Clients are on pace in 2018 to record levels for spending the largest amount ever on outside counsel. At the same time, they rely on fewer law firms than ever.
Latham, which has just posted the highest revenue of any law firm, has been following and using these shifting client and market trends to its advantage for more than 10 years—it’s one reason Latham’s growth is in overdrive.
Latham’s unprecedented growth is turbocharged by the firm understanding why clients are consolidating their work and then positioning the firm to pick up major chunks of new business with existing clients by delivering what clients are seeking.
Latham’s winning approach? Adopt the ‘provide-the-best-value’ approach, not the low-cost provider approach—and clearly this tactic is working.
This strategy becomes clear once you understand why clients are consolidating work.
Improving Risk Management
The current round of consolidation is all about risk management and adding value. Clients have been cutting their law firms in an especially aggressive manner—dropping more than 19% of their firms over the last 3 years. On average, clients now have a record low 34 law firms on their panel, down from 42 firms in 2015. Clients’ goals with consolidation are to:
- Streamline outside counsel management
- Stop working with firms not adding measurable value
- Have law firms build institutional knowledge about the company
- Develop uniform understanding of their preferences among their law firms
- Create uniform understanding around the risks they face
It’s Not About the Fees
Cutting your fees won’t keep you on the roster anymore. What clients are looking for most in their panel firms is:
- Knowledge about their specific risks and exposures
- Vehicles to share and discuss this knowledge
- Candor—how can they do things better and smarter
- Tools—budget/progress dashboards and other tools where key information is now on-demand
- Education on issues they need to know—going well beyond e-alerts
These criteria have big implications for how to develop big client relationships:
- Clients teams who don’t offer client-specific education programs will miss a major opportunity to upgrade the relationship.
- Play an active role in helping clients streamline their legal operations.
- Use client feedback to learn what tools clients have, what they want, and then give them more.
- Always be in an informal discussion with your client. Informal discussion provides the context for the formal requests— giving you knowledge no one else has, and you will learn about new needs before anyone else, too.
- Offer to perform the work you know is coming down the pike—don’t wait for it.
- Stick it out. Client growth is anything but linear. It will take more time to develop than you expect—and will then grow faster than you expect.
Clients have never been more serious about using their law firms in a more clever way. The market is still ripe for firms to execute this low-risk/high-return strategy, but success demands commitment, training, tools, and embracing the art and science of pulling all the pieces together to make it sing. Latham serves as highly visible proof of this concept. What more evidence do you need?
BTI has helped some of the most successful firms in the world develop client growth plans. We would be happy to answer questions or discuss your approach.
(Based on BTI research conducted on a rolling basis between February 2017 and December 2017. BTI conducted more than 350 independent, individual interviews with CLOs and General Counsel at Fortune 1000 companies and large organizations)