February 2016

BTI_Client_Service_All-Star_MVP_Logo_2016I wrote my first blog post on April 10, 2005, and I have published 968 posts since then.  To be candid, not all of the posts related to client service issues, the blog’s name notwithstanding.  But a good many of the posts have addressed client service.  It has been a passion of mine since long before I even heard of blogging, let alone actually did it.  When that passion is recognized by those at whom and for whom it is directed, it is a very special moment.  Actually, it is quite humbling.

I am honored and humbled to have been recognized as a Client Service MVP All-Star for 2016.  The MVP designation is for those who have earned this distinction multiple times.  I have been fortunate to have been named a Client Service All-Star in 2012, 2014, 2015 and now in 2016.  The MVP bar has been set by H. Rodgin Cohen, the Senior Chairman of Sullivan &  Cromwell, who has been named an All-Star 14 times, a truly admirable accomplishment.

What makes this recognition truly special is the way in which BTI Consulting about identifying the All-Stars>  From the report (available here):

No attorney or firm can self-nominate, self-refer nor pay to be included. The only possible avenue for becoming a BTI Client Service All-Star is for corporate counsel to identify an attorney who stands out—above all the others—for delivering superior client service, in an unprompted manner. Only clients select and decide.

Clients are the ultimate, indeed the only, judge of value and service quality.  I am privileged to represent great clients, and this recognition means that I now have to set the bar higher.

Great article by Sara Randazzo in today’s Wall Street Journal, Legal Fees Cross New Mark: $1,500 an Hour Set aside the wisdom of such rates when firms provide discounts on demand and realization rates average near 80%.  What stands out for me is the utter hubris of this statement by John Altorelli, previously of Dewey fame and now speaking for DLA Piper:

We just raise them every year.

There must be a law somewhere that requires firms to do this.  I missed that day in law school, apparently.  But again, set aside the wisdom of increasing rates every year.

It makes on wonder whether lawyers understand the concept of public relations?  Does DLA understand that many clients don’t like the “we just raise them every year” mantra they hear from outside counsel and instead think they, the client, get to decide whether rates increase or not?

I used to ask why clients didn’t say no to rate increases.  Now, more and more clients are doing so.  I wonder how many more will do so when they see rates like these.

Make v Buy v Create

Most complain that their law firms are not meeting their needs. Some law departments bring work in-house.  Some change law firms.  But the problems persist.

Outside the law department, companies solve this kind of problem by creating a solution. Often, the company’s engineers work with a willing vendor to find the right solution.

Is the time coming when an innovative law department will choose to follow this path?

I recently read the 2016 Report On The State Of The Legal Market by Georgetown Law and Peer Monitor. I was struck by the clarity of the message being sent by clients, and equally struck by how law firms seem not to hear it.  Consider these messages.

  1. More work is going places other than law firms.

Law Firm Demand chart

 

 

 

 

 

It is not as if the amount of work inside law departments is less or even the same.  The amount of work is greater than ever and increasing every year.  Where is that work going?  Certainly not to law firms.

2.  Law Firms keep raising rates. Clients refuse to keep paying.

Law Firm Rate progression

 

 

 

 

 

Notice how the gap between standard rates, billed rates and collected rates is increasing.  That is a reflection on client pressure to reduce spend and their refusal to “go along” with regular rate increases.  This message is made crystal clear here:

Law firm realization

 

 

 

 

 

Law firms are collecting a decreasing percentage of their standard rates every year.  What message to they believe is being delivered?  The fact that the percentage of billed v. standard is declining so precipitously means law firms know that clients won’t tolerate being billed higher amounts, but the continual rate of decline means firms are not addressing the fundamental problem or are doing so ineffectually.

At the same time, client satisfaction  with law firms’ client service is declining.  From a recent post on the Mad Clientist (BTI Consulting):

56% of corporate counsel issued RFPs for law firms in 2015, up from 45% in 2014. We now face a majority of clients using RFPs to hire new law firms. The increase is due directly to the rock-like drop in client service performance clients are experiencing.

What does it all mean?

It means the greatest revenue opportunity for law firms is not raising rates.  The greatest opportunity is increasing realization rates.  Perhaps the road to doing so is by improving client service.  The combined data certainly suggest that clients are delivering a clear message.

I wonder if  law firms need to have their institutional hearing checked.