The disconnect between clients and large law firms is so significant and persistent that a growing number of clients are considering bringing more legal business in-house, exploring alternative legal service providers and are contemplating doing business with smaller firms that offer greater flexibility, reveals a report.
General counsel feel that large law firms make little effort to understand their business, do not appreciate the budgetary constraints they face, and receive little help when analyzing the complex portfolio of legal work given to them. Indeed, the report points out that not a single client was satisfied with what law firms provide.
“Earlier research commissioned by LexisNexis looked at barriers that inhibit change in the industry and a theme that consistently emerged was a disconnect in how law firms listen and act on the voice of the client,” said the report which was conducted by information provider LexisNexis and Cambridge University’s Judge Business School. “That this voice is not always heard, or can become distorted during interactions is both puzzling and potentially ominous, given how critical client relationships are for law firms.”
Part of the problem is that while both law firms and clients are aware of the disconnect, their interpretations of the magnitude and underlying causes are far from the same. Echoing findings by a 2016 global research study by Deloitte, the LexisNexis study noted that clients want solutions to their problems, and large law firms are not providing them. In fact 40 per cent of clients noted that senior partners of their law firms appear to lack more than a basic knowledge of their business. Several general counsel even went so far as to describe their interactions with partners as superficial, with partners often poorly briefed.
Clients want relationships, and do not view transactions as the essence of the relationship. Rather, clients look for law firms to “connect the dots, convey the bigger picture, suggest ways in which the law firm can create value for the client’s business and not just reduce costs,” noted the report.
Law firms don’t see it that way. They tend to focus on the transaction, not relationship-building, and many law firms see no need to foster relationships. Law firms provide advice, and it’s up to the clients to translate this advice to solutions, as one partner put it.
It’s also no secret that the majority of in-house counsel are under intense pressure to shave costs and run a lean team. But general counsel complain that law firms do not seem to recognize that reality, and are in fact “underwhelmed” by their response. In-house counsel assert that law firms have “little appetite” to offer alternative business models. And when law firms do offer services at fixed fees, “clients see the parameters of the service changed so frequently the fee is actually variable,” noted the report entitled “Applying the voice of the client in law firms.” Further 75 per cent of clients stated that they get little help from large law firms when “analysing complex portfolio of legal work” given to them, be it spends, trends, type of work, the life cycles of cases and impact.
Unsatisfied clients are taking matters in their own hands, and are ending relationships with law firms more frequently than ever before, added the report. Twenty per cent of clients stated that they change “membership of their panels of law firms” more often that they wish. Moreover, 25 per cent of clients are considering moving more business in-house while others have begun working with much smaller law firms who offer the flexibility, visibility and responsiveness that they do not get from large law firms.
“The pace of evolution in the legal profession is unprecedented and although many of these changes are client-driven, it seems based on this research that the client voice is still not being heard loudly enough within the firm,” said Mark Smith, market development director at LexisNexis. “It suggests that law firms need to improve their ability to work in a joined up manner, focus on identifying opportunities that create mutual value, and start working harder at putting client relationships at the heart of everything they do.”
Law firms still have time to do something about the disconnect, suggests the report. To begin with, law firms should consider re-engineering processes and practices. Law firms should appoint key account representatives to help ensure close co-ordination between different teams because far too often law firms are uncoordinated in how they execute a portfolio of transactions with a client. They should also take their cues from the likes of consulting firms who provide “dashboards of the status of completed and ongoing activities,” with billing and associated information.
It would also be in the best interests of law firms to spend more time building relationships with their clients and partners should better coordinate these efforts.
Law firms need to rethink core client strategies, suggests Kishore Sengupta of Cambridge Judge Business School. “To succeed in the current climate, lawyers need to be more than just great lawyers. They need to understand their clients’ businesses more deeply. Lawyers now need to implement clear strategies to manage client relationships, moving beyond pragmatic engagements to providing a sense of partnership where the client feels valued and protected.”