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Disgruntled Customers

Back in the day, a law firm’s relationship with its clients was often a cozy affair. Senior corporate managers and senior partners belonged to the same country clubs, and the legal bills that the firms submitted were seldom subjected to close scrutiny.

Times have changed for sure. Corporations these days want more value for their legal budget and are demanding greater financial accountability from the law firms they hire.

A recent survey reveals that corporate counsel aren’t happy with the service they’re getting from their primary law firms. And they’re doing something about it.

The report – entitled “How Clients Hire, Fire and Spend: Landing the World’s Best Clients” – was conducted by BTI Consulting Group of Wellesley, Mass. BTI over the past year interviewed more than 200 corporate counsel in large companies.

Only 30.7 percent of the respondents in the newest survey said they were satisfied with their primary law firms, compared with 43.5 percent a year ago.

This year’s decline is the sharpest in the six-year history of the survey, according to BTI president Michael Rynowecer.

“Clearly, the market is changing” Rynowecer said. “Clients have new and different expectations. And law firms need to be aware of that.”

Fewer Firms, More Competition

One of the major trends identified by BTI is an effort by corporate counsel to trim the number of firms they use. The average company in the survey used 52 law firms last year – two primary firms and 11 secondary firms, along with 39 niche or case-specific legal providers. By 2008, Rynowecer said, the same firms expect to use only 32 firms – two primaries, six secondaries, and 24 others.

Other data in the report show that the distinction between the top-shelf firms and the second-level ones is not as clear as it used to be. For the first time in the six years of compiling the report, BTI found that clients in 2005 paid more money to secondary firms – 43.1 percent of their total outside legal bill – than to their primary ones, who received 39.1 percent.

The survey also found that over the previous 18 months more than half of the respondents – 53.7 percent – had either replaced or demoted one of their primary firms. And as Rynowecer pointed out, clients seldom feel obligated to inform firms of their reduced status.

“Law firms never get fired,” he said. “They just don’t get more work.”

The numbers in the report clearly show that clients are shopping around.

“As clients lose faith in their primary law firms, they look to other sources for help with new and higher priority legal matters,” the report concluded. “Secondary law firms, those that capture an average of $600,000 to $700,000 per year, rapidly become the escape valve for unhappy clients.”

Why Clients Are Unhappy

According to Rynowecer, the reason why many companies are unhappy with their outside legal work is not necessarily dissatisfaction with the legal product they’re receiving. Instead, he said, “what we hear the most is, ‘Law firms do just what we tell them to do. No more and no less.’ They want law firms to be more proactive.”

The firms that get the highest marks from corporate counsel, he said, are the ones that devote the most time to “client outreach.” Clients prefer firms that encourage them to answer periodic questionnaires about the service they receive, that devote “client teams” to understanding their business, and that update clients regularly on changes in the law and other matters that might affect their businesses.

At Cleveland-based Thompson Hine, for instance, “client service” teams are headed by the partner who works most closely with a particular client. They’ve also developed a formal client survey program designed to identify what clients want from the firm.

The information gleaned in the surveys is often very specific, identifying preferences for billing dates, preferred communication modes, and times of day that are good and bad for phone calls, according to Avidas Jasin, director of business development at Thompson Hine.

The firm, which numbers 370 lawyers in eight offices, also emphasizes as much face-to-face interaction with clients as possible.

“We encourage our teams to meet with clients off the meter to learn about the clients’ business and the kinds of things they might be facing,” Jasin said.

Boston-based Goulston & Storrs, which has 180 lawyers and offices in three other cities, also uses teams that sometimes visit clients at their own sites for noontime “lunch and learns” where the firm provides food and information.

“We know that most law firms get fired because they don’t provide good enough service, not because the lawyer isn’t smart,” said Beth Cuzzone, the firm’s director of business development. “Our department isn’t here just to find new clients. We also try to keep the ones we’ve got.”

Another firm that uses the client-team approach is 430-lawyer Jenner & Block, which is based in Chicago and three other cities.

“Our concept of client-service teams is rooted in embracing the concept that we want to exceed client expectations, not just meet them,” said Theresa Jaffe, the firm’s chief marketing officer.

She said the firm’s client-service program focuses on regularly scheduled face-to-face meetings with clients, as well as quarterly measurements to evaluate how well client needs are being met; and “value-added” services, such as continuing legal education and legal alerts.

Devoting greater attention to client needs can be difficult for busy lawyers struggling to meet their billable-hour requirements. But Rynowecer has found that “the lawyers with the best client service usually have high billable hours.”

“Lawyers are very busy trying to serve their clients’ current legal needs,” said Jasin of Thompson Hine. “It’s easy for them not to think of the broader needs that a client might have. But they really need to do that.”

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Checklist for Improved Client Service

The BTI report proposes a five-point checklist for law firms on how to improve client service:

  • Be cost-effective. Pay more attention to clients’ budget restrictions. Manage cases to avoid duplication of effort. Focus on cost-effectiveness. Don’t “over-lawyer.”
  • Improve communication. Return phone calls and e-mails promptly. Include clients in decision-making processes.
  • Provide “bench strength.” Assist corporate law departments, which have experienced severe staff cuts in the past five years as the result of consolidations. Consider a “loaner” program in which the firm loans an associate or junior partner to the client’s in-house legal department.
  • Offer a full-service approach. As clients are moving toward fewer law firms better able to provide one-stop shopping, small firms can compete by forming partnerships or associations with other firms offering complementary services.
  • Utilize technology. Employ user-friendly technology to improve communication with clients, including electronic billing and adherence to clients’ billing wishes, etc.

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