The traditional indicators of law firm revenue projections for 2014 have been published, and the results are not surprising. While law firms have made many (often painful) adjustments to their lawyer and administrative team numbers, as well as to their expenses and costs, the news is as expected. According to reports by Citibank and other market leaders, law firm profits will remain essentially flat in 2014. While many outside law firms will be reaching out to their clients to preserve and protect relationships, there will not be a better time for in-house counsel to raise their hands first. So given this climate, how can the GC’s office better manage, control or direct their relationships with outside counsel?
Now More Than Ever – It’s Time To Set An Agenda
Flat profits mean that law firms would like to nail down the business that they can count on in 2014, while courting and maintaining the core relationships they share with their existing clients. There has never been a more perfect time for in-house counsel to solidify the level of service they can count upon and to have their law firm(s) formally present to them what they feel that they can do for them in the new year. If the GC team uses several discrete departments within a firm, it would be interesting to invite the outside firm to come in and present as a fully coordinated team that can discuss how they work together on a day-to-day basis in the service of the client, and provide outside counsel with expectations for the new year. There is an ever-increasing number of large-scale general counsel panels being organized to discuss these issues with law firms and their business development professionals, and attending one of these programs could help jump-start the in-house counsel team’s efforts, and benchmark what other comparatively sized companies are doing to capitalize on these opportunities. Please e-mail me for an array of panels on topics that are being held nationally, most often on the coasts.
We Talk A Lot About Billing Rates And Alternative Fee Arrangements,
But Now Let’s Put Our Plans Into Action
Many clients and outside counsel dance around the billing rate and alternative fee arrangement questions because it takes time, discipline and courage to face the issue. There will be few times as perfect as the present to review billing over the past two to three years and come to an agreement on rates for the next two years. If inside counsel wishes to review/benchmark trends on billing before entering into a discussion with their outside counsel, there are several consultants who can come in to discuss trends in this area at length and in advance of your meetings. A fascinating idea would be for the inside and outside counsel to agree upon a consultant with whom to talk, and make her/him part of their joint discussion. This type of partnership approach to billing can provide untold benefits and really strengthen the relationship. And to keep it all objective – perhaps they can split the consultant’s fee!
Staffing
I always find this piece of the law firm provider puzzle interesting. If in-house counsel aren’t “over the moon” happy with those staffing their matters, now is the time to change the team. If there are issues with the lead lawyer on the team, tell him/her directly, or call the firm’s managing partner and have lunch. The firm, including the lead partner, wants to see GC teams stay on the books as clients and will do anything reasonable to keep them there. In my experience, and far more often than not, clients walk before addressing matters directly. It seems like a costly expenditure for both sides.
Results And Bonuses
It stands to reason that law firms are interested in premiums and bonuses right now in order to combat stagnant earnings. If there are projects that are particularly painful in terms of timelines or tasks on the inside counsel books that need to be addressed, bring them out for review and see whether the outside law firm will take them on for a flat fee or on a greatly accelerated timetable for no extra fees and charges.
Quarterly Reporting
Given the above potential advancements to the relationship between inside and outside counsel management, reporting on the results of these changes will be critical. Ask for a budget breakdown by quarterly summary, along with a narrative summary that highlights the service that is being delivered to the GC’s office.
I am aware that some of these steps may appear to be radical changes for many corporate clients in the handling of the rapport and relationship with their outside law firm. For those of you who would like a further reading list on 2014 law firm revenue projections or information on resources to help benchmark the services being delivered by outside counsel, please e-mail the editors of this publication, or me, and we will provide information on select resources that will be useful to you. This information is one of the benefits available to you, at no cost, as a reader of The Metropolitan Corporate Counsel.
Published December 11, 2013.
