Do you buy law firms, or lawyers?
In house lawyers get asked that question quite a lot, by outhouse lawyers and by each other. To put it another way: which is more important in choosing your external legal advisers, the attributes of the firm as a whole, or the attributes of the individual lawyers that you deal with?
For me, the answer is clear: I buy lawyers. The most important thing for me is having an adviser that understands my business, and in particular its commercial drivers and its appetite for risk.
Of course, all of the big firms will say that this is what their lawyers deliver. “We are business advisers first, and lawyers second” is the slogan, and everyone prides themselves on their ‘commerciality’.
But I’ve seen enough of private practice lawyers who sit back and say “that’s a commercial point” when any question of money or risk arises to know that those promises aren’t always, or even often, delivered on. And god help me if I ask an outhouse lawyer to venture anything so firm as a recommendation on any matter that is less than black or white.
Why is this a problem? Well, there’s two reasons why I need to outsource legal work: lack of resource and lack of expertise. If it’s the former, then I have a limited amount of time to spend on supervision, and in the latter case the whole point is to get someone who can deal with a matter that I can’t.
Of course, I’m not suggesting that crucial decisions are turned over to external advisers. But in both cases, a lawyer that wants me to handle all of the commercial points, or who gives equivocal advice, isn’t delivering the value that I need.
So when the standard of legal expertise is pretty much the same across a wide range of firms (and it is, despite the fetishisation of the city firms), what differentiates is a genuine understanding of non-legal considerations and a willingness to come down off the fence. And that is very much a matter of the individual lawyer’s own experience, skills and personality.
Where does this leave the promise of great service that many firms would see as their great selling point? Well, that’s important, but for me it’s a hygiene factor – a reason to leave if it’s not there, but not a reason to buy in the first place.
Let’s face it, pretty much any firm of a reasonable size offers speedy turnarounds and quality documents, and most will lay on half-yearly seminars for in house counsel to snooze through. Many even have nice biscuits (although quality pens seem to have disappeared in recent years). What differentiates in service terms is the ability, enthusiasm and likeability of individual lawyers – which comes back to my original point.
But the larger firms seem to view their lawyers as interchangeable. For example, for many years we have instructed a large national firm on commercial matters, and have developed a relationship with two lawyers in particular. When they both left for partnership at smaller firms within a couple of months of each other, the national firm did nothing to maintain the overall relationship – and so we have continued to instruct those lawyers at their new firms.
Why does this happen? In that case, we hadn’t spent a great deal on external advice for a couple of years, so I guess that they didn’t feel that we were worth the effort, But our spend has increased a fair bit recently, so that looks like a mistake from this end of the telescope.
At the level of individual lawyers, I’m not sure why more don’t take the time to really understand their clients’ businesses, or even the individual transaction that they’re working on. Maybe it’s workload, or maybe it’s because the hours might not be billable. In some cases, I rather get the feeling that it’s because they don’t believe that they have anything to learn.
Now, this is a personal view. There are clearly many other reasons for choosing external advisers, amongst which I would guess that (for commodity work and when setting up a panel) fee structure ranks foremost. And the city firms do offer something extra on those deals where time is important and money isn’t (specifically the abuse of trainees and support staff, but that’s for another time).
But for me, it’s always the individual. Maybe I just want to be loved?