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March 18, 2006

BigLaw's Mixed Reviews, "Mercy-Theft", Vanishing Wimpy GC's, The BTI Consulting Study and McMurray's Take.

For years I've seen Fortune 500, European companies and big privately-held firms leave large law firms for high-end boutiques and, more recently, even tiny niche and solo firms. The reason for the switch was almost always service--not price. More importantly, these clients stayed at the smaller firms (between 5 and 100 lawyers). They stayed for service alone. This was service of the non-cookie cutter variety by first-rate lawyers with great credentials who took service seriously, and were willing to do what it took to keep those clients: fabulous, dogged, creative, and even "soulful" work by often short-handed lawyers who could work pretty much at any firm they wanted. In fact, the service at these smaller firms was so good that the BigLaw firms they stole from would never have a clue about how good the new service level was--and BigLaw might even scoff at it if it did know. Firms I knew really did make themselves available 24/7, and they weren't ashamed of it. We all wanted those BigLaw clients to stay.

They stayed. Great clients were leaving their traditional law firms, or trying something new, and taking a chance smaller firms with the same types of lawyers with corporate experience. The syndrome (maybe not a trend) benefited my firm and other new corporate law shops starting in the early 1990's. The 2 main reasons it happened, I think: there were much better lawyers at smaller firms who left much larger firms to keep doing high-end stuff; and the GC's at the clients were smarter, more sophisticated, more self-assured and more willing to use "unknown" lawyers who could get things done, no matter how large those law firms were. In-house counsel changed literally, figuratively. If we lawyers are a bit introvertish, risk-averse and hesitant generally, in-house counsel (who in many cases Fortune 500 management often joked about and thought was a pretty "can't-do" lot anyway) in the 1960-1990 period were even wimpier than lawyers at law firms. That changed, too. GC's started thinking and acting like law firm partners.

It happened slowly. At first I saw clients leave BigLaw for smaller firms with federal court and litigation work. And then IP, environmental and corporate tax. International was next and that was a big next. Our larger clients from our "old" firms stayed at the "new" firm after I completed a project. Or gave us new projects. And then an article or two would appear in the Wall Street Journal about a tiny litigation firm in NYC no one had ever heard of working on 5 cases for DuPont or GE. I was delighted, and torn--hey, I love BigLaw. We refer projects to them if the service and talent (rare combination, though) are there. My friends are there. We need their associates, too. BigLaw still has the best lawyers in the world. I will build a BigLaw firm myself if I (1) can do that, (2) keep the service level of my current firm and (3) convince my Pittsburgh partner Julie McGuire. Nothing evil about BigLaw, and a lot of the disdain fired at them in the blogosphere is sour grapes of all varieties.

Now I just want BigLaw's clients--especially publicly-traded ones, if they are functional. Sure, I want to further prove my point, further build my firm. I also want to use quite a few of BigLaw's better ideas and models. Listen: a lot of this is just "mercy-theft"; some of the best companies in the world are getting systematically abused by BigLaw--again, on service, not price. If the service were even barely adequate, the price would make a little more sense. Many (not all) of the senior lawyers at those firms have not kept their skills up, they don't care, they never really wanted to be lawyers in the first place, and they are teaching associate lawyers to not care either. NOTE: "Smaller firm" does not mean good service, by the way, and it often times means just the opposite. Most medium size and smaller firms are just as bad--in fact, I would say even worse, because they are under less pressure and much less of a microscope. What we are talking about here is the care and feeding of BigLaw clients. Because I want them at our firm.

Finally, we look for reliable numbers on the dissatisfaction syndrome but we all fall short there. The recent welcomed/dreaded BTI Consulting Study (see this post and links) concluding that 52% of Fortune 1000 companies had fired their "primary" outside counsel in the last 2 years sounded too good to be true. According to the Deborah McMurray Associates blog in a post yesterday "Are companies really firing their outside law firms in record numbers?", her experience and a recent interview with Rees Morrison (linked to this blog) suggests that BTI is telling all law firms what they want to hear. There's business in them thar hills. My friend Moe Levine tipped me off about Deborah. A Dallas-based marketing consultant, McMurray is a facilitator of the Martindale-Hubbell/Lexis Nexis Counsel to Counsel forum. Like me, Deborah isn't in the statistics business. And M-H/L-N naturally relies on revenues from BigLaw firms, many of whom cavalierly disregard the best clients in the world because weak, scared and/or boxed-in GC's either don't know any better or are not positioned well enough with management to make a change. So I'm not sure where Deborah's coming from--and it probably doesn't matter--but I agree with her that these BTI stats are a bit high. Maybe way too high. Still, I see many Fortune 500 clients mixing it up a lot more and leaving or limiting their use of BigLaw firms. I expect it to continue.

Posted by JD Hull at March 18, 2006 06:23 AM


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