Cashing in on Criticism
from
July/August 2007
by Sasha Issenberg
For 18 years, Inside Counsel magazine, formerly Corporate Legal Times, has surveyed in-house lawyers to record their gripes about the work done by their outside firms. The complaints that are perennial—most notably, that outside lawyers don’t pay proper attention—suggest that at many firms this essential inside-outside legal twosome is due for a tour through couples therapy.
Some law firms are working on the communication gap. At Baker & McKenzie, No. 8 in the 2007 Corporate Board Member/FTI Consulting rankings, lawyers now get special training to develop their listening skills. “You’d say, ‘Gee, isn’t that common sense?’” observes partner Nick Coward, 54, about listening to what a client company might have to say. “Sometimes common sense is the most difficult. We’ve learned that lawyers are prone to do all the talking. You go in to make a pitch to clients, and we lawyers do that instead of asking appropriate questions to learn what the client’s issues may be and to understand the context in which problems arise.”
Baker & McKenzie has created a “talent-management platform,” Coward says. It evaluates an attorney’s performance in key areas such as client service, people management, business development, and legal knowledge. Coward stresses that client feedback has signaled the need to look at “skills that go beyond traditional knowledge, beyond what’s measured on a law school transcript.”
“Anytime you can sit down with a client and hear about your relationship, it’s extremely beneficial,” says Mark Stewart, 51, a litigator at Ballard Spahr Andrews & Ingersoll in Philadelphia. “You will hear things you would never otherwise hear, and that’s an extremely valuable tool to solidify and strengthen the relationship.” Lately Ballard has heard criticism of its billing practices and has responded by investigating alternative pay structures.
Many firms not only have come to welcome clients’ feedback on their work, but even hire companies like Hildebrandt, a consultant to law practices, to gather the reviews for them. “It does not come naturally to lawyers and firms to be disciplined about their concern for client satisfaction,” says Jonathan Bellis, a Hildebrandt vice president. But firms are realizing, he says, that their futures will depend on whether they can learn to listen—and then figure out what to do with what they hear. The major changes some firms have made include introducing a fixed-fee structure, under which a company and its outside lawyers negotiate an annual contract for litigation services. Alcoa, for example, has initiated this arrangement with Hunton & Williams. “We get certainty,” says Hunton partner David Landin, 60. “Every law firm needs it. We know what kind of income stream we will have, and they have a sense of where they’re going to end up at the end of the year with regard to their legal fees.”
Using client feedback, firms are experimenting with other forms of nontraditional pricing to help strengthen long-term relationships. “We will do certain types of transactions based on a commitment not to exceed a set fee,” says Rick Miller, 54, a mergers-and-acquisitions lawyer at Powell Goldstein in Atlanta. “We’ll also make sure that monthly advisory invoices are sent for all transactional matters, just to avoid sticker shock at the end.” With set-fee arrangements, Landin says, “our product is not a billable hour. It’s a result.”
Baker & McKenzie, which operates 70 offices in 38 countries, now has a “global director of talent management,” who is, among other things, responsible for the firm’s worldwide learning programs. His name is Greg Walters, he’s 49, and he is not a lawyer; before coming to Baker & McKenzie, he was the chief learning officer at Motorola.
And what has been learned? Coward says one of the concerns Baker & McKenzie lawyers hear most often is that their counsel is not always tailored to the client’s needs. “You may have great legal advice,” he says, “but it’s not practical for the business they’re in.” This is especially true, he adds, in “highly regulated industries where knowledge of the business is absolutely critical.”
Baker & McKenzie has established special groups to monitor some of these sectors—pharmaceutical and health care; IT and communications; and energy, chemicals, and mining. The teams include nonlegal staff and technology specialists, who are part of Baker & McKenzie’s new “global knowledge systems”—interoffice networks around the world sharing specialized expertise and experiences. It’s a high-tech approximation across continents of water-cooler brainstorming.
Fred Krebs, president of the Association of Corporate Counsel, notes that one-third of the legal officers his organization recently surveyed said they had fired a firm in the previous year. “The reasons tend to be costs, poor results, and lack of responsiveness,” he says. Listening carefully to clients is a good way to stay off the hit list.
