I skimmed the “Top Headlines” of a recent edition of The American Lawyer and was struck by the lineup:
– The 2016 Am Law 100: Growth Slows for Big Law
– Hit With Defections, K&L Gates Stays the Course
– How a ‘Burned-Out’ International Lawyer Ditched Squire Patton Boggs
– Davis Polk Hires Ex-Cravath Partner, Plus More Lateral Moves
– Law Firm Leaders React to a Year of Slow Growth
– Firms Ranked by Gross Revenue
– Firms Ranked by Profits Per Partner
What a litany of bad news for law firms: flat growth, persistent partner defections, “burned-out” lawyers; a free agent defection from law’s version of The New York Yankees, and metrics that still focus on internal results, not client satisfaction. So much for what passes for “headlines” on the BigLaw beat.
But here’s a headline that I — and many corporate legal departments–would like to see: “Law Firms Tackle Client Disaffection.” Which begs the question: Are law firms adapting to a rapidly changing market or are they like the Titanic passengers who stayed for another glass of champagne as the band played a final tune?
Are Law Firms Responding to Market Demands?
The simple answer is: not really. And while there certainly are some firms in tune with marketplace demands (Seyfarth and Thompson Hine are two that come to mind), most have focused on internal tweaks designed to sustain profit rather than proactively delivering what clients want and cutting back on what they don’t.
Here’s a list of what many firms are touting as “change”:
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- Alternative fee arrangements (AFA’s are client driven in most instances)
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- Creating back office centers in low-cost locations (this is not even the best option in many cases and is an internal, not client-centric response)
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- Pruning the ranks of “service” partners (might help short-term PPP but usually not at all helpful to clients)
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- Negotiating steep discounts of rack rates (driven by clients; now the standard; hardly innovation)
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- Getting bigger (to what end?)
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- Bringing on laterals (Darwinian struggle among firms; rarely done to benefit clients)
- Hiring marketing directors and utilizing social media (fine, but what’s the message? And how are client needs being addressed?
Some Useful Initiatives
Here are some things that might be useful for law firms to consider:
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- Focusing on what they do best and jettisoning what they are no longer outstanding/differentiated at
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- Working with existing and prospective clients to determine what clients need and expect from a law firm they use/would consider retaining (rather than what the law firm wants to sell them)
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- Developing metrics for gauging client satisfaction
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- Collaborating with other lawyers/firms/providers/corporate legal departments for the benefit of clients
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- Forming joint ventures with providers to integrate offerings/the supply chain
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- Training their lawyers in project management
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- Requiring IT competency for lawyers (specifically, as it relates to promoting delivery efficiency and taking prophylactic steps to mitigate cyber breaches
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- Procuring stand-alone cyber risk policies
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- Investing in thought leadership (limited to areas of firm excellence)
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- Engaging in a meaningful self-analysis of the firm structure, focusing on value, results, and what the brand really means and how it is differentiated (or might be) in the marketplace
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- Investing in clients (short-term secondments at no/reduced charge, answer desk team, etc.)
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- Evaluating how certain firm deliverables can be offered as products rather than services (e.g. 50 state surveys, certain types of research, etc.)
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- Taking a longer view in client relationships
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- Investing in thought leadership
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- Offering an equal seat at the management table for IT and process leaders
- Reflecting the priorities of their clients (diversity, client-centric approach, etc.)
Where to Look for Innovation
Many corporate lawyers remain dismissive of the retail segment of the legal market, but that’s where the real innovation in legal delivery is occurring. BigLaw could learn a great deal from LegalZoom whose unswerving focus on customer satisfaction, utilizing technology to ensure consistency of quality, affordability and convenience could be applied to large corporate representation.
I spoke recently at the company’s “Interact 2016” conference and heard their CEO, John Suh say: “Our job is to surprise and delight our customers.” And he meant it; LegalZoom has developed all manner of gauging customer satisfaction. Imagine if BigLaw were not simply to articulate this priority but also to act on it?
Conclusion
Legal delivery has come full circle. Decades ago, the attorney-client relationship was personal, and client satisfaction was paramount. Then, as law firms grew and PPP became the primary measure of their success, client satisfaction became less of a focus. But now, in a buyer’s market with lots of competition — among law firms and from other provider sources — client satisfaction is again the priority.
Law firms would do well to ask what differentiated services (or products) they can offer clients; how best to deliver them; and measure achievement of client objectives and satisfaction. That’s a basic game plan in customer service but one that seems to have been lost over time by many law firms.
