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Law firms are paying a lot of money to get answers to that perennial question: how to improve their relationships with clients. Prestigious firms such as Morrison & Foerster, Pillsbury Winthrop, Gray Cary Ware & Freidenrich and others have been plopping down hefty sums lately to have outside consultants conduct extensive in-person interviews with key clients. While most corporate counsel say they care about cost and quality, the studies may serve another purpose — letting clients know that the firm is keenly interested in maintaining a good relationship. “If I and fellow GCs can get the message through to outside counsel that they have to be more in tune with what counts most with in-house lawyers,” the surveys will be a success, says Michael Roster, general counsel of Golden West Financial Corp., who has been repeatedly canvassed. Firms, of course, have always cared about maintaining good relationships with their clients. But the status of those relationships has become more important in recent years as many companies have cut back on the number of outside firms they use. This practice, which has been dubbed “convergence,” is intended to increase companies’ leverage over outside counsel when it comes to negotiating rates, staffing resources and amount of time that firms can devote to them. In exchange, these companies then agree to dole out more work to the firms. According to BTI Consulting Group Inc. in Boston, corporate law departments are using 25 to 30 percent fewer law firms than they did three years ago. At the same time, corporate legal staffs have shrunk 40 percent even as companies shift more work to outside firms. “These are trends that would make law firms stand up and say, ‘I better find a way to make my clients happier,’” says Michael Rynowecer, BTI’s president. While client surveys are hardly new, the recent twist involves firms’ use of outside consultants in order to get more candid feedback from corporate clients. Last spring, Morrison & Foerster hired the Zeughauser Group to interview about 100 decision makers among the firm’s clients. While firms say the results are confidential, what they are learning is apparently making an impact. “We’re spending a significant amount of time at our worldwide partners meeting [which was held in Washington, D.C., in late October] discussing the results of the survey,” says Keith Wetmore, MoFo’s chairman. “We think they will be shaping how we describe ourselves.” Wetmore declined to say how much the survey cost other than to acknowledge that it was expensive. Zeughauser’s Mozhgan Mizban met with five of the firm’s clients in Tokyo as well as several in the United States. She is now conducting similar client interviews for Pillsbury and a couple of other prominent firms. Mizban began doing client interviews when she was chief marketing officer at San Francisco’s Cooley Godward and sought to continue the practice when she helped found the Zeughauser Group three years ago. One common refrain she hears from clients is that “they want someone who really understands their business” in addition to someone who can provide straight legal advice. Thelen Reid & Priest is another firm that has used outside consultants � in their case, the Law Firm Development Group in Dedham, Mass. — to interview their clients. Thelen Reid client teams also hold monthly telephone meetings with clients to discuss the firm’s work and any issues that client companies are concerned about. Consultants aren’t the only ones sitting down to chat with corporate counsel. Some firms interview their clients directly rather than going through an intermediary. Reed Smith, a Pittsburgh-based firm, recently hired a long-time general counsel, Julia Kopta, to the new position of director of GC relations. Other firms have set up internal structures to improve client relationships and attract more business. Pillsbury Winthrop has client teams that focus on the firm’s top 30 clients by researching and analyzing the clients themselves as well as their industries. Orrick, Herrington & Sutcliffe launched a similar program this year in which a partner and staffer evaluate the business of each client and pinpoint additional work they might pursue. “Every one of our clients has work beyond what we are doing for them,” says Ralph Baxter Jr., Orrick’s chairman. Some firms have even hired coaches to train partners in how to pitch themselves to clients. Fenwick & West has a pilot project under way in which a consultant is coaching 18 partners on how to improve client relationships. Orrick also had a coaching program but decided to drop it. “We concluded it was too superficial and didn’t go to what we really need to go to — enhancing the relationships with clients,” says Baxter. With all the attention already being paid to keeping clients happy, will the surveys be any help? It depends on the firm, says Daniel DiLucchio Jr., director of the law department consulting group at Altman Weil Inc. While some firms are very eager to creative “action plans” for clients, “a lot of firms never do anything,” says DiLucchio. Rynowecer says small and midsize firms in particular have taken steps to improve their services. Such measures include formalizing their progress reports to clients, providing more detailed invoices and making billing arrangements more attractive to clients, including caps. “It sounds trivial, but it’s a big deal for general counsel,” he says. “On average, they are trying to manage 10 to 40 law firms” while CEOs, boards of directors and other corporate overseers are keeping a sharp eye on their legal bills. Consultants say firms could do a lot more. In a 2003 survey of chief legal officers, Altman Weil asked what new or creative practices their law firms had initiated. Suggestions about ways to control costs came out on top. But the survey revealed deeper issues. “The problem is that only 22 percent of responders to the survey could identify any innovation at all,” says DiLucchio. “That’s kind of a statement in and of itself.” The trend toward greater reliance on client surveys, meanwhile, ultimately could force law firms to acknowledge a truth that the firms themselves are already dealing with: law departments are becoming more focused on the bottom line. “For a long time the law department was an area that was mysterious to the rest of the company,” says DiLucchio. “That veil of mystery has been pulled aside.” Ralph Savarese, from McMorrow Savarese Consulting in Santa Ynez, says corporations increasingly regard law firms as simply another supplier of goods and services and want to have more control over their behavior. Savarese says large corporations with expensive outside legal budgets have tried to rein in costs by forcing firms to adhere to strict guidelines. For some time they have produced hefty outside counsel manuals specifying such things as how many people should be on a deposition and requiring prior approval to add staff to a case. “These manuals are designed to get law firms to line up [the way] a non-legal executive wants,” says Savarese. “They’re fed up with spending all this money on legal costs.” While some corporate counsel say that a law firm’s specific rates are not their top concern when it comes to choosing outside counsel, billing rates and structures are likely to become more of a consideration in the future. “I believe that some firms will be pricing themselves out of the marketplace,” says Jonathan Mack, deputy general counsel for litigation at Hewlett-Packard Co. Indeed, billing rates at some firms have increased by 25-30 percent over the past three years. “That’s not sustainable,” says Mark Brazeal, deputy general counsel at Broadcom Corp. But while clients have been complaining about costs and the need for alternative billing models for years, it may be a while longer before they see any dramatic change. “Law firms feel pressure but they don’t feel pain,” says DiLucchio. “Until it gets painful, there won’t be the kind of action corporate counsel are looking for.” Brenda Sandburg is a senior writer at The Recorder , which publishes GC California magazine.

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