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Why In-House Clients Fire Firms
The American Lawyer
In most legal markets, but especially the current one, law firms want to keep their clients. It's an obvious goal and one that, for the most part, they reach. But not always. The separations can be painful, costly on the margins, and, if the firm is paying attention, instructive.
So why are firms losing important, blue-chip clients? Let us count the ways:
The quotes come from a new report by Acritas, the U.K.based market research firm. They are verbatim responses from aggrieved in-house lawyers who were explaining why they stopped using a law firm. Working from a call center in Newcastle, Acritas interviews a couple thousand general counsel in about 45 countries each year on their experiences with the law firms they've hired. From this research they compile a ranking of law firm brands and ask a variety of questions about the attitudes and practices of clients and their legal service providers. This year they asked about firing firms.
The answers, of course, were one-sided. And no doubt there were some prickly customers in the bunch. Nonetheless, they are worth heeding, for the firing phenomenon is no longer isolated: Thirty percent of the in-house counsel reported dropping at least one firm in the last year. The fired firms can't be regarded as trivial. I've read the list, and it's a litany of the rich and famous. Nor can the unhappy clientsmainly big companies: 20 percent reported revenues of more than $6 billion, and another 40 percent reported more than $1 billion.
Every unhappy client is unhappy in his or her own way. But the reasons listed tend to clump in four categories: too expensive (21 percent); bad advice or no expertise (18 percent); poor service (15 percent); and lost a key lawyer (11 percent). The other big categorythe job endedaccounted for 16 percent.
Taking these statements at face value, it's the unforced errors that seem maddening. We all recognize these faux pas in other lines of work: fumbling in the open field; overcooking a roast; knocking an hour off your recorded time in a marathon. Skill players can't afford to hurt themselves, and that includes law firms. The clearest example of this boneheaded phenomenonletting a client leave when a partner retireswas cited repeatedly. "The primary attorney who had good industry knowledge and knew us well is retiring," said a billion-dollar manufacturing client. "They haven't done a good job of transitioning, so I feel our work is at risk." The client went elsewhere.
So what was the hard part for the firm? Knowing that the partner was retiring or checking with the client on how well his or her replacement was faring?
Sometimes the problem is personal. "[The lawyer] did not know how to play nice with others, so we don't use the firm anymore," said the $6 billion insurance company client. Sometimes it's systemic. "[We stopped using them] mostly because of cost and efficiency," said the billion-dollar health care client. "They put their own interests ahead of their client's interests."
Pretty damning jibes, but hardly impossible to address by firms that are aware of the complaints and willing to address them. Awareness, of course, requires a working feedback loop that connects to a firm's client relations operation, not just a partner riding solo. The clients won't mind being askedwho doesn't relish a chance to grade another's work these days? Plus regular assessment and measurement are part of the life of Global Inc. Indeed, the oddity is when legal services aren't part of a metrics matrix. There's not much benefit for anyone when the only thing assessed is the size of the firm's bill.
This article originally appeared in The American Lawyer.