Legal Business

Are Clients 'Demanding' Change?

Adam Smith, Esq. has an excellent piece this morning, based on a Legal OnRamp thread, questioning whether corporate clients are actually demanding the changes so many of us are talking about, from alternative fees/value-based billing to legal project management. Are clients really asking for efficiency, or is the hiring of a firm something of a CYA maneuver?

The answer, unfortunately, is the lawyer's answer to all questions.

It depends.

Some clients are being very forthright and direct about demanding not just AFAs or efficiency but a new approach to their services. Cisco continues to be out in front here. I see changes in the law departments of companies ranging from FMC to Canada's Bruce Power.

But I see more missed opportunities on the client side than game-changing rethinking of how a law department best serves its stakeholders. As Bruce/Adam points out, an increasing number of firms are at least getting ready for potential changes and new opportunities, from 20-partner firms to the AmLaw 10. But there's still hesitancy from clients.

Bruce looks to the GCs as part of the problem, wondering if perhaps they don't always put shareholder interests first. I agree, but I'd look further up the corporate ladder. If the CFOs and COOs and CEOs don't absolutely hold them to such a position, and GCs believe that choosing an expensive firm is the best way to secure their jobs when outcomes can't be guaranteed (the "we tried our best" argument), then you'd see something like the current picture.

Which raises the larger question - to what extent do CFOs and COOs and especially rockstar CEOs put shareholder interests above their own survival?

In the corporate world, and the real world, little is clearcut, black and white. Not all CEOs are selfish, and almost all have behavior that moves about the continuum between me-me-mine and shareholders-rule. GCs are no different.

That said, most other corporate departments appear held to clearer accountability than Legal. I do think it will change, eventually, if only because of Stein's Law: If something cannot go on forever, it will stop. Ten years ago, it was the DotCom bubble. A few years ago, it was the housing bubble.

Will there be a Legal-spend bubble? What will puncture it?

Adam Smith's/Bruce MacEwen's comments might at least help sharpen the needle pointed at the bubble, by forcing people to ask some very difficult - and so far largely avoided - questions.

Read more on the Lexician Blog.