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Clients Pushing Firms to Change? Don't Believe It!

Vivia Chen

December 12, 2011

Surfer©Luis Louro:Fotolia.comDear Managing Partners:

Chill.

Like, I know you've been so stressed lately. Like, all that pressure from clients, consultants, and those know-it-all young lawyers. Like, they've been so bothersome—bugging you to dump the billable hour, train associates better, increase efficiency.

Great news, dude: No need to do that stuff! Cuz I just read some surveys of legal departments—and, like, general counsel don't really give a rip about change. Like, they're just talkin' big, but they don't really mean it.

I mean, just check out my take on Corporate Counsel magazine's latest GC survey:

Billable hours aren't dead. But we can pretend they are. To control costs, you'd think that GCs would "insist that law firms offer alternatives to the billable hour, or at least discuss it," says CC. But that's just talk so far: "True, more than three-quarters of legal departments surveyed are initiating talks with their law firms over alternative fee arrangements, but these rarely bear fruit." 

Didn't make the approved list? Try again. Companies aren't shrinking their pool of lawyers. "In fact, the average number of law firms employed by companies with revenue of at least $5 billion rose from 126 to 173," reports CC. The caveat is that "a very small number of firms receive the lion's share of the work." But, hey, so what?

And here's what that fancy consultant Altman Weil finds in its survey of chief legal officers at companies:

Firms don't want to change, and the client won't insist. "For the third year in a row, CLOs said they don’t think law firms are at all serious about changing their service delivery model, rating them a median 3 on a 0-to-10 scale. However, they don’t rate their own appetite for change much higher."

More alternative fee arrangements—but not that much. "In 2011, 84 percent of law departments report using some nonhourly fee arrangements, compared to 81 percent in 2010. Nonhourly fees accounted for 14 percent of total fees according to the survey." Bottom line: Keep that meter going!

No one is communicating, so clients will keep complaining—and paying! "Only 35 percent of law departments regularly and formally evaluate outside counsel . . . and a meager 17 percent communicate the results of those evaluations to their law firms."

I don't know how you read all this--but it sounds like a big, happy, dysfunctional family to me. So, law firm managers: Hang loose. Go surfing.

Hat tip: Prism Legal.

 

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Do you have topics you'd like to discuss or tips to share? E-mail The Careerist's chief blogger, Vivia Chen, at VChen@alm.com.

 

Comments

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Don't resist that which will make you profitable, unless you're happy being mediocre.

These survey findings are interesting, but they elide a more practical explanation of what's going on. Just because clients are not pushing for AFAs, that doesn't mean they're blithely paying whatever bills they get.

AFAs are the outside firms' issue. As long as outside firms are willing to write off billable hours, clients can achieve their cost/productivity objectives without the trouble of negotiating complicated new service agreements.

Data on current realization rate trends at corporate firms would round out the picture.

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The Careerist takes an inside look at how lawyers shape their careers and manage their lives. The blog aims to dissect developments in the profession, provide useful information and advice, and give lawyers a platform to voice their views. The goal is to provide a fresh, provocative take on the state of lawyering.

About Vivia Chen

Vivia Chen

Vivia Chen, The Careerist's chief blogger, has been covering the business and culture of law firms for a decade. A former corporate lawyer, Chen is fascinated by those who thrive (as well as those who don't) in the legal profession. Her take: Success in the law (and life) doesn't always travel a linear path. If you have topics you'd like to discuss or information to share, contact her: VChen@alm.com

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