Law Firm Clients Going Generic?
June 22, 2009 | Filed Under Law Firm Trends, Selling the GC
We have seen many stories of large-firm clients moving some work to smaller, lower-cost firms.
It turns out that this goes beyond corporate law and extends to cornflakes. The Economist
($$) drills into this issue and quotes Eric Anderson, associate professor of marketing at Kellogg School of Management, Northwestern University:
The study will alarm packaged goods groups, as the most loyal customers – those choosing one brand for more than 70 per cent of their purchases in a category – should also be their most lucrative.
“Defection is top of mind for brand managers now because they’re the most profitable customers…”
You could link that excerpt to convergence and ponder it for awhile. The good professor continues:
“Price and promotion have become so salient at retail, that what we thought was the loyal customer can be moved with discounts…”
“Past recessions have seen similar defections from top-tier national brands to stores’ private-label goods, Mr Anderson said. Academic research showed that customers could be quickly persuaded to switch by a cheaper price but took far longer to switch back.”
Let’s assume for a moment that some of this retail phenomenon applies to professional services. My question is: will the flight work return to the largest law firms once the economy turns around?
My hunch: some maybe, most no. (The efforts of certain firms to hold on by giving discounts in consideration for future work is noted, but it will get a separate post.)
Certainly these so-called “branded” firms may have to try something different, marketing-wise, to make that happen.
One idea: how about this splashed across the firm home page?
The Price of Excellence
June 21, 2009 | Filed Under In the News
Harvey Miller of Weil Gotshal gets a glowing write-up today in the Father’s Day edition of the Detroit Free Press.
GM wanted the best for their fast-track, “quick rinse” Chapter 11 filing, and it doesn’t come cheap:
Weil, Gotshal & Manges has about 25 lawyers working on the GM bankruptcy, and GM has already paid the law firm $54 million for services incurred in the past six months and as advance payments to cover some of the Chapter 11 case, according to court records.
The firm’s normal hourly rate for lawyers ranges from $650 to $950. Associate lawyers’ hourly rates range from $355 to $640.
(I say make that $640/hr associate a partner!).
Mr. Miller is clearly dedicated to his clients and craft, and while it pays well, it does come at a cost:
He once told the Wall Street Journal that he decided early in life to skip having children because it would only get in the way of his law practice.
“Children would have been an added pressure,” Miller reportedly said. “You have to have time to give them love, and I didn’t.”
Given the astounding workload (he’s still guiding the Lehman Brothers case), and the early stage of the GM bankruptcy, we might assume that Mr. Miller had to work today.
Hopefully most of the father-attorneys out there, on this their day, didn’t.
Time for Twittering Lawyers?
June 5, 2009 | Filed Under Technology
When a company hits the cover of Time magazine, it’s either best for lawyers to take notice or for the board to update the exit strategy. This time, it’s all about Twitter; I took a look at it a few months back.
Here’s two of the co-founders of Twitter, Evan Williams and Biz Stone, with their blue bird of happiness:
(Ed: OK, the picture has been *slightly* enhanced for conversational purposes.)
One observer commented that the title of the story, “How Twitter Will Change the Way We Live,” almost induced nausea. Another recently noted a Harvard Business Review report that for all of the moonshot growth of Twitter as a social network, very few really use it much:
Twitter’s usage patterns are also very different from a typical on-line social network. A typical Twitter user contributes very rarely. Among Twitter users, the median number of lifetime tweets per user is one. This translates into over half of Twitter users tweeting less than once every 74 days.
I went over 10 months from my first Twitter “tweet” to my second; my problem was when I saw the question on my Twitter home page that asks “What are you doing?” I always answered “Who cares?” Twittering seemed awfully similar to frittering. Here’s some more by Carolyn Elefant on just that.
But it’s a phenomenon, and if you want to learn more about Twitter, Jaffe Associates just published Part I of a white paper “Twittering for Lawyers,” and you can find it here. It’s very helpful, I wish I had the benefit of it before I started.
And, to hedge my bets a bit, yes, I Twittered a tweet about this post about Twitter.
Legal Secondments with a Twist
June 2, 2009 | Filed Under Law Firm Trends, New Services
Mayer Brown is providing attorneys to key clients, according to the Chicago Tribune.
Secondments, involving law firms tasking attorneys to key clients for a defined term, are not new.
One part of this one is, however:
Mayer Brown is paying some of its associates to work in-house at corporate clients such as United Airlines parent UAL Corp. and Kraft Foods Inc. But there is a catch: The associates’ pay is reduced to $60,000 plus benefits, from about $160,000, and the jobs last one year with no guarantee of further employment.
It’s clear why some may like it:
UAL was a willing participant, said Paul Lovejoy, its senior vice president and general counsel. Why not? The company gets people with top credentials and good training for free and are under no obligation to provide a permanent position.
[…]
“These are well-qualified people,” Lovejoy said. “If they stay with us, we have the advantage of a nice, long tryout.”
I applaud Mayer Brown for coming up with a creative way of packaging a severance that helps the former associate keep working and helps a client (obviously a long-standing, major client) by delivering clear added value.
Assuming this is a one-way ticket from Mayer, Brown, it seems there are three options:
1. Client likes the former associate, and has a position. Hired.
2. Things don’t work out with former associate, for whatever reason. Gone, but with valuable experience.
3. Client likes former associate, but no positions open. Associate rolls over to another term, or hangs out a virtual shingle with a key anchor client. Associate & Associates, LLP.
Not sure if Mayer, Brown has given any thought to #3, but if it happens, it’s likely with work that they wouldn’t be able to keep long-term anyway with their current cost and pricing structures.
As with other data points in the global service economy, you can hear some of the helium leaking from the associate salary balloon. When the Chi-Trib writer notes that some of the “associates were making as much as $200,000″ and that a “first-year associate at Mayer Brown makes $160,000,” you know that’s not how things work for in-house counsel with limited experience.
Unlike the #1 movie at the cineplex today, the BigLaw starting salary trend is no longer Up.
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