ILNews

Corporate clients are reshaping big law firms

Back to TopCommentsE-mailPrintBookmark and Share

Every client wants something.

The demands being made by corporate executives and legal departments are forcing law firms to change not only how they do business but also how they run their business.

More companies are pressuring their in-house counsel to increase efficiency and, in turn, those attorneys are demanding that outside law firms provide their services quickly, with high quality and at a low cost.

“I think that’s the new era of the legal industry,” said Keith Bice, corporate transactional practice group co-chair at Bingham Greenebaum Doll LLP. “Clients are looking for a very high level of service, but they are also looking for it to be delivered in an efficient way.”

Bice Bice

The era of long lunches, unlimited billable hours and two-week turnarounds are going into the history books. Now, law firm attorneys say, corporate clients expect an answer by the end of the day or the next day, at the latest. They want reasonable prices and not to be billed for every minute. They also look for their outside firms to use cutting-edge technology and produce work that meets a high level of excellence.

These trends were documented in a 2014 survey of corporate counsel by the Indiana Lawyer, in partnership with Benesch. Of the in-house attorneys who participated, 88 percent said responsiveness and communication was one of the “top three” qualities they wanted in an outside law firm. Fifty-six percent put pricing predictability or alternative fee arrangements in this category, and 40 percent ranked a reasonable hourly rate in their trio of most important hiring criteria.

bob hicks Hicks

The legal marketplace is “highly competitive,” said Robert Hicks, partner-in-charge at the Indianapolis office of Taft Stettinius & Hollister LLP.

Big firms are attracting and retaining corporate clients because these firms are full service, Hicks said. They offer expertise in multiple practice areas. Meanwhile small- and mid-size firms are getting squeezed and likely will not survive unless they become a boutique firm.

And big firms are competing among themselves as corporate clients rethink their own operations. Corporate legal departments are pulling more work in-house and reducing the number of outside law firms being used.

A key to keeping corporate clients and getting more work is relationships. Outside firms have to be a true partner and not just another vendor.

In the Indiana Lawyer/Benesch survey, 26 percent of the respondents said the most irritating aspect of their relationships with their most valued law firms was a firm’s inability to consider business objectives when presenting legal solutions. Corporate clients become frustrated with firms that do not act as strategic business partners.

Firms can meet this demand by investing time to learn about the corporate client’s business, said Ken Yerkes, management committee member at Barnes & Thornburg LLP. Outside attorneys have to show clients they understand the business and its challenges. As a consequence, the firms will be able to give better advice.

Cost is king

Price continues to be a top concern for corporate clients. The 2014 Chief Legal Officer Survey by Altman Weil Inc. found the majority of respondents – 62 percent – controlled costs by receiving price reductions from outside counsel. This was followed by 60 percent using alternative or fixed fee arrangements.

Providing high-end services at discount prices is creating a challenge for big firms.

Law firms can no longer concentrate solely on the work product, said Jeffrey Abrams, partner-in-charge of Benesch’s Indianapolis office. They also have to keep watch over the bill. Clients are being given cost estimates or even fixed pricing for projects, and associates are being told how many hours they have to finish the work.

However, firms still have to do good work. The need to maintain a reputation for excellence could translate into work being done off the clock.

“I don’t think we can sacrifice quality because that’s going to lose clients,” Abrams said. “We have to figure out how to operate our legal practice more efficiently than we have in the past.”

Taking care of clients

Bingham Greenebaum Doll recently invited in-house counsel and corporate clients to their Indianapolis office for an update on changes in business law. A panel of attorneys led the audience through PowerPoint presentations on employment law, taxation and intellectual property law. Afterward, clients and attorneys mingled over drinks.

The seminar was part of the firm’s effort to serve its customers, Bice said. Business owners and company attorneys were invited to get some practical advice and learn what issues they should be following.

In a competitive market with “a lot of very fine law firms in town,” Bice said BGD must be sure it is delivering the highest level of service in every category.

To help with this push, the firm will periodically bring in consultants to run surveys of corporate clients to spotlight the areas where the BGD attorneys may need to improve. The consultants hold training sessions for the lawyers, presenting them with different mock scenarios so the attorneys can build their client service skills.

Cambridge Capital Management Corp.’s executive vice president, Charles Kennedy, and corporate counsel, Amy Thurmond, attended the seminar. They said programs like this help them to stay current and better alert their own clients to issues or changes to watch.

“It’s very helpful because these attorneys work with it day in and day out,” Thurmond said of the seminar. She noted the BGD lawyers disseminate the information in a format that is easy to use, which is especially helpful for her company because it does not have a big legal department.

Hiring practices

The demands and needs of corporate clients and in-house counsel are rippling into law firms’ employee counts.

Technology has reduced the need for administrative help. Firms have become leaner. Clients are hiring other vendors to do discovery instead of turning the labor-intensive task over to their lawyers.

Business clients are increasingly setting the conditions on who can handle their legal work. Some do not want first- and second-year associates, and they require the billing rates of the third- and fourth-year associates be frozen for five years.

In response, Abrams said, bigger firms in metropolitan areas, including Indianapolis, are considering no longer hiring lawyers fresh from law school. Instead, they would focus on making lateral hires of attorneys who have gained experience elsewhere.

Law firms not hiring first-year associates would be catastrophic for the legal industry, Abrams said. And if one firm makes that move, others will follow.

Yerkes Yerkes

New lawyers will not have the opportunity to get the training they often receive in big firms, so they will be more likely to open their own practice or leave the legal industry altogether. In addition, firms that still take on recent law school graduates will worry once the new hires get experience, other firms will poach.

At the same time, businesses are asking their attorneys to become more diverse, Yerkes said.

This has law firms competing for the top minority graduates. Some are trying to lure these lawyers by lowering billable hour requirements and increasing salary offers.

The current environment is not likely to change. Corporate clients will continue to expect a certain level of service and firms will continue to deliver.

“I think the push for efficiency is here to stay,” Bice said.•

ADVERTISEMENT

  • Bunk
    "Meanwhile small- and mid-size firms are getting squeezed and likely will not survive unless they become a boutique firm." I've been a business attorney in small, and now mid-size firm for over 30 years, and for over 30 years legal consultants have been preaching this exact same mantra of impending doom for small and mid-sized firms -- verbatim. This claim apparently helps them gin up merger opportunities from smaller firms who become convinced that they need to become larger overnight. The claim that large corporations are interested in cost-saving and efficiency has likewise been preached for decades, and is likewise bunk. If large corporations had any real interest in saving money they wouldn't use large law firms whose rates are substantially higher than those of high-quality mid-sized firms.

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in Indiana Lawyer editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by
ADVERTISEMENT
Subscribe to Indiana Lawyer
  1. The appellate court just said doctors can be sued for reporting child abuse. The most dangerous form of child abuse with the highest mortality rate of any form of child abuse (between 6% and 9% according to the below listed studies). Now doctors will be far less likely to report this form of dangerous child abuse in Indiana. If you want to know what this is, google the names Lacey Spears, Julie Conley (and look at what happened when uninformed judges returned that child against medical advice), Hope Ybarra, and Dixie Blanchard. Here is some really good reporting on what this allegation was: http://media.star-telegram.com/Munchausenmoms/ Here are the two research papers: http://www.sciencedirect.com/science/article/pii/0145213487900810 http://www.sciencedirect.com/science/article/pii/S0145213403000309 25% of sibling are dead in that second study. 25%!!! Unbelievable ruling. Chilling. Wrong.

  2. MELISA EVA VALUE INVESTMENT Greetings to you from Melisa Eva Value Investment. We offer Business and Personal loans, it is quick and easy and hence can be availed without any hassle. We do not ask for any collateral or guarantors while approving these loans and hence these loans require minimum documentation. We offer great and competitive interest rates of 2% which do not weigh you down too much. These loans have a comfortable pay-back period. Apply today by contacting us on E-mail: melisaeva9@gmail.com WE DO NOT ASK FOR AN UPFRONT FEE. BEWARE OF SCAMMERS AND ONLINE FRAUD.

  3. Mr. Levin says that the BMV engaged in misconduct--that the BMV (or, rather, someone in the BMV) knew Indiana motorists were being overcharged fees but did nothing to correct the situation. Such misconduct, whether engaged in by one individual or by a group, is called theft (defined as knowingly or intentionally exerting unauthorized control over the property of another person with the intent to deprive the other person of the property's value or use). Theft is a crime in Indiana (as it still is in most of the civilized world). One wonders, then, why there have been no criminal prosecutions of BMV officials for this theft? Government misconduct doesn't occur in a vacuum. An individual who works for or oversees a government agency is responsible for the misconduct. In this instance, somebody (or somebodies) with the BMV, at some time, knew Indiana motorists were being overcharged. What's more, this person (or these people), even after having the error of their ways pointed out to them, did nothing to fix the problem. Instead, the overcharges continued. Thus, the taxpayers of Indiana are also on the hook for the millions of dollars in attorneys fees (for both sides; the BMV didn't see fit to avail itself of the services of a lawyer employed by the state government) that had to be spent in order to finally convince the BMV that stealing money from Indiana motorists was a bad thing. Given that the BMV official(s) responsible for this crime continued their misconduct, covered it up, and never did anything until the agency reached an agreeable settlement, it seems the statute of limitations for prosecuting these folks has not yet run. I hope our Attorney General is paying attention to this fiasco and is seriously considering prosecution. Indiana, the state that works . . . for thieves.

  4. I'm glad that attorney Carl Hayes, who represented the BMV in this case, is able to say that his client "is pleased to have resolved the issue". Everyone makes mistakes, even bureaucratic behemoths like Indiana's BMV. So to some extent we need to be forgiving of such mistakes. But when those mistakes are going to cost Indiana taxpayers millions of dollars to rectify (because neither plaintiff's counsel nor Mr. Hayes gave freely of their services, and the BMV, being a state-funded agency, relies on taxpayer dollars to pay these attorneys their fees), the agency doesn't have a right to feel "pleased to have resolved the issue". One is left wondering why the BMV feels so pleased with this resolution? The magnitude of the agency's overcharges might suggest to some that, perhaps, these errors were more than mere oversight. Could this be why the agency is so "pleased" with this resolution? Will Indiana motorists ever be assured that the culture of incompetence (if not worse) that the BMV seems to have fostered is no longer the status quo? Or will even more "overcharges" and lawsuits result? It's fairly obvious who is really "pleased to have resolved the issue", and it's not Indiana's taxpayers who are on the hook for the legal fees generated in these cases.

  5. From the article's fourth paragraph: "Her work underscores the blurry lines in Russia between the government and businesses . . ." Obviously, the author of this piece doesn't pay much attention to the "blurry lines" between government and businesses that exist in the United States. And I'm not talking only about Trump's alleged conflicts of interest. When lobbyists for major industries (pharmaceutical, petroleum, insurance, etc) have greater access to this country's elected representatives than do everyday individuals (i.e., voters), then I would say that the lines between government and business in the United States are just as blurry, if not more so, than in Russia.

ADVERTISEMENT