I had a discussion last week with a friend who was formerly at a large law firm. We were talking about the constant challenge to retain and attract clients. He is able to charge much less now that he has his own firm, but net as much if not more.
While at the large law firm, the pressure to generate business was exacerbated by the yearly increase in his rate, something he had almost no control over. It’s almost like the firm was pricing him (and many other partners) out of their particular markets.
So, only half jokingly, I said “Well they should try paying their rack rate out of their own pocket!” We both erupted in laughter at the absurdity of the notion.
Later, I started thinking: how many lawyers have ever been a client?
And I’m not just talking about retaining your own firm to do some high-level litigation at $750/hour. We all know that is absurd. I’m talking about hiring a lawyer to do anything at less than half that. If you throw out the traffic ticket fix, an estate plan or an unfortunate divorce, I bet most lawyers have never been a client of another attorney for any reason.
And if someone at a large law firm uses the firm (such as a managing partner), you can bet they are not paying much, or anything at all. “Good training opportunity” I think it is called.
Historically, law firms saw corporate clients as indifferent to price, maniacally risk-averse, and unswervingly loyal. After all, they were spending OPM, as in other people’s money.
Now those other people are called shareholders and the GC has to watch the spend because there is a CFO and CEO looking over the shoulder.
I think there is a joke about how an economist gets out of a large hole. “Assume a ladder” is the punchline.
For the last 10 years, for law firms, the joke may be law firm strategy and the punchline likely is “assume a client.”
Tomorrow, a list of factors for lawyers to use to determine retain-ability.