The New Divide: Big Law Firms Change But Clients Still Don’t Believe Them
The AmLawDaily reports Study: Law Firms Have "Little or No Interest in Change," CLOs Say:
Altman Weil’s 2009 Chief Legal Officer Survey received responses from 183 CLOs–about 15 percent of the 1,222 corporate law departments invited to participate. Sixty-two percent of respondents worked for companies with over $2 billion in revenues. …
The study revealed that 25 percent of CLOs surveyed said they were putting a ‘high’ amount of pressure on their outside panel firms to change "the value proposition in legal service delivery," as opposed to simply cutting costs. Another 37 percent rated the pressure as medium, while 38 percent said there was a low degree of pressure on outside law firms to change.
When asked how serious firms are in changing their service models, only five percent of CLOs surveyed said firms are serious about changing their structure. Another 20 percent gave firms some credit for implementing efforts towards change, but an overwhelming 75 percent rated firms as having "little or no interest in change."
With the economy down, law firms have less work. That means they’ve got more time — or at least, slightly more appetite — for training new associates. As the National Law Journal reports, a number of firms — most recently, 659-lawyer firm Howrey — are moving toward an apprenticeship model, with new associates spending time attending classes and shadowing partners on client matters. Associates participating in the Howrey program are still expected to generate billable hours, though the requirements are reduced to 700 hours in their first year. And to help subsidize the costs of the $3 million training program, the firm is cutting first-year salaries from $160,000 to $100,000, with a $25,000 bonus that can be applied to repay student loans.
Several other firms have launched similar efforts, including Drinker Biddle & Reath, Dallas-based Strasberger and Price, which recently introduced apprenticeship-type programs, and Atlanta-based Ford & Harrison, whose "Year One" training program was rolled out last year.
“This combination of inside and outside reductions means not only that in-house lawyers will assume greater workloads, but also that Chief Legal Officers will need to become more strategic about triaging work, allocating resources, and, in some cases, tolerating higher levels of risk,” says DiLucchio. “And when they do hire outside counsel, you can bet that they will be shopping for value.”
The importance of price when hiring outside counsel declines as the importance of the work being done increases, according to the survey. In addition, there is a direct correlation between the importance of a firm’s capabilities and the importance of the matter to the corporation.
In normal industries, increasing value is often a matter of increasing productivity, and Law21 has a thorough post on the many new approaches for measuring lawyer productivity. On the whole, the legal industry is furiously searching for ways to provide better value to the client through new billing and compensation models — they’re even exploring a novel approach to training new hires.
Of course, I never miss an opportunity to criticize corporate law firm culture or the billable hour, but it sure looks like the big firms are trying to change. As noted by this insightful piece about the news and scientific publishing industries, it is extraordinarily hard even for a smart, adaptive, and willing organization to radically change and survive disruptions.
As also reported today, a number of corporate firms around here in Philadelphia are reducing associate and partner salaries; as I’ve discussed before, given the BigLaw business model, cutting salaries is a dangerous and desperate move. BigLaw is worried and trying to change.
Thus, I’m going to blame businesses for their unhappiness. Moreover, if you’re still unhappy with BigLaw, stop using it. Are you defending a national antitrust case? Multi-district mass torts litigation? Are you acquiring a billion-dollar public company and taking it private?
Perhaps you don’t need a whole team of lawyers working day and night. Think about it.