The Client Survey Says…
September 26, 2007 | Filed Under The Client Speaks, Selling the GC
The customer may not always be right. But she is still the customer.
This is clear from the recent Chief Legal Officer Survey from Altman Weil and Lexis Nexis. Your humble correspondent was recently interviewed about this survey in the latest issue of Legal Industry Insight, published by Lumen Legal. A reprint of the interview is available here.
The stark reality of the survey for me is on page 7, in the response to the question “What steps have outside counsel taken to improve the working relationship with your Law Department?” A full 40% said “None.”
My take on that in the interview:
“Firms and relationship partners need to have an ongoing dialogue with CLOs and key managing counsel. This provides a foundation for being proactive about finding solutions,” says John Wallbillich, founder and CEO of Lexvista Partners, a legal advisory firm. “Once you improve your communications with clients, bringing forward ideas to improve services or offering topical training to in-house counsel will distinguish a firm from the 40 percent who are doing nothing right away.
“I think there a lot of CLOs who would fall off their chairs if a law firm came to them with unsolicited cost-savings or best practice ideas.”
The point here is not the exact percentage. It is the perception that exists, in almost half of the CLOs surveyed, that law firms are essentially taking the client for granted.
Lumen Legal CEO David Galbenski is clearly one who gets this, and has been a first mover in providing options for firms to take a closer look at how they deliver services and consider unbundling some strategically:
“Law firms that do that get more business because they build trust with their client. They show that their firm is doing what is in the best interest of the corporation they represent. It will ultimately get them more work and lead to greater profitability, even though they initially ‘gave away’ some margin by bringing in contract help.”
In a time of record profits for many firms, it’s understandable to be wary of doing anything to stop the music. Sooner or later, I expect, many clients will start to change their tune.
Update (28 Sept 07): New Conde Nast magazine Portfolio also takes a kick at the can of outside counsel.
Your Pad or Mine?
March 26, 2007 | Filed Under The Client Speaks, Law Firm Trends, Managing
Are the legal bills you get in the mail today what you are expecting?
According to UK’s The Lawyer, some GCs are growing increasingly concerned over law firm bills, and the size and contents thereof.
In a recent study by that publication, 69% of in-house counsel surveyed had some concerns about the padding of bills; the number rises to 73% when GCs alone are asked.
While there was no definition of “padding,” some participants said it may not be fraud, but more like a failure to scrutinize bills before sending them and what constitutes “good time” from other charges.
Here are some of the responses:
– “I’ve been billed for a conversation between colleagues. And I’m not paying for a junior to learn the ropes.”
– “There’s a lot of time on bills that gives general counsel the impression of padding because too much junior training and learning time is billed and not written off.”
– “Because of the pressure on partners to market, as well as to be legal advisers, they don’t often monitor the bills closely enough, so junior staff might be going off on wild goose chases that the client will be billed for.”
So while there is much talk of rising rates and starting salaries, the clients speak.
It will be interesting to see who is listening.
Cisco GC Talks Real Legal Tech
January 30, 2007 | Filed Under The Client Speaks, Law Firm Trends, Technology
The 25th anniversary LegalTech conference is going on in New York City as we speak. Many good people are speaking; good solutions are on display.
Moving West, there’s a different take on legal tech. It’s in the form of a speech by Cisco GC Mark Chandler (hat tip: WSJ Law Blog).
Simply stated, the speech defies a capsule summary. Every in-house lawyer should read it; every law firm managing partner should make it a discussion piece at the next firm meeting. Mr. Chandler isn’t talking about incremental tech-driven change in the approach to delivering legal services to business.
The phrase “paradigm shift” is overused, but that is exactly what Mr. Chandler is talking about: using technology to lower costs and improve legal services, current billing conventions be damned.
Print out Mr. Chandler’s speech, and read it with a highlighter. It really should be the starting point of a discussion. Not a debate, because change isn’t negotiable for forward-thinking GCs.
My personal favorite is this excerpt:
The bottom line is that I’m driven by the same need for productivity improvements as is the rest of the company. It’s simple. As Cisco gets bigger, the share of revenue devoted to legal expense needs to gets smaller. Letters from law firms telling me how much billing rates are going up next year are therefore totally irrelevant to me, or as we say in Silicon Valley, orthogonal to my concerns. Think about it: not one of the CIOs of your firms expects to get a letter from Cisco explaining how much more our products will cost next year. And not one of our suppliers comes to us to tell us how much their prices will go up next year. So from my perspective, I don’t care what billing rates are. I care about productivity and outputs.
I have also written about the annual law firm rate-ratchet-racket. Some firms still see annual increases (up to 20%!) as an intrinsic part of the their business model. Good luck with that…
One last thing in the vein of full disclosure: I have seen a beta version of the Legal On Ramp site Mr. Chandler mentions; content from The Wired GC may be offered to participants.
Sun’s CEO on Lawyers
January 15, 2007 | Filed Under The Client Speaks, Managing
Rarely do CEOs speak directly about their in-house lawyers. Rarer still is when they talk about their impact on the business.
But rare is a good description for Sun CEO (and blogger) Jonathan Schwartz. He was interviewed this weekend in the New York Times. Mr. Schwartz was asked about how many companies went astray in the options-dating imbroglio:
Q. Did the Valley get bad legal advice regarding options practices?
A. I’ll give you my view on legal advice. Lawyers are the very core of Sun Microsystems. I mean in essence we’re a company that monetizes intellectual property. There’s a lot of lawyers involved in helping us think through open source licensing arrangements, you know, customer indemnity. These are not simple things. But at the end of the day, when folks inside of Sun come to me and say, a lawyer wouldn’t let me do X or Y or Z, my response is, well, then why don’t I move headcount under the lawyer, because who’s making the decision here — the lawyer or the businessperson? So legal advice is just that, it’s advice.
Wow. That’s refreshing on three fronts. First, Mr. Schwartz gives a nod to the IP underpinnings of the modern tech-driven company. Score one for the lawyers. Next, Mr. Schwartz apparently doesn’t like line executives who impassively act like the lawyers are running things. (This is known in the trade as blame ‘em when things go wrong and ignore ‘em when things go right). Finally, Mr. Schwartz flips the subject over and also notes that legal advice (in general, presumably) is advisory, not mandatory.
Sun GC Mike Dillon apparently has an enlightened (and demanding) client. That’s about all you can ask for.
(Update 17 Jan 07): Carolyn Elefant, writing yesterday at Legal Blog Watch, has a slightly different view:
So while lawyers can add value, at the end of the day, it’s the business folks who run things. And if business doesn’t want to listen to the lawyers, they don’t have to — because legal advice is merely advisory. With that kind of attitude from clients, being a GC can’t be easy …
I actually inferred Mr. Schwartz’s comment this way: in the context of business decisions, legal advice is just that. The business person is paid to be responsible and accountable.
For purely legal matters, I’d bet the GC is similarly responsible, perhaps relying on advice from other lawyers (inside or outside).
The reality for the GC is that many business matters have law mixed in for good measure. It makes the job challenging (and interesting). But, as Ms. Elefant points out correctly, definitely not easy.
But if a company wants a lawyer running the show, make him or her CEO. Hmmm…, sounds familiar.
The Client Speaks — Wilbur Ross
November 7, 2006 | Filed Under The Client Speaks
A new feature today; from the mouths of clients oft time come gems.
Appearing in a New York Times article about the merger integration of steelmakers Mittal and Arcelor:
“Any management designed by lawyers is much more complicated than it needs to be.”
— financier and Mittal board member Wilbur L. Ross.
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