Get on the Bus, Gus: How to Succeed in an Era of Corporate Growth
In 1956, Greyhound launched an advertising campaign with the “Go Greyhound and Leave the Driving to Us” tagline that would become their lead advertising slogan for decades. The campaign was wildly successful in attracting millions of travelers who could not afford air travel as well as those that needed to travel long distance, but did not have the luxury of a second family car. Greyhound was the king of the market.
Then, with a one-two punch, the market changed.
First, by the late 1970s, the interstate highway system had matured to the point that mid-distance auto travel (200 – 350 miles) became something that was within reach for most consumers.
Then, the Airline Deregulation Act was passed in October of 1978. This spurred the rise of the low-cost, point-to-point airline industry on one end of the spectrum and the consolidation of major airlines on the other. Before long, airlines were offering long haul service at prices below those that Greyhound could offer. More importantly, the question of price became secondary. Why would a traveler spend two or three days on a bus when they could make the same trip in a few hours for the same price? It became a question of service and convenience.
Like Greyhound, Big Law has been king of the market for decades. With the exception of all but the largest corporations, companies could not afford the luxury of keeping a fully staffed and equipped Legal Department on the budget. Forget the cost of attorneys for a moment; no one wanted to spend the real estate dollars to build out an entire floor for a Law library and document storage!
Legal Department staffing was kept to a relatively small number with enough people on hand to simply manage the relationships with outside counsel. Law firms were more than willing to take on even the smallest and simplest of matters, whether they were profitable for the firm or not. For Big Law, the strategy of building a relationship with a corporate client was based on the “Leave the Lawyering to Us” value proposition.
Then, the legal market got a one-two punch of its own.
First, in the late 1990s and early 2000s, the surge of personal computing and the internet created opportunities for savvy GCs to bring some of the smaller and/or more standardized work (contracts, real estate) in-house. Complex work (read: profitable for the firm) remained the province of the outside counsel. Realization rates went up, so everyone was happy.
Then, in the late 2000s the economy tanked. Law firms found themselves shedding attorneys and support staff at unprecedented rates. At the same time, corporations began looking for ways to create efficiencies in all departments. Legal departments were tasked to not only look for ways to trim their overall budgets, but to handle an ever-increasing workload at the same time. Not only have they responded, they have now taken over as driver of the bus.
The results of research conducted by BTI Consulting Group and released in September 2014 shows that “Larger companies, with $1 billion or more in revenue, are on track to move another $1.1 billion in legal spending in-house. This is on top of the $5.8 billion corporate counsel moved in-house in 2013.” This report is consistent with the results of a LexisNexis survey released in early November.
Enlisting outside counsel is no longer just a question of price. It is a question of service and convenience.
Here are three simple ways to ensure your law firm thrives in this era of extreme growth for corporate legal departments:
Improve CommunicationEvery survey that I read and every client that I talk to raises this as their #1 request. Not necessarily more communication, but better communication, more efficient communication, personal communication. Quoting one client, “Stop hiding behind emails. Pick up the phone!”
It sounds basic, but many of my corporate clients are now requesting logins for their litigation support databases and are quarterbacking document reviews. They are beginning to realize substantial cost savings and productivity benefits. They have changed the paradigm where each case was being treated as a “one-off,” to a model where documents, knowledge and attorney work product are repurposed across matters.
Notice that I did not say “cut price.” Lowering hourly rates as a way to increase business will not work any better than raising your rates to try to offset lost revenue (big surprise there). Nor are corporate clients looking for “freebies.” Corporate clients are, however, tired of seeing nickel-and-dime charges for every task under the sun as a potential profit center for the firm (paper clips and fax charges?). Clients expect to pay for quality legal advice and are happy to do so when they see the value.
Oh, and providing a little extra help (short term staff assignment?) during crunch time can go a long way toward building a relationship between law firm and in-house counsel that was previously built on all of that unprofitable work. Not only are you building a personal relationship, you’re getting to know your client’s business from the inside out and will hopefully experience corporate growth.
The bus is pulling out of the station. Are you on it?
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