March 3, 2014
“What is this going to cost me?” This is the first question in-house counsels tend to ask when a case arises. The fear behind this question is also a strong driver for why so many cases settle before going to trial – fear of the unknown, fear of an exorbitant verdict, fear of unexpected costs to the company and its shareholders. This concern, coupled with the increasing percentage of legal work being taken in-house, would lead some to believe that concerns about legal costs are the primary factor in decisions around which law firm to hire. Moreover, the 2013 Association of Corporate Counsels Survey of managing partners revealed that the top reason law firms are not retained is because their costs and fees are too high. I would argue that hiring a firm with high fees is not always the issue; rather trust and predictability are key.
Let me provide some insight as to why I have this opinion. I attended a general counsel panel recently. When asked why the general counsels had hired someone more expensive, one responded that the company had experienced a huge judgment several years ago and had to make sure that did not happen again. As you can see, fear motivates. Another general counsel talked about narrowing her search in a foreign jurisdiction to two attorneys. The first attorney said he has been handling these types of matters for 20 years and was the best there is. The second attorney came to the meeting saying, “Here is what typically happens in these situations. Here is the cost you can expect. You are probably not going to be happy, but here is what you can anticipate with regard to the outcome and the costs.” He came to the meeting prepared to be a true partner and trusted advisor and in turn won the business.
In my role at Thomson Reuters, I talk with law firms all over the country about business development solutions. I have noticed an increasing interest from partners in using case resolution analytics to advise clients around estimating costs, just as the attorney above did successfully. Using case resolution statistics that allow an attorney and in-house counsel to arrive at likely answers to key questions, such as the length of time the firm usually takes resolve matters, the length of time the company has taken with other law firms in the past, and even the mean time for various types of cases to be resolved by a specific judge, attorneys are able to better inform the client (or prospective client) on what to expect. It changes the conversation from “We are the best,” which is a message that seems to be losing its traction with clients, to “We are experienced, we understand you and your situation and here is what you can expect.” In my experience, that latter message is the one that seems to be clicking with potential clients.
I do not like surprises and in-house counsel does not either. These tools are helping law firms initiate conversations that truly put them in charge of becoming the trusted advisor and partner. While rates continue to be extremely important to law firm hiring decisions, being a trusted partner who can advise on predictable paths from experience and study will be, too.