In Search of Perfect Client Service

If Other Institutions Can Learn, Why Can't Law Firms?

                                                                              

If hospitals can learn, maybe there's hope for lawyers.

Lessons for Lawyers: Communicate, communicate, communicate

There is nothing so important as ensuring through every available means that you and your client are on the same page, that what you do is what is expected.  Doesn't this say it all?

Cartoons courtesy of Brand Autopsy (which is worth looking at just to see the brand).

Firing Law Firms

Corporate Counsel magazine (January 2006 issue) did a survey of General Counsel at Fortune 250 Companies.  The survey found (15% response rate) that 34% of the surveyed GCs fired a firm in 2005 for poor performance, 3% for poor technological capabilities, 3% for lack of diversity, 9% for a combination of those factors and 31% did so for other reasons.  The survey doesn't suggest whether these terminations are of primary counsel or peripheral counsel.

The same issue reports that 46% of the top 200 firms anticipate raising their hourly rates by more than 5%, while 53% expect to raise rates by 5% or less. 

I wonder whether the January 2007 issue will contain survey results showing a significant percentage of firms being fired for being too expensive.

The Geography of Great Client Service

Eschewing the time-honored maxim of "location, location, location," The Wired GC continues his analysis of the importance (or lack thereof) of office location in a world where most client interaction occurs in the client's office, or at least somewhere other than the lawyer's office.  The post, bearing the sublime title "What Face Means For Place," addresses the question "why do most firms in large cities persist in putting all their people in pricey high-rise space under long-term leases?"  None of the common answers survive The Wired GC's pithy commentary.  The post goes on to suggest some alternatives that no doubt will be the subject of much conversation. 

Here's a statement in the post that every managing partner should memorize:

I’m sure I don’t understand all the intricacies of space selection and design of the modern law firm. But when I see firms jockeying for a new “signature” building, and later submitting their interior design to magazines for their annual awards, I know one thing: I’ve never retained a firm on the basis of its offices. And I have to think that the overhead costs inherent in the current space model are a big driver of higher rates and higher billable hour quotas. And I have decided against retaining more than one firm because of these factors.

Perhaps the driving factors on space should be minimizing cost, maximizing operating efficiency and teamwork and creating a desire to leave the office and go visit clients.

I want to relate one true observation.  The most effective office design I every saw was an open room, where the CEO and Chief Acquisition Officer had the desks in the center of the room, facing each other.  Other desks encircled this power center, with the most junior people being the ones closest to the windows but farthest away from the CEO.  There wasn't much time spent on personal calls or mindlessly surfing the internet.  There was, by contrast, a lot of time spent bouncing ideas off colleagues.  And when meetings needed to be in private, the many conference rooms were utilized.

But to get back to the topic at hand, The Wired GC's point that the price of the law firm's office (location, location, location) becomes a substantial factor in high hourly rates is a truth that cannot be escaped.  I ask this of discerning inside counsel:  Do you ever hold a firm's toney location and expensive offices against them?

And to underscore the point I made yesterday, the right place for meeting your client is your client's office.  Her convenience, not yours.  Your nickel, not his.  Your investment in the relationship.  Your chance to learn more about her business and the demands on her time.  Your chance to figure out more ways to help.  Its all about the client, not your trendy offices with the expensive artwork.

Driving Change: Chicken or Egg, Client or Law Firm?

The Greatest American Lawyer contains a very thoughtful post on the issue of whether law firms will ever lead change in the manner services are provided to clients. The GAL posits that  "[i]t has been suggested that until clients demand that law firms deliver lower cost and higher quality services, law firms will not be motivated to act. While there may be something to this notion, I am not buying it."  The GAL concludes with this:

So, what needs to change in the legal market in order to for innovation to ensue? Does the change have to come from the client side? It is my belief that law firms and lawyers will have to employ traditional marketing and sales people who can go out into the market without the demands and pressures of having to bill time or work for clients on important matters and evangelize what they are doing. Without a marketing and sales force, the reach of any particular law firm to distinguish themselves in the market and reach new clients is extremely limited. The market must be educated as to how and why the flattening of the world and the availability of technology can revolutionize the way law is practiced. Without this important piece of the puzzle, the legal market will continue to be the caboose of the global train of innovation and technology adoption. 

I'm not sure I can agree.  The implication of GAL's post is that there really isn't competition now for business.  That certainly isn't true.  In my view, the problem remains one of economic incentive.  Law firms have no reason to embrace technology or the efficiencies it creates more than is minimally necessary because technology costs them money and doesn't generate revenue. Clients make the hiring decision and law firms offer what they think the client needs from them, and no more.  If clients demanded the types of efficiencies GAL discusses ("do this or you are fired") and followed through by hiring only those who provided the innovation, the level of innovation would increase dramatically because it would be the price to play.  Now it isn't.  I leave with this thought:  if clients don't insist on change now, why will they hire based on that differentiator if the pitch is made by a professional seller?

A Substantive "Must" For Great Client Service

I saw this post on PDF for Lawyers, a site edited by Ernie Svenson (Ernie the Attorney) and Dave Fishel, just on top of participating in an ALM program on the same topic.  The referenced article from the Federal Courts Law Review is an excellent overview on electronic evidence issues.  There are, to be sure, lawyers like Dennis Kennedy who are light years ahead of most on analyzing issues relating to electronic discovery.  The issues relating to e-discovery are becoming so pervasive, however, that every firm that truly wants to be known for "client service" is going to have to have an expert on this topic.  Every case has the potential to involve electronic media, and failure to factor in the cost of securing the data that must be produced will cause resources to be wasted, and failure to produced requested and available data can result in sanctions, the discovery trick box.  Clients need help, and the outside counsel who can provide sound, reasoned advice will have a leg up on everyone else.

Building A Client Service Culture

I am certain that there is no single formula for success, but a recent post by Tom Peters sums up the key ingredients as well as anyone.  The post is linked here, but I've taken the liberty of quoting it for convenience:

Chip Bell to Tom Peters (12.20.2005): "If you were asked to be the keynote speaking coach to a new company CEO eager to do a great job, what is the one thing you would advise the CEO
to do (or not do)?"

TP: (A) Read 2 books. (1) Bossidy (& Charan) on execution ... Execution: The Discipline of Getting Things Done. Main takeaway: Bedrock #1 for corporate success is a "culture of execution." (FYI, Bob Nardelli did this brilliantly at Home Depot, despite pressure to do sexier stuff first.) (2) Read Lou Gerstner's book ... Who Says Elephants Can't Dance: Inside IBM's Historic Turnaround. Main takeaways: Listen first, then do vision no matter how high the pressure for a "scintillating vision." Also, you must tackle head-on the extant culture head; Gerstner reluctantly did this and did it well, but Carly Fiorina didn't at HP (she led with "vision").

(B) And: LISTEN! LISTEN! LISTEN! (The answers are already out there, typically among the most exercised and disenchanted.)

(C) And: COMMUNICATE! COMMUNICATE! COMMUNICATE! (Esp: Keep the board informed of everything, especially hiccups!)

(D) And: Work proactively in every "little" which way, each and every day to "live" and "ooze" INTEGRITY! (Integrity begets trust which begets a good place to work which begets performance.)

(E) And: Remove or marginalize ASAP the career "career corporate politicians."

(F) And: "Do a GE": Elevate HR to the head table on the Right Hand of God, with great HR talent and an HR seat with equal power to that of the CFO. (Again, Nardelli did this spectacularly at Home Depot!)

Chip: "One thing" is cute ... but the above SIX are musts! Use all six of 'em, but do NOT feel free to choose "the best one"—SIX or naught!

 Those who have read my prior posts know that I am a big fan of Tom Peters.  While not every point is directly applicable to a professional service firm (like keeping the board informed), the points apply more broadly (i.e., keep your partners informed). 

Importance of "Face Time" With Clients

Great post by The Wired GC on the importance of face time with  your clients.  He sums up an article from the New York Times about the role of telecommuting during the recent transit strike.  The article took the approach of talking about the importance of face-to-face meetings, which prompted The Wired GC to make this important observation:

In the law firm environment, it is common for some partners and very common for some associates to have never personally met a long-term client. I feel that if a lawyer ever wants to move up the trust food chain with a client, you have to supplement good service and high value with a personal relationship. With a personal relationship, you are less likely to be thrown into this year’s beauty contest with other commodity-type service providers.

And it may go without saying–visit your client on their home turf. I have heard some lawyers complain that they are “too busy to travel” or “can’t bill for client relations time”. My answers: (a) you will have plenty of time to travel when your clients drift away and (b) you can’t bill for any time when you don’t have a client in the first place.

To this I can only add two things.  First, this observation is consistent with my own personal experience: the more time I spend with my clients, the better and the more work I seem to get.  Second, the observation is consistent with feedback we get from clients when we do client satisfaction surveys--clients want face time with their lawyers.

"Bombard" Clients With Communications? Not Necessarily.

Dan Hull has an interesting addition to his rules of good client service. The post is entitled "Over-Communicate": Bombard, Copy and Confirm." The gist of Dan's message is not at as far-reaching as the statement of the rule.  Noting that the rule has "obvious exceptions," Dan articulates what I think is the core of the rule: know what your client wants and provide it to him or her.

There is a danger of "bombarding" clients with communications.  Frequently, clients are paying you to be exercise judgment about what they need to hear or read and what they don't need to hear or read.  The more important the issue, the more your client needs to know.  My formulation of this "rule": No surprises.  And they best way to avoid surprises is to have an on-going dialogue with your clients where you ask if he or she wants to be involved with an issue, kept apprised to simply advised at its conclusion. 

Bear in mind that sometimes the rules change.  For example, if your client, the General Counsel, is involved in a major acquisition, she may not want to be advised at the same level of detail simply because she doesn't have the time to read everything she otherwise would.  Talk about it from time to time.  Its the best way.

Merry Christmas To All

My 4 kids are counting the minutes until Santa's arrival.  Their bedtime announces the beginning of my "assembly period."  It is a fun time, producing many special memories.  I hope all of you experience similar special moments this holiday season.  Merry Christmas from all the Lambs.

Insights From Inside Counsel

One great way for lawyers to learn how to best serve clients is to list what clients have to say.  To that end, check out this article reprinted at Law.com.  The article is about lawyers who went to speak to an audience of inside lawyers.  Here's the key description:

Sitting between in-house attorneys and facing a room of 100 more, Haidet and Brewster did their best to respond to their audience's pet peeves, including:

• Why outside firms are slow to send invoices but lightning-quick to demand payment.

• Why outside lawyers don't understand the business models and corporate culture of their clients.

• Why outside firms are unwilling to bend on price.

And then there was this gem:

Billing remained an issue that bothered the in-house lawyers.

"Even the firms we trust are always behind in giving us budgets," Kalil said. "On Dec. 20, I know I'll be getting a call from a senior partner at Kirkland & Ellis, asking, 'Can you do this for me tomorrow?'

"They are so slow in getting their budgets to us, but so fast in wanting to get paid," he said.

We lawyers are always fond of saying our relationships with our clients is a "business relationship."  When I say that, I mean that discussions about money issues are expected to occur--money is, after all, an integral part of the relationship.  But the word 'relationship' means that it is a two-way street.  Bending on price, providing budgets in a timely manner, invoicing in a timely manner--those are steps that give you the political capital to ask for faster than normal payment at year-end or other considerations from our clients.  Reason begets reason.  Fairness begets fairness.  But at the same time, indifference begets indifference.  Selfishness begets selfishness.

As I discussed here, you need to decide in your heart whether your clients are just wallets or whether they are really friends.

Good Writing: What Lawyers Do To Christmas

I received this via email today.  I know its a joke.  But, its way too easy to see how many lawyers would do exactly this if required to write this for real.  That said, its pretty darn funny.

 

The Night Before Christmas (An Attorney's Version)

Whereas, on or about the night prior to Christmas, there did occur at a certain improved piece of real property (hereinafter "the House") a general lack of stirring by all creatures therein, including, but not limited to a mouse.

And Whereas, a variety of foot apparel, e.g., stocking, socks, etc., had been affixed by and around the chimney in said House in the hope and/or belief that St. Nick a/k/a/ St. Nicholas a/k/a/ Santa Claus (hereinafter "Claus") would arrive at some time thereafter. The minor residents, i.e. the children, of the aforementioned House were located in their individual beds and were engaged in nocturnal hallucinations, i.e. dreams, wherein vision of confectionery treats, including, but not limited to, candies, nuts and/or sugar plums, did dance, cavort and otherwise appear.

Whereupon the party of the first part (sometimes hereinafter referred to as "I"), being the joint-owner in fee simple of the House with the party of the second part (hereinafter "Mamma"), and said Mamma had retired for a sustained period of sleep. At such time, the parties were clad in various forms of headgear, e.g., kerchief and cap.

Now, therefore, Suddenly, and without prior notice or warning, there did occur upon the unimproved real property adjacent and appurtenant to said House, i.e., the lawn, a certain disruption of unknown nature, cause and/or circumstance. The party of the first part did immediately rush to a window in the House to investigate the cause of such disturbance.

At that time, the party of the first part did observe, with some degree of wonder and/or disbelief, a miniature sleigh (hereinafter "the Vehicle") being pulled and/or drawn very rapidly through the air by approximately eight (8) reindeer. The driver of the Vehicle appeared to be and in fact was, the previously referenced Claus.

Said Claus was providing specific direction, instruction and guidance to the approximately eight (8) reindeer and specifically identified the animal co-conspirators by name: Dasher, Dancer, Prancer, Vixen, Comet, Cupid, Donner and Blitzen (hereinafter "the Deer"). (Upon information and belief, it is further asserted that an additional co-conspirator named "Rudolph" may have been involved.)

The party of the first part witnessed Claus, the Vehicle and the Deer intentionally and willfully trespass upon the roofs of several residences located adjacent to and in the vicinity of the House, and noted that the Vehicle was heavily laden with packages, toys and other items of unknown origin or nature. Suddenly, without prior invitation or permission, either express or implied, the Vehicle arrived at the House, and Claus entered said House via the chimney.

Said Claus was clad (on information and belief) in a red fur suit, which was partially covered with residue from the chimney, and he carried a large sack containing a portion of the aforementioned packages, toys, and other unknown items.

He was smoking what appeared to be tobacco in a small pipe in blatant violation of local ordinances and health regulations.

Claus did not speak, but immediately began to fill the stockings of the minor children, which hung adjacent to the chimney, with toys and other small gifts. (Said items did not, however, constitute "gifts" to said minor pursuant to the applicable provisions of the U.S. Tax Code.)

Upon completion of such task, Claus touched the side of his nose and flew, rose and/or ascended up the chimney of the House to the roof where the Vehicle and Deer waited and/or served as "lookouts." Claus immediately departed for an unknown destination.

However, prior to the departure of the Vehicle, Deer and Claus from said House, the party of the first part did hear Claus state and/or exclaim: "Merry Christmas to all and to all a good night!" Or words to that effect.

Further, the parties sayeth not. 

Magnetic Service

I just started reading Magnetic Service by Chip and Bilijack Bell. I haven't gotten too far into it yet, but the introduction captured my attention.  "We selected 'magnetic' to describe the kind of service experience for customers that fosters their enduring passionate devotion ..." the authors write.  In speaking about 'magnetic' personalities, the authors say that it is synonymous with compelling, alluring or captivating.  But the word has different meanings, such as the characteristics of a regular magnet: hold, pull, attraction.  But a magnet adds the word 'steady' as an adjective--a steady hold, a steady pull, a steady attraction. Service that creates a constant attraction that creates an experience that is good enough to result in enduring passionate devotion by clients. 

I am going to like this book.

Harry Beckwith On Passion

I receive Harry Beckwith's monthly newsletter by email.  I read them carefully because Harry Beckwith is much smarter than I am.  His December newsletter is entitled "Giovanni and the Extraordinary Force of Passion."  It is the story of a man who is a maitre d' at a hotel in Ravello, Italy.  He works long hours, serving his customers at breakfast, lunch and dinner.  Harry ends his story this way:

 

One could argue that Giovanni became the world's greatest maître d' simply because of practice. Working twice as many hours a year as the typical person in his profession, he accumulated 40 years of experience in his 20-year career. But no doubt, there is something more. He has found his passion, and you can feel it. You want to be around him, to be served by him, to feel your sense of life elevated by him. You know he will do everything he can to make your visit perfect. And he does.   May you live your passion, too.   I agree.  I've written on passion before (here and here).  It has to show.

 

A Personal Thank You To Someone Truly Commited To Great Client Service

In my second post as a blogger, I mentioned that Andrea Gordon, my firm's Director of Marketing, was one of my "consiglieres."  We are just ending our 4th year of working together, and I want to publicly thank Andrea for her great work.  My colleagues may never realize just how extraordinary she is and how lucky we are to have her.  But I do.  And I wanted to let the world know just how terrific she is.

Good writing: Breaking From Useless Traditions

Good writing is good writing.  Or is it.  Dan Hull had a terrific post on how we write for our clients.   I posted a comment, suggesting good writing knew no venue, and it shouldn't matter whether the writing was a pleading or a letter.  Or, as I just posted, an invoice.  Communications are effective when they are clear, concise and direct.

Dan has just responded to my comment with another very thoughtful post.  In this post, he notes that the norm in many courts is to use enough legalese to fill a truck.  After considering the value of piecemeal change, he issues this challenge to himself and the rest of us: 

"Doesn't changing legal writing to just clear and simple writing come down to to leadership? Maybe I should start setting a better example. Why not buck the traditions 100%--whether it's writing to courts, to clients or to other lawyers--and never use those expressions again? Ever."

That sound you hear coming from my office is loud clapping.  A standing ovation for Dan.  Hooray!  I will be with you every step of the way.

Actually, a confession.  I practice in a lot of different states. I can't remember all the terms some courts get their kicks from.  I don't know what a demurrer is, but I do know what a motion to dismiss is.  So I use words I know.  A simple mind yields simple writing.  I'm lucky in that respect.

Another Writing Issue: Clarity in Billing

Dan Hull recently had a nice post about writing for clients in his What About Clients blawg.  As I sit here reviewing several bills (I am national counsel and review local counsel invoices), I see entries like "analytical review of of plaintiff's threshold information".  What does that mean?  Should we contrast this review from a "non-analytical review"?  What is threshold information?  With entries like this, how can I advise our client that these bills are meaningful and reasonable?  It drives me crazy.  And if it drives me crazy, I'm sure it would be driving the client crazy.

Invoices are a communication device.  They market you and your firm to the client.  Prepare time entries as if you really give a damn what the client thinks about you and what you are doing.  Even if you don't care, pretend.

Clients--Is this the kind of team you want on your matter?

My December American Lawyer arrived today.  As I always do, I turned to Aric Press' column.  Aric is the Editor-in-Chief of American Lawyer.  If there is anyone more attuned to the state of the profession, I would be surprised.  Aric's column is about the results the survey of the Am Law 200.  One of the questions asked this year was about the number of firms that lamented their loss of associates.  Aric writes:

The days when associates would hang around confident that they would snare a partnership are long gone -- and are not coming back.  Now may who linger stay only until their student loans are under control, and then they map a quick exit.  Firms complain bitterly that these young lawyers are leaving before the firms can fully recoup their investments in them.  They have no one to blame but themselves.  The profitability model is built on churn, and even the cream resent getting battered into butter.

Great prose (a hallmark of Aric's column) but very insightful as well (another hallmark).  Large firms losing associates need to look in a mirror.  Otherwise, its like the rancher opening the barn door and then complaining that the horses are running out the door. 

But my mission here is not to tell large firms how to run themselves--its to talk about client service.  There is no mistaking the significant role associates play on most matters.  Clients need to ask themselves whether they want to create teams where integral players are looking for the exit.  At what cost to the client is the associate's departure?

Tom Kane's Legal Marketing Blog Added To My List of "Must-Read" Blogs

I've linked to Tom Kane's Legal Marketing Blog twice in recent entries.  I overlooked the fact that it was not listed on my "must read" list of blawgs.  It should have been.  Tom's insights are keen and his advice practical.  Don't miss it.

Under promise and over deliver is not simply falling over the goal line--its blowing through the back of the endzone!

Interesting post by Dan Hull taking issue with the "under promise and over deliver" philosophy of client service.  As I understand Dan's argument, the philosophy doesn't apply to lawyers because client expectations are so low that "over delivering" doesn't really accomplish much.  Sort of like being the tallest midget.

Dan's argument continues that lawyers really need to change the way people think about lawyers by "communicating in all aspects of your work that you care deeply about your lawyering for them, you want to serve their interests on an ongoing basis and that it's a privilege to be their lawyer."

I guess I don't see the difference here. The "under promise and over deliver" philosophy is not a suggestion to promise "2" and deliver "3".  It is a philosophy that says deliver something that defies expectations, not merely surpasses them.  Its not a negotiated set of expectations, but rather a belief that doing something radically different--better--than what is expected is the surest way to draw positive attention to yourself.  Its Harry Beckwith 101.

Are Your Clients Really Friends Or Just Wallets?

Sometimes my kids make me feel like I am a giant wallet.  I hate the feeling.  But that experience makes a question raised by Tom Kane all the more poignant.  Do we make our clients feel the same way, or do we treat them as real friends?  That is the gist of  Tom's terrific summary of an article by David Maister that I highlighted here.  Anyone committed to client service should read Tom's post.

The Ability To Serve

Many of you know I spent the last month and half in Los Angeles on trial (non-suit against my client!).  So I'm catching up on a lot of reading that I missed.  This morning, I've been reading several weeks worth of the Chicago Daily Law Bulletin.  The December 1, 2005 issue contains a reprint of a Wall Street Journal article entitled "As more cases settle, firms seek pro bono work to hone associates' courtroom skills."  It leads with this paragraph:

"Marc R. Kadish, a partner at Mayer, Brown, Rowe & Maw LLP, recently made an offer to federal judges in Chicago, where the law firm is based: The 1,300 member firm would represent, pro bono, any prisoner with a case set for trial who didn't already have counsel."

The article discusses the inability of lawyers at big firms to develop trial skills and suggests that this is a recent phenomenon.  Actually, the problem has been around for some time.  I worked at a very large law firm before law school and was working on a large antitrust case that went to trial.  Two of the partners on the case had never tried a case before, and both had been with that firm for more than 14 years.  At my former firm, a number of people in the litigation area never tried a case during my 18 tenure with the firm.  I don't think these two experiences are atypical.

When it comes time to retain lawyers for litigation, clients need to know what they are getting.  A litigator--someone who settles cases and files motions--is different than a trial lawyer.  Make no mistake about it, your adversary will know which type of lawyer is on the case.  They know that a capable trial lawyer is a far more formidable adversary.  This issue, which requires some candor from law firms, is one that should be fronted with clients.  They should not be allowed to assume to just because a lawyer can talk a good game, they actually know how to play it.

Remember, David beat Goliath, not the other way around

Nice posts by Tom Kane and Dan Hull about a topic close to my heart. Both talk about the fact that GCs do, in fact, hire smaller law firms.

I made the move from very large to boutique firm, so I have seen this from both sides.  The best way for me to discuss this issue is to use a military analogy.  Sometimes, you do need the Army and Marines.  But sometimes, its better to use Navy Seals or Delta Force.  There are strategic reasons to pick the small, elite force rather than the large force.  Most cases don't require the large force, and hiring the large firm for the routine case is an invitation to overstaffing, overbilling, overlitigating.

I agree with Dan's comment that a client is far more likely to get high quality client service from a boutique than from a large firm.  Small firms can much more easily create the institutional focus on service necessary to provide quality service.

An Opportunity For In House Lawyers To Work With Lawyers Truly Committed To Client Service

I am very happy to see the number of posts commenting favorably on the launching of the Law Department Purchasing Consortium.   Highly respected blogs and bloggers and greeted the lauch with enthusiasm.  Gerry Riskin,  Larry Bodine,  Geoffrey Gussis,  and The Wired GC all have taken note of the launch.

I need to acknowledge upfront that I am part of the Consortium and am on its Advisory Board.  Having said that, it is a great concept.  The Consortium is designed to help law department leaders gain more value for their legal spend, improve operational efficiencies and reduce costs. These objectives are achieved: (a) by pooling the purchasing power of participating law departments; (b) by providing technology and specific legal management tools to law departments on a turnkey, cost-free basis; and (c) by introducing law department leaders to a select group of best-in-class, partnering-savvy attorneys and legal suppliers  who are committed to helping their clients achieve their business goals.   The Consortium was conceived by Gary Cohen, EVP and GC of Finish Line, Inc. (and ACC Board member), but it was given birth through the perseverance and hard work of Peter Jenkins.

Its a great concept.  I hope it works.  And I strongly encourage inhouse readers to take a look at the idea, let Peter know what you think, and envision how the Consortium could work for you.

On becoming a Trusted Advisor

David Maister is one of the leading thinkers on client service, if not the leading thinker.   His book The Trusted Advisor was an incredibly insightful work.  He focused on the nature of the relationships between inside and outside counsel, and how lawyers should aspire to be "trusted advisors" to their clients.  David Maister has written a  new article that succinctly summarizes the kind of relationship lawyers should aspire to develop with their clients.   Its a worthy read.

And Increasing Associate To Partner Leverage Benefits Clients Exactly How?

Was flying home from New York this afternoon catching up on some reading.  The November 28 issue of The National Law Journal had an article entitled "A hot topic: associate to partner leverage."  The article focused on several Los Angeles firms who are consciously seeking to increase the number of associates in order to increase the partner's profits.  I started laughing to myself as I was reading.

A piece of free advice.  If you are going to add associates (which does not automatically translate to more work), don't advertise that fact to your clients.  They already don't think they need the headcount they have on their matters.  And certainly don't brag about your brilliant strategy.  That is like throwing cold water at your clients.

It is clear the firms that continue to focus on leverage on stuck in the old way--looking at hours and hourly rates and not figuring out new ways to enhance profitability.  The slower big firms move, the better as far as I am concerned.

How Will Corporate Lawyers Respond To An Invitation To Sleep With The Enemy?

Every month my firm publishes an "Outside Perspective" article in Corporate Counsel magazine.  My partner Jim Morsch wrote this month's article on "Thinking Like Plaintiffs  About Revenue Enhancing Litigation."  Jim has made a lot of money for corporate clients and I wanted to see what he had to say to so I could try to convince my clients to talk to him about "positive revenue litigation." 

On my way to Jim's article, however, I ran across an "Outside Perspective" piece offered by Barry Cohen, called "Sleeping With The Enemy: Why Hiring A Plaintiff's Firm Can Be Smart Business."  Mr. Cohen, a Florida plaintiff's lawyer, makes the argument that many plaintiff's lawyers are really good trial lawyers, that some corporations have hired plaintiff's lawyers for business litigation, and that its good for corporations because plaintiff's lawyers are used to working under contingency fee arrangements.  This piece relied heavily on Ron Perelman's $1.4 billion verdict against Morgan Stanley.  Of course, Mr. Cohen doesn't say that the Perelman case was worked up by Jenner & Block and that the result was aided immeansurably my Morgan Stanley's discovery failings, which ultimately led to the judge telling the jury to assume the plaintiff's complaint was true and that all Mr. Perelman had to prove was the amount of his damages.  Even a defense lawyer would do okay under such favorable conditions. It is interesting that Mr. Cohen didn't mention the case where famed Texas personal injury lawyer Mark Lanier represented Kelly Moore Paint Company in a suit against Union Carbide, which had supplied Kelly Moore wth asbestos fibers incorporated into Kelly Moore products.  Even with Mr. Lanier's prodigious skills, highly capably "corporate" counsel won the case for Union Carbide.

The Cohen "Outside Perspective" piece follows on the heals of several articles about other plaintiff's firms starting to market to corporations, based on same set of arguments. I have bitten my tongue on this topic--until now.  First, I absolutely agree that there are some terrific trial lawyers who represent personal injury plaintiffs.  Some really bad ones too, as well as a lot of really mediocre trial lawyers.  Just as there are some outstanding trial lawyers who represent business interests, and some terrible and mediocre ones as well.  Trial skill and savvy is not a by-product of which side one represents.  It is a set of skills that some have and some don't.  Many lawyers try to differentiate themselves from other corporate lawyers by distinguishing between being a trial lawyer and a litigator.  The point is that a client needs to hire the necessary skill set.

But where the plaintiff's lawyers argument really falls down is on client service.  Personal injury lawyers have clients in name only.  The victims they represent are not like a corporate general counsel or chief litigation counsel who are skilled lawyers in their own right and know the business intimately.  Personal Injury lawyers don't have to be responsive to client needs the way lawyers do who represent corporations.  And finally, plaintiff's personal injury lawyers are't the only ones who are willing to work on a contingency fee arrangement.

Plaintiffs attorneys are great marketers--we've all seen the plethora of television commericals.  I, for one, believe that most corporations will be smart enough to know good schtick when they hear it.  Sleeping with the enemy may be okay in the movies, but in real life it tends to get you killed.

Outsourcing the legal function--or at least parts of it

I was having a discussion with a General Counsel a few months ago.  He was thinking of hiring a lawyer to oversee the company’s litigation.  He was thinking of hiring a lawyer with 3 to 4 years experience.  It got me thinking.  Will this young lawyer be able to make better decisions or even recommendations than I would?  Boy, I sure hope not.  Otherwise those 20 years of additional experience under my belt wouldn’t count for much.  But what would this young lawyer bring to the table that I wouldn’t—the only thing is lower compensation.  He could be hired for less than I could.  But would I undertake the management assignment for the net cost of hiring this young lawyer (salary and benefits)?  Probably.  Would the company gain by having someone with greater experience making decisions and recommendations?  Almost certainly.

This same analysis works for general counsel who are not litigators by training or trade, but suddenly (or not so suddenly) have a significant litigation docket to oversee.  Indeed, the same analysis works for any area of the law where the in-house team does not have equal or greater expertise than the lawyers being hired.  And it certainly makes sense for smaller law departments which do not have the resources to hire top talent in all substantive areas in which legal work is done.

Lots of projects and job functions are being outsourced these days.  Maybe outsourcing part of the legal function is an idea whose time has come.

After Hours Training?

Tom Peters just made an interesting post on leadership.  His piece includes this most interesting observation:

Can leadership be "taught"? Oh yes. But as the USMA, USNA, Sandhurst and Parris Island demonstrate, not as a sideline. Effective leadership in the private sector or the military is an occupation, a preoccupation, a trade, a craft, an obsession ... and must be studied and practiced accordingly. For God's sake, it takes six long years to train a halfway decent graduate engineer in formulaic technical skills. Why should we expect to "pick up" leadership skills "on the side" at a B.School or corporate "university"? Fat damned chance.

I’ve made this observation before in the context of budgeting and client service.  Training people in things that are important, be it to the operation of your business or dealing with your clients, cannot be a mere afterthought.  Few, if any, law firms provide real education and effective training in these areas.  They should. Failing to make things that are important to your business an “occupation, a preoccupation, a trade, a craft, an obsession” is a big failing. 

Clients, Not Firms, Control The Future Of The Billable Hour

Another American Lawyer piece on the billable hours. Author Douglas McCollam does a terrific job analyzing the flaws in the system and some of the reasons it remains entrenched.  Here is an interesting insight:

The question remains then: If the billable hour is so unpopular, why hasn't it been replaced? For starters, it's a huge moneymaker for firms. To a large extent, reliance upon the billable hour is responsible for the pyramid structure of the modern law firm. With legions of associates toiling away on behalf of a narrow band of partners, the modern megafirm generates huge revenue. Take away the billable hour, however, and the foundation of the pyramid collapses. If the basic commodity sold becomes knowledge, not time, then the modern megafirm suddenly begins to look like an obsolete smokestack industry.

What if the basic commodity sold was results?  Makes me wonder how many CEOs would tolerate the system tolerated by their GCs?  If Jack Welch or others of his stature were ever charged with creating an efficient, effective legal marketplace, what would the over/under be on the future of the billable hour?  My bet would be on less than a New York minute.  CEOs like results.  Apparently the GCs are willing to focus on process.

The bottom line is that clients will continue to be offered what they buy.  All the carping in the world isn’t going to cause the fundamental, systemic change needed to banish an economic model that is not in the best interest of the consuming clients.  If clients pay for “legions of associates toiling away,” that is what they will get.  If they pay for hours of research on an issue that is at best a sideshow, that is what they will get.  If they choose to pay for results, that is what they will get.  The market moves to the money.  Always has.  Always will.

The Annual Rite Of Passage: Raising Rates

Check out this post on Law.com. Brenda Sandburg of The American Lawyer reports that amongst the Amlaw 200:

• Billing rates will continue to go up. Fifty-three percent of respondents expect to increase billing rates by 5 percent or less; 46 percent anticipate raising them by more than 5 percent.

• Profits will keep rising, too. Sixty-eight percent of respondents expect profits per partner to grow more than 5 percent; 27 percent think profits per partner growth will be 5 percent or lower.

Its amazing—99% of law firms “expect” to raise rates, nearly half by more than 5%.  Did they ask their clients?  Are their clients raising their prices?  How many of their client legal departments are facing cut-backs or cost constraints?

At the same time, profits per partner are going up.  More than 2/3 think the PPP will go up more than 5%.  I wonder how their clients feel about that.

I will say that this might be misleading, akin to a peacock showing off its tail feathers.  Impressive, but not relevant.  How many of these firms will be offering discounts that more than offset the increase?  How many “negotiate” the bill on top of the discounts?

As I have said before, the system is phony.  Maybe this is the year some clients will wake up and smell the coffee.