Leaders of many of the nation’s biggest and baddest law firms converged in New York City recently to discuss the rapidly changing legal landscape and how to adjust not only to survive, but thrive. The oft-repeated themes of innovation, differentiation and collaboration ruled the day.
The inaugural Big Law Summit, put on by Bloomberg BNA, was successful on all fronts. The full-day program attracted a standing-room-only crowd of big law representation. The program was filled with a who’s who of players in the sector. And the content was strong enough to keep attendees present and interested through the concluding conversation with esteemed Judge Shira Scheindlin of the U.S. District Court for the Southern District of New York.
“Lawyers are risk averse,” said Terrence Truax, managing partner of Jenner & Block. That line was repeated a multitude of times throughout the programs. “Everybody wants to be innovative, but we have to push through a lot of resistance.” His anecdotal example was the partner that simply could not live with the rollout of a new Blackberry platform.
Truax cited three core areas where Jenner looked to “innovate,” in the areas of law firm staffing, technology and project management. He said the goal was to provide value without compromising quality on premium work. But he also emphasized a need to not deviate from the firm’s core values.
Jami McKeon, chair of Morgan Lewis, used much of the same language. “Lawyers and law firms by nature are not regarded as innovative,” she said. Morgan created an innovation committee, because firm leaders wanted to create that culture and think of fresh ideas.
The firm sought to align its interests with those of its clients. Examples included a client struggling to recruit diverse attorneys, so they worked together to improve the problem. Another dealt with working together on pro bono. “Lots of clients want to do pro bono but don’t have the infrastructure for it,” McKeon said.
Another aspect mentioned by McKeon and repeated by Kim Koopersmith, chairperson at Akin Gump, was an increased focus on industry and the need to further develop that type of expertise. There has often been debate as to just how important industry knowledge is when cross-compared with legal knowledge. But a client feeling like you know their business as well as the legal issues is now seen as a differentiating factor in buying legal services.
Koopersmith highlighted the need to get buy-in from a skeptical lawyer population. These changes often revolve around technology and pricing. Akin hired a chief pricing officer three years ago to help the firm determine what profitability really looks like.
“We need to change the way we look and evaluate ourselves,” said Seth Zachary, chairman of Paul Hastings. “For us, it was about breaking down geographic boundaries.” Getting there included breaking down geographic boundaries and being “less cosmic and more specific.”
Zachary detailed the firm’s key client program, started about 15 years ago, and still going strong. Those clients, worth 40 million at the start, are worth about 240 million today to Paul Hastings. He echoed the need to look at the firm in a more institutional way and the use of industry association—“we really know your business”—and various joint training exercises between the firm and clients.
The law firm leaders were also asked about securing against a few dozen key lawyers jumping ship. Zachary said anxiety is like “good cholesterol.” He noted the importance of making people feel more secure by providing a sense of financial progress. Koopersmith noted that in a post-Dewey era, it was important to make sure partners are comfortable with the firms’ financial status and that a level of transparency exists.
We’re Just Vendors
In discussing “appropriate” fee arrangements during a panel discussion on “The New Change Agents,” Adam Storch, chief of staff and chief operating officer for legal and public affairs for Marsh & McLennan Companies, discussed Marsh’s preselected “vendors”—hiring the right outside counsel for matters.
Recently, I was annoyed when the administrative staff at a large Tennessee firm repeatedly called me a vendor. When Storch said it at the Summit, the first thing I did was confirm that he was a non-lawyer as well. Because no attorney would ever refer to a colleague as a “vendor,” but it was interesting to hear that term. To Marsh, legal counsel is simply another necessary evil, like buying copiers.
Attorneys from AIG and GlaxoSmithKline did not refer to their selected counsel as vendors, but did detail how every new matter needed to have value-based arrangements, whether through reverse auctions, RFIs or other forms of “procurement.” While the companies don’t always go with the lowest bidder, they do evaluate qualitative criteria such as relationship with opposing counsel, knowledge of a judge, strategy and diversity. The entire process is completed in 4-5 business days with a scorecard showing the best quality at the lowest price.
Robert Harchut, associate GC from GSK, also referenced the company’s use of a “Director of Alternative Fee Analytics.” Of course, law firms are countering with their own pricing directors. Big Law needs to understand both the push and the pull on the corporate client side to survive and prosper.
A panel of in-house counsel addressed how they can compete with the big law firms—whether it meant keeping more work in-house or choosing different counsel where the work may have automatically flowed to “big law” in the past.
Driving Efficiencies in the Law Practice
“How do we get better and faster rather than ‘cheaper?’” asked J. Stephen Poor, chairman of Seyfarth Shaw. Starting with the premise that there is a value gap between law firm and client, the “driving efficiencies” panel looked at challenges that included redundancy in multiple offices and the need to shift from profitability through rate increases (from the now long defunct “golden age” of Big Law). Poor said it was about communication, transparency and trust.
“Each firm has to look to its own culture and organizational structure,” said Rosemarie Sturtevant, chief of office administration at Holland & Knight.
The Global Firm Perspective
Roger Meltzer, global co-chairman and co-chairman (Americas) for DLA Piper, said that the clients have changed. There is a sense that the world is smaller. Clients want one stop shopping (or “one throat to choke”).
“Doing commodity-based work across the globe does not work,” said Meltzer. He mentioned the race and battle for talent, innovation, technology and capital formation as four of the driving forces today—noting that some of these conflict with one another.
The program titled “Harnessing the Power of Collaboration,” could have been called “how origination dooms us all.” Panelists from Gibson Dunn, Quinn Emanuel and Cravath each referenced their firms’ handling of origination issues.
“Origination credit should be outlawed,” said Faith Gay of Quinn. “Either go to lockstep or what we have…something softer.” Gay talked about the importance of working well with others and rewarding people financially for doing so.
Sandra Goldstein of Cravath said that firm’s 100 lockstep system gives clients the best product, with no origination credit issue. “The eat what you kill structure won’t do what is right for the client.”
“What goes to the culture of collaboration is the trust and support of your partners. A culture of responsiveness regardless of origination,” said Barbara Becker of Gibson Dunn in describing her firm’s modified lockstep approach.
The panel stressed the need to teach associates collaboration from day one. They also discussed the importance of recognizing different lawyer traits/talents, not trying to make someone something they are not—business developers, craft people and innovative thinkers. They all have value and bring different things to the table. In the end, it is about teaching people to play well together. That is probably easier said than done.
Admitting You Have a Problem…
As the infamous quote goes, the first step is in admitting that you have a problem. I was drawn to the Big Law Summit because these law firms are my clients. The issues and answers that ruled the day reinforced those that I experience whenever I’m sitting with a Big Law managing partner or management committee. The conversations struck honestly at the heart of the issues that need to be addressed for major law firms to thrive in today’s global marketplace. At a minimum, everyone recognizes them—we are all trained in issue spotting—the question is whether firms can overcome the character traits that hold us back. Clearly, we know the problems. Getting to the solutions is a different story.
About the Author
Micah Buchdahl is an attorney who works with law firms on marketing and business development, and is a past chair of the ABA Law Practice Division. Micah is Editor-In-Chief of Law Practice Today. He can be reached at firstname.lastname@example.org or by phone at 856-234-4334, and on Twitter at @mbuchdahl.