase top-line revenue," the report says.

"Unfortunately, demand for legal services remains soft, and that is unlikely to change any time soon. So the only way firms can grow their revenue is at someone else’s expense. Firms have to be more strategic about how to increase their share of a smaller pie--specifically, by differentiating themselves from competitors."

There is a good trend for regional and mid-size law firms: "Respondents agreed that general counsel are increasingly willing to diversify their portfolio of legal service providers and include lower-cost alternatives to their traditional firms, such as Second Hundred firms, offshore legal service providers, and virtual law firms."

Citi surveyed The 187 firms, including 87 Am Law 100 firms, 50 Second Hundred firms, and 50 other firms.

Guerrilla Marketing with a Flying Skateboarder

The skateboarder in the white suite glides up in the air over storefront windows and across the fronts of buildings, occasionally jumping and flipping his skateboard. You can't take your eyes off of him.

The call it Beamvertising.  This video is a another perfect example of innovative, creative and truly imaginative form of guerrilla marketing. It comes unexpectedly,creates curiosity and sure is unforgettable, thereby adhering to everything that guerrilla marketing about.

Many also call this form as advertising Beam Advertising. This advertisement is by Holland's chewing gum, 'Sportlife,' this ad was to draw people's attention to a promotion that they started called 'Can you make it to the pack?' 

Can't you see a leaping tall buildings to promote his law firm?


Three Ways to Get Fired by a Corporate Client

Angry, law firm marketingMany are the ways that a lawyer can annoy a client, such as failing to return phone calls quickly, leaving no one in an office to field an emergency call from a client, and failing to learn the business of the client.

But now there is actual research about the three major peeves of in-house counsel.  Each will irritate corporate lawyers, and will likely get the lawyer fired, according to BTI Consulting of Wellesley, MA:

  1. Poor billing and budgeting

    Of the corporate counsel surveyed, 33.3 percent said that poor billing and budgeting were their biggest frustration with their outside law firm. Failure to communicate changes, untimely invoices, ignoring clients' billing guidelines and going over budget without warning were the major complaints in this area.

  2. Weak client focus

    For 32.5 percent of general counsel, outside counsel who act as if they do not care about their client's needs were a prime source of ire. Lawyers in this category tended not to update their clients frequently enough or let their ownership of the case languish, or proved to be generally unresponsive.

  3. Ineffective case management

    For 29.4 percent of corporate counsel, ineffective case management on the part of outside counsel can be traced back to a lack of concern for providing value. Over-staffing, bad judgment weighing the risk against the reward of a particular action, training associates on a client's dime and billing extravagantly for doing easy work were all signs of poor case management, according to corporate counsel.

    Putting too many associates on a case and charging for “ridiculous items like research for things that are obvious and shouldn't require research" were mentioned as examples by one associate general counsel for a privately held wholesaler.

For more details, visit Top 3 Pet Peeves Of In-House Counsel on Law360.


Brinks Offers Video for CLE Credit

Brinks Hoefor, CLE video, patent law, law firm marketingBrinks Hofer, the 170-lawyer intellectual property law firm, just relaunched its website. Part of the package takes online video a step farther, and offers viewers CLE credit for watching.

The 62-minute program "The Supreme Court Decision in Bilski: What's Patentable Now?" the virtual panel discussion features lawyers Tim Delaney, Meredith Martin Addy, Marc Richards and Charlie McMahon.

As a marketing technique, the video stands out for making the website interactive, providing valuable information to visitors and demonstrating the firm's expertise in patent law.

Viewers can click a link to get the PowerPoint and speaker bios, which were presented in a live webinar last July. The program is worth one hour or CLE credit in Illinois, and the firm will help lawyers from other states in getting CLE credit. At end of the program viewers much click on a link to a questionnaire to prove that they attended the entire program.

Bilski v. Kappos was a major intellectual property case in which the US Supreme Court ruled on June 28, 2010, that certain kinds of business methods were indeed patentable, but  it left muddled the applicable test for determining the patentability of methods.  The court ruled against Bernard Bilski, who was trying to patent a method of hedging risks arising from a company's exposure to fluctuations in commodity prices, because the court said they were abstract ideas that were not patentable. 

Ambiguity in the law creates a field day for lawyers, and Brinks' video offers guidance on how the Patent and Trademark office will deal with the ruling.


Confirmed: 2009 Was a Bad Year

David Brown, National Law Journal, law firm economicsNo matter which statistic you pick, 2009 was a bad year for small to mid-sized law firms, according to the new ALM Survey of Law Firm Economics. The responses from 187 law firms, ranging from 1 to 150 employees (with only 7% from large law firms) were all bad news.

A double-whammy occurred.  "Not once in 25 years has there been a decline in revenue per lawyer two years in a row," said David Brown, Editor in Chief of the National Law Journal. It dropped 5.5% -- the worst drop since 1985.

Added to this, "personnel costs (especially spending on lawyers), actually increased slightly in 2009," he added.  Personnel costs consumed 78% of fee revenue in 2009.


  • It took 2.3 months on average to collect fees from clients.
  • Equity partners wrote off 7% more unbilled time.
  • Realization rates declined 3%, from 88% to 85.9%.

Lawyer compensation, law firm marketing, marketing directorEquity partner compensation averaged $358,000, slightly up from 2008, but down from a 2007 high of $374,000.

On the one hand, the average equity partner's billing rate was $342 -- up $10 an hour from the previous year.  (To reach the top quarter of billable rates, a partner had to charge $400 per hour.) 

However, equity partners averaged 1,636 hours in 2009 -- down 3% from 2008 -- the second consecutive annual decline. Associates billed 1,746 hours on average, down 1.8%.

Billing rates of LawyersAt .56 to 1, the ratio of associates to partners is at its lowest level in 25 years. This reflects the widespread layoffs of lawyers in 2009 and the cutbacks in hiring by midsized law firms. Firms of 21-150 saw declines of 11% or worse in the ratio.

The survey sells for $1,065.


McKenna: The Demand Side of The Market is Not Demanding AFAs

Patrick McKennaFollowing is a post by Canadian strategist Patrick J. McKenna on his Rants and Raves blog and picked up by LegalOnramp. His comments that "value billing" is a revolution, but nobody came, are new evidence reported in articles on the LawMarketing Portal such as:

We keep reading editorials about how the “clients are driving change” and one in today’s Financial Post about how the “clock is ticking on hourly billing.” Then from certain consultants come dire warnings about the potential obsolescence of law firms whose leaders are too clueless to see and react to the changes in the market. On September 14, New York will host a one-day event entitled: The Client’s Revolution. What you should be demanding from your legal advisors in the 21st Century.

Client revolution indeed! Among all of this one sees a lot of smoke, but . . . where’s the fire?

Regular readers of my blog may remember my rant (#396) back on June 30 of last year, entitled: CLO’s Are Not Serious About Change.   In that post I reported on an interesting experience working on behalf of an AmLaw listed, “Go-To” regional firm of over 500 attorneys. I spent two weeks initiating contact with the General Counsel of more than 35 Fortune 500 Companies to explore their interest in investing one-hour to meet.  The invitation was to discuss how this particular law firm could provide exceptional client service and deliver a potential savings of between 25 to 40 percent, or more.   And that proposed savings was accompanied by specific details of guaranteed responsiveness, assured predictability, enhanced added-value, and references from some top New York based Fortune 50 existing clients. To my absolute chagrin, I confessed in my post that I completely struck out! No bunts, no hits, not even a sniff of interest. I subsequently heard back from a couple of GC’s via Legal OnRamp that . . . “unfortunately, change comes slowly.”

Alex Novarese, Legal Week, law firm marketing, AFAsWell, fast forward a year and here’s an editorial from Alex Novarese at Legal Week, wherein Alex postulates that maybe someone called for a revolution but nobody came.

The harder I look at the profession the more convinced I become that clients - the demand side of the equation - are not only generally failing to enforce change, they are, if anything, more conservative than the law firms, which is saying something. What evidence is there that all but a few brave pioneers have even tried to make good on that vision? A financial crisis and a deep recession has hit Western economies and little has changed beyond a modest uptick in alternative billing. The internet? Disruptive technologies? Such trends have unquestionably forced more transparency onto the legal profession and in theory should give clients scope to take control of buying legal services. But, as yet, there has been little to back up the hype in terms of shaking up the industry or empowering clients.

Alex continues . . . outsourcing, offshoring and attempts to unbundle legal service provision - experiments in these areas are being pushed more by managing partners than pulled by clients. It was the same in earlier years when law firms went international, which was as much a strategic bet taken by the profession as a response to client demand. 

As an explanation for this lack of urgency, one commentator suggested: Unlike the management in law firms, GCs don't change every few years - they stay in leadership posts and maintain old practices. Change will take time, but perhaps it will require a generational change inside the in-house world to really make a difference.

Perhaps the real mystery is why clients are quite so ready to tolerate the status quo.  Why do some GCs make a show of complaining about the cost of legal services when they do almost nothing to materially change things?

As yet another commentator opined: Perhaps, moaning about fees gives a sense they are responding to the predicament they are in, effectively signing blank checks for legal services on behalf of their company. But, the alternative - to do something about it, is not a strong enough driver for many GCs. One has to ask, what is the benefit to the GC in annoying law firms by driving down prices, demanding fixed fees, or insisting on other non-traditional methods? For many there is none. No one in the company is second-guessing the GC’s decisions, they can maintain the status quo unchallenged. The law firms they work with are doing all they can to assure the GC that the legal spend is justified. The GCs themselves are busy, have a team to worry about, and ultimately they are spending other people's (shareholder’s) money, not their own. For most GCs their salary is not directly linked to how efficient or inefficient their legal spending is. 

In summary, there is little incentive to change business practices unless it benefits you. For many GCs the positive / negative impacts are still too slight. They are in an accountability blind spot and few have someone going over their spending decisions with a critical eye. Most CEOs worry about their company winning the litigation, not whether the legal spend has risen by another “x” percent this year. It all makes one wonder: 'Who will put pressure on the GC to change?'

I remember an engagement that I was involved with in the early 90s with McKinsey & Company. It involved helping “re-engineer” the legal department of a Canadian-based, international conglomerate to determine which law firm or combination of firms offered the best value proposition. Their strategic decision was whether to continue with the internal legal department as is, or whether they should shut down their internal legal capability and outsourcing all of the work. Only after the decision was made and the outside law firms were chosen did it occur to me that a couple of the choices of firms made, were not based on value at all, but were safety chutes for certain senior lawyers who would be remaining as employees within the legal department, should they ever decide or be forced to go back into private practice.

In the end things will change. Corporate behavior will slowly evolve; more CEOs and shareholders will take notice of legal spend as it grows and grows; GCs will adopt new practices simply because they don't want to stand out as someone who is not following what has become 'best’ practice. Things will change, but on the client side, it may yet be a long, protracted process.


Announcing The Sixth Annual MLF 50

Marketing the law firm, business developmentThis year the prestigious Marketing The Law Firm 50 will focus on business development.  You have until September 24 to get your submission in.

"I would have to say that in looking at the landscape of what law firms are thinking about, it seems that everything circles around the bottom line — and that would be defined as business development and the retention and expansion of existing client work. For business development to succeed, a sound marketing strategy is essential. With that backdrop, this year’s MLF 50 will be all about the intersection of marketing and business development with most of the emphasis placed on the strategies firms are using to keep their clients and expand their businesses," said Elizabeth Anne “Betiayn” Tursi, Editor-in-Chief, Marketing The Law  Firm.

Last year, the MLF 50 consisted of submissions and research into most of the AmLaw 100, Second Hundred firms and several firms that did not appear on either of those rankings. In keeping with past practice, firms of 100 attorneys or more are eligible to submit essays.

Law firms of 100 attorneys or more are eligible to enter. Each firm will be required to submit an essay of 2,000 words. The following categories will be used to evaluate each firm:

  • Marketing/Business Development Strategy
  • Business Development Staffing
  • Results
  • Commitment
  • Advertising and Visual Communications
  • Technology
  • Client Service Programs
  • Outreach

To see the entire list of criteria, click here.

Again, the deadline for submissions is Friday, September 24, 2010. Essays must be sent as a Word document via e-mail to Elizabeth Anne “Betiayn” Tursi, Editor-in-Chief, at elizabethtursi@aol.com. Any firm wishing to send accompanying collateral materials must make a request directly to me via e-mail. The Top 50 Law Firms in the Areas of Marketing and Business Development will be announced in the November issue of Marketing The Law Firm.