The most important trends in legal business development (Part 1 of 5)

A few weeks ago, I had lunch with the general counsel at a Fortune 500 firm, and we got talking about some of his best, and worst, experiences with law firms.  Maybe it was just the questions I asked, but he seemed to have a lot more experiences in the worst category. 

His central message was that “Social events and personal relationships just don’t matter like they used to.  These days, if a firm wants a steady flow of new business, they must deliver value.” 

In a transparent world where every GC is held accountable for results, and you’re only as good as what you accomplished last week, golf outings and tickets to Yankees games just don’t have the power they used to.  This GC’s best relationships were with firms that delivered value, that were open and honest about anticipating cost, and that sought his advice on tactics, so that he could choose the best course based not just on legal strategy but also on their financial implications.

For each new matter, his company selects a law firm based on their expertise, their history working together, the amount at risk, and their billing rates.  Several times, he returned to the idea that there are a number of firms that do excellent work, but their prices are too high for routine work.  So he relies on the high priced firms strictly for cases with a great deal at risk, and “bet the company” matters.

I was not surprised that his stories kept coming back to money, and discussions of the potential return on investment.  But I was surprised at how many firms he had worked with who did not seem to understand this very fundamental point.  They just wanted to maximize revenue in the short term, and did not consider how much better they could do in the long term if they paid more attention to giving clients what they want and need.

Some of the firms he talked about always wanted to win the case.  They couldn’t care less how much it cost, as long as they won. “It’s easy to get carried up in the moment with the need to win,” he said.  “But sometimes we’d be a lot better off if we settled sooner.” 

Other firms have a reputation for producing a blizzard of paperwork, to overwhelm the other side with the cost and difficulty of pursuing a case.  This can be a very effective strategy if you just want to win, but in many cases “it works better for the law firm than for the client, because we have to pay for them to produce all that paper.”

A few firms are notorious for spending weeks, months or years preparing for a case, and then routinely “suggesting settlements on the courtroom steps.”  In many cases, it seems they could have settled much sooner and avoided much of the preparation cost. 

This GC’s comments reflect some significant changes, which are still developing momentum.   Over the next few weeks, I will write about trends in five overlapping areas that are changing the way lawyers do business:  loyalty, relationships, process, price, and value.

This series of posts is an expanded version of an article I published in the March 2008 issue of Marketing the Law Firm, titled "Legal Sales & Service: The Most Important Trend in Legal Business Development."  To download a .pdf file that includes all five parts of this series, go to the Free Resources section of our web page.