December 2005

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.

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.

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?

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.

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). 

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.

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.

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.