Ho Hum

Hat tip to Stephanie West Allen for this.

I don’t know Mark Beese but his blog says:

I’m the marketing guy at Holland & Hart, the leading law firm in the Rocky Mountain West. I’m interested in how to help lawyers become better leaders.

He’s got an interesting post on his blog from April 5, 2008, titled, “We’re Not Going to Take It.”

He recounts what transpired at the Legal Marketing Association’s national conference last month at a presentation by Susan Hackett, General Counsel of the Association of Corporate Counsel (ACC), and Laura Stein, Chairperson of ACC, among others:

In a ninety minute presentation and discussion, Hackett outlined the pressures and realities facing in-house counsel, specifically, increased pressure to contain and predict legal costs and their frustration with double-digit rate increases, off-the-scale associate salaries (and corresponding hourly rates), a perceived unwillingness by law firms to discuss alternative fee arrangements and create lower-cost methods to provide lower-value (commodity) legal services.

To paraphrase, they said, “we’re not going to take it anymore.” Hackett and Stein have created an initiative within ACC to explore ways to re-define the relationship in-house GC’s have with out-house firms. This new committee will develop a set of best practices to recommend to ACC members. ACC will sponsor seminars to teach GC’s how to reduce outside attorneys costs, manage matters to budget, consolidate (or ‘converge’) the myriad of law firms some companies use to a small ‘core counsel’ cadre of firms, and stratify legal work so that only the high-end/high-value work goes to high-cost firms and commodity work is handled on a lower cost basis.

Ho hum. I’ve heard this all before, ad nauseaum (see the post on the recent call by California’s State Bar president to reform the billable hour).

Allow me to do something I rarely do, make a prediction: This ACC committee will amount to nothing. Not because it’s goals aren’t correct—they are. Not because law firms need a push into alternative pricing paradigms—they do.

But because the impetus for change must come from law firms, not their clients. I know this sounds counterintuitive, but I firmly believe it’s true based on empirical evidence.

Buyers don’t change the pricing strategies of sellers. Sellers do. See my post on why this is so here.

General counsel has been bitching about the same things for as long as I started to pay attention to the legal profession. Nothing has happened. Richard C. Reed wrote three seminal books for the ABA, dating back to 1989, while the ABA itself issued a report against the billable hour in 2001-2002. All to no avail.

It’s a testament to how much market power law firms have that their customers continue to vociferously complain about their pricing but can’t do a damn thing about it. And why should they? It’s not their business. They aren’t eating their young, chasing away their human capital. They have their own businesses to worry about.

How can you possibly change anything in your life if you first don’t take responsibility for it? I’ve had many managing partners tell me that there’s no call for alternative pricing from customers, yet evidence such as this continues to poor in every single day.

I’ve had managing partners and consultants tell me that nothing will change until the client demands it. Yet the clients are demanding it and nothing is changing. Why the disconnect?

If you look at history, you’ll find very few instances where buyers forced a pricing change onto sellers. Sure, they attempt to lower their prices—while intelligent sellers push back with value—but they don’t innovate new pricing strategies. That’s the sellers job.

So while I applaud the ACC all I can say is “So what?”

Nothing will change until law firms themselves change. That requires leadership.

I hope Mark Beese can help, at least for his own firm’s future.

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