In recent years, lateral partners looking to expand their

business have sought out larger and larger firms to increase the size

of their marketing platforms. This strategy was consistent with the

consulting mantra that “bigger is better” and it rested on evidence

that more and more corporate work was going to fewer and fewer firms.

See “The Future of the Mid-Sized Law Firm” by Daniel J. DiLucchio of

Altman Weil, at www.altmanweil.com.

But this approach to business build-out not only left laterals

with fewer options for movement, it put many of them on the mega-firm

treadmill of pressure to increase fees and billings year over year.

After years of such increases, coupled with huge salary bumps for

starting associates, a flurry of recent reports have indicated that

corporate counsel are starting to reject the “bigger is better”

approach to hiring. See “New Approaches, New Firms on Corporate

Clients’ Shopping Lists,” at www.law.com.

The new economic climate has fostered an extreme

cost-consciousness, which has led corporate clients to shop their work

to firms of all sizes that can deliver equal quality with greater

efficiency, according to one survey of 370 corporate counsel at Fortune

1000 companies conducted by The BTI Consulting Group.

In-house counsel who have spoken to conferences and trade

publications have repeatedly emphasized the new importance of fixed

fees or budgeted arrangements that some larger firms are reluctant to

consider. They say that larger firms have typically been willing to

consider cost reductions only when there are volume guarantees, which

many companies are in no position to provide at the moment.

The in-house lawyers say that they are not just looking for

temporarily reduced hourly rates. They want to see innovative

approaches that will permanently cut the cost of delivery of legal

services. These clients are looking more closely at law firms that

offer not only alternative fee arrangements, but technology solutions

for managing document review, training and development to make

associates more efficient, and dedicated client service teams that are

efficient because they know the industry and the client’s company.

The focus for these in-house lawyers is on “value” and not

hourly rates. They want law firms who will consciously aim at

efficiency innovation and budget management, and they are now organized

toward that end. See “The Value Challenge of the Association of

Corporate Counsel” at www.acc.com.

While this news about clients shopping around may be a bit

distressing for some firms, it will be welcomed by those lateral partners who may

have moved to larger firms out of a sense of necessity rather than choice. We

have already seen reports of some successful partners taking the previously

unthinkable step of leaving for smaller firms because they cannot

justify higher billings to their clients and because they need a

professional home that is innovative and efficient.

For lateral partners looking to move, the central question is

no longer the self-based, “Which national has the best platform for

me?” It is now the more client-centric, “Where can I go that will offer

value to my current and prospective clients?”