Providing Outstanding Client Value Will Drive Future Success For Large Law Firms

Saturday, September 1, 2007 - 01:00

An oft-discussed question in the legal profession is whether large, global law firms can continue to thrive given the unprecedented challenges that confront them today. The daunting list includes intensifying competition for clients and legal talent, ever-rising costs, conflicts, and initiatives by clients to rein in their expenses for outside counsel.

Further clouding the picture is the reversal of a trend that in recent years saw clients add scores - in some cases hundreds - of law firms to their portfolios. The competition this produced failed to yield the savings that had been anticipated, largely because of the unproductive cost of continually bringing new lawyers up to speed. General counsel also learned that effectively managing squadrons of law firms is a complicated and time-consuming task. Thus, many clients - particularly the blue chip companies whose business is coveted by the large firms - are beginning to dramatically curtail the number of law firms with which they do business. No wonder some knowledgeable observers question whether the number of large law firms will substantially decline in the coming years.

From my position as chairman of one of the largest law firms in the world, however, the outlook remains bright. I am convinced that an exceptionally promising future awaits those large law firms that continue to do what enabled them to become large in the first place: provide their clients with legal services of outstanding value.

The most important variable in the value equation for a law firm is quality service, and the foundation on which quality service is built is quality work - which results directly from the knowledge, experience, creativity and commitment of a firm's lawyers. Simply stated, it takes great lawyers to do great work - and there never are enough of them to go around. The market today for top legal talent is more competitive than ever before - not only for first-year associates but at the partner level as well.

Law firms must invest significantly in programs to recruit, develop and retain attorneys who have the skill sets needed to deliver the quality work that clients demand. Firms must insist that all attorneys - even partners - deliver on client demands and meet the firm's quality standard.

The important thing is to understand that firms that fall short of the mark are prime candidates for the chopping block when clients start paring law firms from their portfolios.

But even the best lawyers cannot do their best work unless they thoroughly understand a client's business. Legal matters do not exist in a vacuum, and in-depth knowledge of all the factors involved in a given situation is needed to devise sound legal strategy. That knowledge does not come easily or rapidly: it requires continuing involvement, commitment and investment from both the law firm and the client. Understanding the client's strategies and operations and forging relationships with key executives creates a win-win for both the client and law firm.

Another important dimension of service quality for a law firm is its ability and willingness to fulfill the role of counselor in its client relationships. Too many firms focus their efforts solely on the assignment at hand - and in so doing miss the opportunity to stand out from the pack. Offering intelligence and advice on subjects of interest to the client, such as an advance warning about an impending regulatory change or an insight into emerging litigation trends, is an important way to enhance service value. So, too, is facilitating an information exchange with the client's staff during training sessions, lunchtime brainstorms and the like. Law firms that are willing to invest some of their own time, expertise and knowledge in their client relationships will cement their position on the client's preferred firm list.

Consistency of quality across practices and offices is another important factor in the overall quality picture. Even the strongest client relationships can be put in jeopardy if work done by another office or practice fails to measure up to the client's experience with and expectations of the firm. And when national or cultural differences come into play, quality becomes exponentially more difficult to manage. Many law firms invest substantial resources in their quality-control programs. Those that succeed can look forward to winning an increasing share of their clients' business.

At Mayer Brown, we strive for consistent quality through a teamwork approach to client service. Firm practice leaders, who are senior-level partners with global responsibility for quality oversight within their designated practice, bring together the best resources from across the firm for each client engagement. To reinforce the mindset adjustment required of partners used to thinking of clients as "mine" rather than "the firm's," we implemented a new compensation system that rewards teamwork.

All clients require quality service from their law firms, but other attributes of value are more client-specific. A law firm's offices in all the major business centers of the world might be of great value to a large multinational manufacturer, for example, but of no value to a company with no overseas interests. In like manner, practice areas essential to one client might be irrelevant to another. Since no law firm can be all things to all clients, each must choose the business model that best suits its capabilities and ambitions and then seek clients whose needs it is well equipped to serve.

For Mayer Brown, the choice is clear. We intend to rank among the top tier of firms that can assist clients with their most complex and challenging legal matters, wherever in the world the need may arise. Our strategy for achieving that goal has two primary elements: offer services that span the broad spectrum of practice areas important to our clients and provide seamless service delivery on a truly global scale.

International scope is an issue of increasing importance to clients and the law firms that serve them. Demand for one-stop-shopping for legal services in markets around the world continues to grow, as multi-jurisdiction transactions and even litigation become more common. But it no longer is acceptable for a U.S. firm to send a few people to London or Paris to set up an outpost of its U.S. business. Clients have learned through painful experience that quality service requires strong local capabilities on the ground in overseas markets.

No discussion of value can be considered complete unless it addresses the subject of price. This is an issue on which clients are speaking out louder than ever, as they seek to lower or at least cap their legal expenses. At Mayer Brown, we work with clients to develop fee structures that meet the needs of both parties, including alternatives to the traditional hourly rate option, such as project-based fees and volume discounts. We also can devise billing options that provide greater predictability of legal expenses for clients who require it. And to achieve the optimal combination of quality and economy, we employ staffing models that make sure all work is performed by attorneys whose experience and responsibility are appropriate for the task.

Although large law firms face formidable challenges today, they also stand at the brink of unparalleled opportunity. As in the past, future success will belong to those best able to deliver the quality service that drives outstanding value for clients.

James D. Holzhauer is Chairman of Mayer Brown LLP, an international law firm with over 1,200 attorneys with offices in Chicago, New York, Los Angeles, Palo Alto, Washington, DC, Charlotte, Houston in the U.S. and foreign offices in Brussels, London, Paris, Berlin, Cologne and Frankfurt. Mr. Holzhauer's practice areas include Supreme Court and appellate litigation, professional liability and responsibility, employee benefits litigation, labor and employment, lawyers' professional liability. He has served as law clerk to Chief Justice Warren E. Burger and The Honorable Robert A. Ainsworth, Jr., United States Court of Appeals for the Fifth Circuit.

Please email the author at jholzhauer@mayerbrown.com with questions about this article.