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Mid-size firms missing out

|Written By Michael McKiernan

Mid-size law firms are missing out on new opportunities to grab a bigger share of corporate work, says a U.S. legal marketing leader.

‘More and more companies are willing to make the leap and hire smaller firms,’ says John Remsen.

Speaking at the TAGLaw conference in Toronto last week, John Remsen, president of the Remsen Group in Atlanta, said many firms in that range lack awareness of initiatives such as the Association of Corporate Counsel’s Value Challenge that aims to reduce legal costs and improve clients’ value for money.

“It amazes me that mid-size firms aren’t paying more attention because they have a tremendous opportunity with what ACC is trying to do.

“Corporate firms are starting to ask why they should have to pay $300 an hour for an associate in Manhattan when they can get a partner in Toledo, Ohio, who’s an expert in my matter. More and more companies are willing to make the leap and hire smaller firms.”

But at the same time, law firms need to get more in tune with their clients if they hope to survive in the changing marketplace, said Darryl Cross, vice president of client profitability at LexisNexis, who also spoke at a conference session on the future of the legal industry.

During the talk, he presented a worldwide survey of private practice lawyers and corporate counsel canvassing opinions about the recent downturn that showed wide disparities in perceptions about the responsiveness of law firms.    

“The future of the legal industry will belong to the firms that are most closely aligned with their clients in terms of their perceptions, value, how their businesses work, and how profitable you should be,” Cross said.

The survey found just 38 per cent of in-house counsel thought law firms had been responsive to their concerns about costs and fees in the last 18 months. But that number

jumped to 57 per cent when it asked lawyers the same question. Just 21 per cent of lawyers thought firms were too profitable, compared to 58 per cent of corporate counsel.

“Your biggest goal should be to make sure these are equal responses,” Cross said. “There is a difference of opinion on how one side is doing. Whether there is reality in that is not important. It’s the difference that matters. You’re out of sync with the clients.

That’s the biggest danger.”

According to Cross, the gulf in perceptions is a symptom of the frustration corporate clients feel in the search for predictability when purchasing legal services.

For example, a small rise in hourly rates, which many firms consider an appropriate response to tough economic times, doesn’t cut it for a company that may be in danger of going under, he said.

“They’re getting hammered, and we’re championing ourselves because we only raised billing rates by three per cent instead of six per cent. You look at things year to year, and they aren’t as good as they used to be. Corporations look right now and say things are terrible.”

But Cross also noted there’s a relatively simple solution that can bridge the gap. “You need to go to your clients and ask them questions, as uncomfortable as they might be.

They’re probably going to say no, and that’s your chance to say, ‘What can we do to help?’ That’s a very simple conversation, but most law firms don’t have it. They don’t want to know.”

For his part, Remsen agrees that client feedback is critical to companies’ relationships with law firms. “Clients will tell you where you’re screwing up, where you can enhance the relationship,” he said. “You’ll be surprised at how positively received you are, as long as you leave the billing attorneys at home.”

In Remsen’s view, law firms have nothing to lose because, whether or not they summon up the courage to ask for feedback, clients will make their own decisions. “I hear so many firms say, ‘Well, they’ll tell us when they’re not happy.’

That’s a pretty risky strategy because there’s a good chance they’re going to drift away and find a law firm that does pay them more attention.”

The host of this year’s TAGLaw conference was Blaney McMurtry LLP, the only Ontario member of the global alliance of 150 independent law firms. The TAGLaw network, which was established in 1998, mainly comprises mid-size firms.

According to Remsen, firms will also need to put more focus on the business of law, as opposed to the practice of it, in the future. As a result, they’ll need to start preparing and, more importantly, using strategic plans, he said, adding that not enough managing partners and practice group leaders have formal job descriptions.

“A lot of lawyers bristle at the notion of the business of law, but you’re running a business. It is a profession, but the most successful law firms are bringing business practices to the practice of law.”

Cross, meanwhile, said firms will have to take the initiative to bring law students up to speed given that his survey revealed that 65 per cent of them feel unprepared to do the business of law.

“They’re not taking courses in law school about how to better service clients, how to keep research costs low, how to create alternative fee arrangements, and use technology to do all these things.”

In response, he suggested law firms could farm out young associates to the legal departments of large companies or create a buddy system that pairs them with top clients. In that way, they would learn what clients really want while forming lasting relationships with them.

In addition, Cross said the rise of social media will increase the importance of relationships with networks condensing to a small group of trusted friends and colleagues.

“Instead of talking to millions of people, we’re just talking to 100 friends and clients, and they’re talking about referrals. If I don’t like the way they behave, I can stop paying attention to them.”

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