This news ought to be deeply disturbing to managing partners and lawyers everywhere, regardless of the size of their firm: Attorneys in larger firms are losing their once-revered position as a business’ most-trusted advisor. Other professionals are edging them out, especially accountants and consultants.
How did this happen? More precisely, why did lawyers let it happen? And how can midsized firms take advantage of the competitive opening created by what could be a cosmic shift in the way clients view their attorneys?
An explanation of “how” and “why” might be found in a parallel example from the American auto industry in the 1970s when Japanese and European manufacturers made their first serious inroads into Detroit’s dominant market position. Several years later, Lee Iacocca – who saved Chrysler from near collapse and liquidation – was asked by the CBS News how the Big Three could have allowed this to happen. His answer was both blunt and accurate: “Nothing is more vulnerable than entrenched success.”
Value v. Price
Contributing to larger firms losing their “trusted advisor” status: Clients don’t feel they are getting sufficient value for what they are paying.
A new study from Nisus Consulting finds “clients feel they are paying through the nose and that the (law firm’s) profits are excessive,” and as a result, they are not getting value for money. According to LegalFutures, the survey shows that the top three factors driving client views of the law firms they use haven’t changed – strategic thinking, personal chemistry and problem solving – yet responsiveness, which lawyers believe is the most important factor, came eighth.
Definitely, the price is driving clients away from seeing their attorneys as an advisor. Indeed, there is a growing reluctance on the part of many executives to call outside counsel on simple, routine matters or to run something by them that isn’t a big deal.
“Unless it’s really vital, I avoid calling our lawyers because it’s gotten too costly,” the general counsel of a midsized, fast-growing, high-tech company told me not long ago. “A few months ago, I phoned him with a quick question. We spoke for maybe 10 minutes and at the end of the month, a $150 charge appeared on my invoice.
“Our CFO tells me that the CPA firm he uses never charges for that kind of a call,” he added. “Why do law firms start running the meter every time the phone rings?”
As a result, lawyers in midsized firms are well-positioned to land larger clients who’ve become disaffected by the attorneys they’ve been using in larger – even BigLaw – firms. But it will take a unique mindset and a sustained marketing and business development effort to convince clients that you can offer a different experience while still providing the same high level of work. Begin the process by thinking about these six ideas:
1. Be sure to listen to your clients.
Many lawyers in large firms have forgotten how to do this. I’ve lost track of how many business people echo the words of one executive, in focus groups and client satisfaction interviews, who complained, “They don’t hear what I’m saying. I tell them I just need a dining room chair and they come back with six chairs, a table and a sideboard. They were at the meeting so why is this so difficult?”
2. Don’t over-lawyer files.
Large firms seem to put three partners on a file when two can do the job. If I were a client, I’d explode hearing, “I asked Joe to help on the file because he needs the hours” – which I’ve overheard in hallways too many times over the years. Unless the client is the Lawyer’s Relief Charity Fund, let Joe find his own hours.
3. Don’t charge for bringing young associates to meetings.
Yes, they need the experience and observing a deal being structured is a valuable learning exercise. But don’t bill for every minute of the associate’s time; training young lawyers is a cost of doing business for the law firm, not the client, and charging for the time is unprofessional.
Turn off the meter. Billing for a 10-minute phone call where you answer a quick question may be ethical but it’s bad business. The executive will believe that you see them as a paycheck, not as a colleague, and it only deepens the crack in the “trusted advisor” relationship.
4. Invite clients to a free “What are your plans?” Meeting
This doesn’t occur to larger firms: Invite a client’s key executives in for a lunch where they can explain how they plan to grow their business over the next few years. Tell them the meter is off, and have some of your colleagues attend. Just ask questions, don’t use it to tout the expertise of a lawyer the client has never met before. Absolutely, the session will generate new files.
5. Learn to get by giving.
Attorneys in larger firms hate to do this. But a well-written, readable blog is the best way to establish an attorney’s thought leadership and provides clients, potential clients and referral sources with things they should think about in running their company. If you give away good ideas, you’ll get files that help an executive implement them – just as we’re giving away some good ideas here.
If your firm doesn’t have the budget for a marketing department to go after this new level of work, consider outsourcing the function to a firm such as PSM. We can provide a full-blown marketing and business development department staffed with senior people for less than the annual cost of a junior manager. Recognize that attracting larger clients won’t happen by itself; it will take a strategic approach with a carefully thought-through plan to accomplish the job.