The late Alexander Haig committed one of the great faux pas of the twentieth century when he announced “I’m in charge here” at a news conference after President Regan was shot. He was not in charge according to the Constitution’s order of succession. The gaffe became his epitaph.
Large law firms- like Mr. Haig-were accustomed to being in charge. For decades, they controlled legal delivery, dictating to clients the terms of engagement. But times have changed and law firms are no longer in charge-clients are. Why, then, have about one hundred firms matched or eclipsed Cravath’s $180K salary for newbie associates when clients refuse to pay for their on-the-job training?
Are these law firms having a collective Al Hague moment?
Bad Timing or Antiquated Structure?
Client dissatisfaction with law firms is well documented. A recent BTI study found only forty percent of GC’s would recommend their primary outside firm. Deloitte’s June 2016 research study on “Future Trends for Legal Services” revealed more than half of the corporate legal departments surveyed envision outsourcing the bulk of their legal work to non-traditional law firm structured providers. And while demand for legal services continues to rise globally, it is flat for law firms for the third consecutive year.
Deloitte’s study found law firms are not meeting purchaser expectations in a number of key areas:
- Integrated, multidisciplinary services other professional service providers deliver
- Use of IT, especially in data management and cyber-security as well as operating from an integrated platform
- Regulatory compliance/utilization of technology
- Fee structure, especially fixed fees, value pricing, and transparency
Clients are voting with their feet– taking more work in-house; creating and/or collaborating with legal operations teams to integrate with core legal functions; and engaging tech savvy service providers for a host of legal products and services. And when clients do engage law firms, they are hiring fewer, exacting significant discounts, and using RFP’s, reverse auctions, and a host of other competitive filters. [Read more…]