Insight:

9 Reasons Clients Hire and Fire Their Law Firms – What we can learn from the new Acritas in-house counsel survey

Hiring and firing lawyers. Do you know what motivates clients?

This week, UK based research firm Acritas, released their annual report on law firms winning and losing business. (Thanks to @JRFitzgarrald for the heads up.) The Acritas report has been ‘go-to’ research on firings for several years and their new questions concerning law firm hires (either new engagements or “substantially increased” assignments) is new and will add a balancing element to their report. Their research was conducted in 2013 among 968 senior in-house lawyers in $50m+ revenue organizations operating in all industry sectors around the world and clearly lays out what client are looking for in their law firms.

Why they hire?

Let’s start with the good news. Clients are looking for lawyers who know their field – as long as they feel that they offer good value for money and they like working with them. If you know this is how your clients feel about you, you should feel pretty confident that they will continue to retain you.

The main reasons given for hiring their law firms and lawyers were:

  1. Expertise – 37% of clients were influenced by subject matter expertise
  2. Location – 17% hired on the basis of geographic presence
  3. Positive Experience – 15% quoted a previous positive experience as their reason for the mandate
  4. Cost – 11% mentioned cost as their deciding factor

The most common reason given for hiring a firm they hadn’t worked with before was because they had a new specific issue in which their current firm was not an expert. That went hand in hand with the new firm having a name they recognize. One pharmaceutical client pointed to a new firm’s “high profile.” A construction company noted a firm’s “good reputation” in the industry.

The “positive experience” category came down to two ideas. The firm already knows us, “We don’t have to advise them on what we do, so we feel like we’re getting value for (our) money,” and we know the firm. “I have a great relationship with a partner there, and that’s sort of developed into other … work.”

Why they fire?

And now, the not so good news. Not surprisingly a lot of the firing of law firms came down to price and the dreaded “V” word, value with a close third being client service which means that if you charge a lot while not paying close enough attention to your client and their actual needs, you could be in trouble.

According to Acritas, the main reasons the in-house lawyers interviewed gave for firing their law firms and lawyers were:

  1. Price and budget – 26% said that price and budget reductions had driven their decision
  2. Too expensive – 19% said their lawyers were simply too expensive
  3. Client Service – 17% said their law firm were slow or provided poor service
  4. Poor Advice – 13% gave receiving poor advice as their reason
  5. Lost People – 6% had lost the lawyer(s) the client valued in their relationship
  6. Conflicts – 5% cited a conflict as their reason for leaving

When asked for their comments, one Canadian “Chief Practice Counsel” is quoted as saying,

“Well we just felt we did not have that good bang for the buck. We thought that they were too expensive, I have nothing to say on the service levels, we just got better value from X and we get the same efficiency level”

While another senior in-house legal individual went as far as to say,

“They raped and pillaged when they billed us.”

If that is ever said about your firm, just hide your head under your desk in shame. One GC who fired for “Client Service” simply said,

“The firm’s attitude towards us was very disappointing.”

Nothing has changed since elementary school – if you get this on your report card it’s not good.

What have we learned from the report this year?

  • Profile really is important since clients won’t hire law firms or lawyers that they’ve not heard of before.
  • Price and perceived value matter. With continued pressure to control external spending, clients are becoming more selective in their use of the top-priced firms, more frequently using them for only their bet-the-company or highly specialized matters.
  • In-house counsel will both look for new law firms and lawyers to solve new issues, but will also direct more work to firms with whom they like working.
  • What Acritas calls “International challenger brand firms” (i.e. those with a wide geographic spread, high levels of customer service and competitive rates) are gaining favour most rapidly and winning the most work.
  • Of the Acritas panel, one-third had dropped a law firm in the last 12 months, a 10% increase over last year’s report. This was for a variety of reasons reflected above but it should also be noted that for 20 percent of those who let their law firm go, it was a one-off assignment that had simply ended.
  • 3 of the top 4 most fired firms were market-leading, premium global practices.

Commenting on the new research, Lisa Hart Shepherd, CEO of Acritas, said,

“Our data reveals that law firms can take simple, effective action to prevent unnecessary client loss. By conducting regular, formal client feedback interviews and maintaining good client communication from the start of the relationship, law firms can effectively put in place an early warning system to highlight problem areas before they become critical. “

I couldn’t have said it better myself. So what can you do to increase your opportunity of being hired and lessen the chances of getting fired?

Key Takeaways

  • Invest in a robust Client Feedback Program
  • Act on what you hear from your clients
  • Invest in rounded Business Development and Client Relationship Management programs
  • Invest in Profile Raising activities at both the firm and individual lawyer levels

 

 

If you have any thoughts about the report, including how you can use what you’ve read within your firm, share them in the comments below or drop me an e-mail to lynnfoley@fsquaredmarketing.com.

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