Big Law and the Old Gillette Strategy: a Response to the Open Letter From 25 GCs

Dear General Counsel,

It’s great that you’ve launched “The GC Thought Leaders Experiment” examination of what works best when engaging outside law firms. Bravo! I look forward to reading your findings; I’m sure we will all learn a lot.

Might I make a plea for you to launch a parallel exercise, one exploring the best ways for corporate counsel to take more work away from law firms, instead executing it in-house (or through non-law-firm vendors)?

I suggest this because achieving your ultimate goal—enhancing value delivered by outside counsel—requires two types of change: change in how you as clients engage outside counsel, and change in the fundamental inner workings of law firms. The former is the focus of your just-launched effort addressing preferred provider panels, flat fees, sharing performance evaluations, etc. The latter, I believe, offers even greater potential for improvement and, paradoxically, the only way it will happen is if you take more work away from law firms.

How can this be? Surely law firms are the ones best positioned to address their inner workings? Well, no. They can tinker but they are currently incapable of fundamental change. According to the recent Altman Weil Flash Survey, less than half of law firms report they have significantly changed their approach to efficiency of service delivery since the recession. Why? It’s not spelled out directly but the same survey reports that over 60 percent of firms agreed with the statement “we are not feeling enough economic pain to motivate more significant change.”

To be clear, the logic for taking work from law firms isn’t a sadistic desire to ratchet up the economic pressure. Rather, it is because taking work away from law firms is the competitive response required to counter the Big Law strategy of the last two decades. You see, Big Law has been following the old Gillette strategy: add features and raise price. In the shaving world, it started in 1971 with the world’s first twin-blade razor. This was followed by lubricating strips, spring mountings, micro-fins, three blades, blades with stronger edges, five blades, blades that were 15 percent thinner, blades arranged together more closely, ball mountings, low-resistance coatings, enhancing lubricating strips, etc. In 2012, Dollar Shave Club launched. They offered a basic twin-blade razor at $1.50 when Gillette was charging over $6 for its latest cartridge. Gillette lost share dramatically, and in response they cut prices across the board, started promoting their lower-cost offerings more and even introduced their own equivalent to Dollar Shave Club, initially branded (not especially imaginatively) as the Gillette Shave Club.

Analogously, Big Law’s offer has progressively protected clients from ever-less-probable risks—exposures which many clients would be better off ignoring (that is, effectively self-insuring)—at an ever-increasing price point. Taking work from Big Law is the equivalent strategy response to Dollar Shave Club’s launch and growth. Only by removing demand from the Big Law marketplace will firms have the incentive to undertake the real changes required to deliver greater value to clients. As you take more work away, firms will have to fight harder over what’s left, and in doing so will start to re-engineer their workflows, invest seriously in knowledge management, change how lawyer performance is assessed (i.e., get away from billed hours), deploy labor-saving technology, and relentlessly push work to the lowest-cost appropriate resource.

Of course, taking more work from law firms isn’t without its challenges. Corporate legal departments have struggled in the past to achieve the efficiencies insourcing and outsourcing to non-law firms offer. Hence the focus of this proposed second study would be to answer questions like: what are best practices in hiring from the outside, what’s the best “pyramid structure” internally, how are LPOs best leveraged, how can workflows be streamlined, what technology investments are worthwhile?

Don’t expect law firms to change fundamentally; they can’t; you’ve got to create the conditions that make it necessary for them to do so. From there, necessity—the mother of invention—will take over.

Respectfully yours,

Hugh A. Simons

Former Big Law leader and (occasionally disgruntled) Big Law client

Cambridge, Massachusetts

Hugh A. Simons is a strategist and veteran professional services firm leader. He is a former senior partner, executive committee member and chief financial officer at The Boston Consulting Group and the former chief operating officer at Ropes & Gray.