We hope you’ve digested last week’s installment, because it’s time for another helping of wisdom from our elite panel. (Click here for the first edition.) BLT Steak hosted our not-so-roundtable talk with:
- Ann Ford, Co-Managing Partner, DLA Piper
- Mike Nannes, Chairman, Dickstein Shapiro
- Stuart Stock, Chair, Management Committee, Covington & Burling
Ann and Stuart (in the blue shirt) are on the left and Mike is closest on the right. A pair of prized Bisnow sponsors—Phil Leibow, co-head of the global law firm practice of Jones Lang LaSalle (opposite Stuart) and John Niehoff, head of the law firm practice at Beers & Cutler (closest left)—filled out the expert group. (Those guys in the back are Bisnow COO Doug Anderson and Bisnow legal writer John Ford.) Publisher Mark Bisnow, possessor of the hands and pen at right bottom, hides his identity just like a restaurant critic.
When we left off, we were devouring one of BLT’s gigantic popovers. Errr…no…the group was talking merger trends.
|Mark: || |
Will conflicts be a brake?
|Ann: ||It’s a big reason to be careful about growth. But we’ve found that conflicts don’t necessarily get worse if you’re 700 lawyers or 3,500, if you manage it properly. You can’t have uncontrolled client development or be everything to everybody. There needs to be direction—you have to look for certain client segments. |
|Stuart: ||But it takes real attention. |
|Ann: ||Oh, completely. We had 10 lawyers at my first firm, and our idea of a conflicts check was yelling down the hall, “Anybody have a problem?” Now there’s far more thought and focus given to your conflicts system. |
|Mike: || |
And there are more demands from clients pertinent to the conflicts process at the same time. You can have a retainer letter in place, which establishes terms for an acceptable relationship, and a client will send a new set of terms and conditions to govern starting next month. It’s not presented as being negotiable. I’ve seen letters that say your law firm will not take positions that are contrary to the positions of the company, even though you have no idea what those positions are, and they cannot be clearly articulated because business circumstances may change.
Ann won our award for favorite photo subject—smiling every time.
|Mark: ||What other changes are you seeing in clients? |
|Stuart: ||In-house lawyers are extremely savvy. A lot of them have been partners in firms. They shop around matter-by-matter. They say, “I’m a big company and I’m going to use so-and-so for my patent litigation, but not my ERISA work.” And that’s going to drive the market in important ways. That’s why I firmly believe that you’re going to see a variety of models succeed, including boutiques. |
|Ann: || |
At the same time, clients want the benefit of bundling their legal services. There is a tendency now for them to want relationships with 20 firms rather than 5,000. They’re never going to have one firm, but they want to ease the pain. They want to have reduced transaction costs with firms who really know their business. Plus, they can get better rates by bundling work because they have more buying power.
|Mike: ||There’s also the notion of clients developing “preferred provider” networks. Some clients want 20 law firms in their preferred network. They expect firms in their network to cooperate and share information to deliver the best service. You also have competitive RFPs based considerably, if not primarily, on price. That is a very different proposition than existed 15 years ago when law firms had 50 year relationships with a client that were embedded and never at risk. |
Phil Leibow sees firm globalization from the real estate side: “In the past, firms said they wanted ‘dots on the map.’ Now they need ‘dots on the world’—a Brussels office or a London office, or something in Beijing. We see more of that every day.”
|Ann: || |
You can’t underestimate the corporate governance aspect of it as well. There used to be captive clients because the lawyer was on the Board and did all their work. We don’t see that anymore. There’s definitely more oversight and more arms length relationship. You don’t take it for granted that you’ll be anyone’s law firm forever. At least you shouldn’t.
|Stuart: ||The preferred provider programs are very much the vogue now among many large companies. If these programs work as intended, they can add important depth to the relationship between the client and the law firm. On the other hand, you will also see situations where the preferred provider program takes second chair when the client has some immediate need with respect to a big problem or transaction. If these sorts of programs are to be really successful and beneficial for both the clients and the law firms, I think they are going to need to produce deep, sustained long-term relationships between the parties. |