In today’s world, there is little doubt that, with very limited exception, the business of law is now a buyer’s market. The number of layoffs at large firms, and the demise of several prominent firms seem to confirm this. Certainly the anecdotes of revenue declines in 2009 do as well. But not only are we a buyer’s market, we are in a service business. Combine those two things and insights into the thinking of buyers becomes priceless. (It was before, but at least now no one should want to argue the point.)
On Friday, I had the opportunity to listen to a panel of distinguished General Counsels who, among them, were responsible for many tens of millions of legal spend. Maybe even nine figures worth of legal spend. Certainly enough that one ought want to hear their views.
Let me quote from my notes (the quotes indicate I wrote down verbatim what the GC said):
"the cost pressures are unprecedented."
"we can spend only if we can show it adds to our competitive advantage"
"A substantial amount of my time is spend on finance issues. We did up a bottom up budget and were told to reduce it by 25%."
"Firms must recognize we are living in a different world"
And so it went on. One after the other made this point and then came back to it to emphasize it. Several commented on their frustration with firms that sent the annual rate increase letters (don’t say I didn’t warn you) and the missed opportunity of trying to lower rates (again, you heard it here).
So, for those law firm leaders who have raised rates and laid off associates and others, might I suggest a sabbatical to go to business school. You will not sustain a business by ignoring the needs of your customers–ever! And certainly not in a buyer’s market.
Is anybody listening to the buyers?