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?”