The press release accompanying the survey noted that 25% of CLOs planned to increase their use of law firms in 2007.
Sounds good; that’s why they pay rainmakers big bucks.
But on the flip side, 54% said they would not change the number of firms they use, while 15% said they would decrease their use of law firms. 32% of respondents said they fired a firm in 2006; 20% of those firms were characterized as having a “significant relationship” with the client.
These exit percentages show the measure of the challenge law firms face in growing top-line revenues without raising rates or increasing billable-hour targets.
The law firms chasing those 25% of companies who might want to add another firm to the mix may want to consider the top three reasons for giving law firms the boot:
1. Cost management
2. Mishandling matters
3. Lack of responsiveness
While managing partners have their eye on the prize of increasing the number of clients, it’s clear they need to work hard to keep current clients happy. Given these reasons for firing firms, here’s a memo to compensation committees: throw a few dollars to partners minding active client matters. Retention is the foundation for expansion.
Grist for the legal mill is not easy to find. Or to keep.