These last couple of years have proven highly challenging to the legal market, and as is customary during difficult times, many calls for reform of business practices have come from both inside and outside of the profession.
While there have been some changes, the pace of such change has not directly responded to the clamor of the demand. The “normal” law firm model and the traditional “billable hour” have again managed to pull-through with nary a scratch.
As the summertime is oft a time of reflection, and when pushed by a General Counsel client for an explanation of this, I had to come to my own terms as to why change has been so slow. In short, I told him it was his fault.
Luckily, I have a good relationship with him, and we both laughed.
But, I did go on to explain that I think there is a weird, unhealthy relationship between in-house clients and law firms, whereby in-house clients actually enable firm inefficiency.
No, I was not watching Dr. Phil over the weekend.
Think about it. While this is somewhat simplistic, most in-house legal teams are understaffed, and work under tremendous pressure. What they can’t accomplish, or issues that are somewhat arcane, are referred to outside counsel. Firms charge top dollar for jumping in to complete things, put out fires, and for levels of expertise that many in-house groups do not have. So, firms make money on short-sighted strategic thinking, poor staffing decisions, and occasionally on a level of needed expertise.
Now, don’t get me wrong. Oftentimes corporate clients view attorneys as at best an inconvenience, and at worst impediments to any form of business progress. GC’s are often put uncomfortably in the middle. GC’s are an incredibly talented group–typically extraordinarily intelligent, politically deft, possessing diplomatic tact and skills that would inspire awe in the most seasoned consular official. However, they are also responsible for continuing this relationship.
I pointed this out to my friend, and as always the ever savvy and astute business person, he observed a law firm opportunity here.
He is not alone.
Paul Gilbert also observed in his recent post:
Law firms should be supporting their clients to improve resilience, create better process and manage risk more effectively; but if they did this they would lose money. So, consciously or unconsciously, law firms do not focus on making their clients more efficient; instead they focus on ‘relationship management’.
The result is that in-house teams have weaknesses disguised by their ‘friends’ in law firms who will provide all the fixes they need, just at a price.
So, it appears as if those firms which are savvy enough to recognize and understand the issues in their current in-house relationships have an opportunity to re-define those relationships for a healthy, and prosperous long-term engagement. Those that do not will see their in-house clientele fade into the past.