LawFuel.com – Has the recession affected relationships between law firms and their Big Law clients? Corporate Counsel editor Anthony Paionita writes that things have perhaps evolved rather than revolutionalized with the recession.
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Three years ago, we plastered the determined faces of four prominent general counsel across alternate covers of this magazine. We asked, “Is It Their Hour?” The legal chiefs in question were champions of alternative fees and, generally, pressuring their outside law firms to change their way of doing business. The context was the previous autumn’s financial meltdown and the resultant recession. It’s painful to remember even four years on, but it was a time when two major automakers were basically nationalized, and many large financial institutions were still in business because they were propped up by the federal government.
At the time, we and many others believed that the economic meltdown would lead to a major upheaval in the relationship between corporate legal departments and their outside law firms. I wrote in my editor’s note, “The current downturn isn’t behaving like normal ones, during which growth heads into reverse gear, but then everyone expects to go back to their old habits afterward. Instead, this year some corporate legal departments are taking the opportunity to make good on previous threats to change how they hire and deploy outside counsel.”
Brave words. Four years after the crash, however, has that revolution come about? Is the in-house/outside firm relationship different? Are law firms changing age-old practices and doing everything they can to keep their cherished clients? Well, yes and no.
There is no question that the rhetoric has ratcheted up. Go to any conference with chief legal officers in attendance, and you will hear talk about restructuring the business of law, about value challenges and alternative fee arrangements, about getting more value from law firms. You’ll hear panelists discuss outsourcing, the disaggregation of legal work, and the fall of the law firm superstar. The law firm partners in attendance will laugh nervously and make supplicating noises, murmuring that yes, they get it.
You can say that these hoped-for changes in how legal services are provided were overdue. General counsel, even absent a recession, are under constant pressure to reduce costs, and get more from vendors and their own staff. And big firms recognize that pressure, even if they may not like it. “Things have certainly changed since 2008, but those changes were a long time coming. The economic crisis just made the situation more acute,” says White & Case chairman Hugh Verrier. “We work closely with our clients around the world to make sure we deliver our services in the way that is most appropriate and makes sense for them.”
The revolution has in reality been a slow-moving evolution. It’s even simplistic to talk about a unified movement, says Susan Hackett, former general counsel of the Association of Corporate Counsel and currently CEO and CLO of Legal Executive Leadership LLC. Change is happening, but like most change, it’s not proceeding in a predictable, orderly fashion, she and other interested observers say. That dance, again. Law firms adapt in various ways, and so do the departments that hire them.
“I describe it as the difference between feeling pressure and feeling pain,” says Daniel DiLucchio, a principal at Altman Weil Inc. in Newtown Square, Pennsylvania, talking about what law firms are dealing with these days. “Is there more pressure?” he asks. “Yes. Pain? No.”