Corporations Are from Venus, Law Firms Are from Mars

Published July 29, 2008

A recently released report from the Eversheds international law firm discusses some conclusions for the future of the legal profession. With nearly 40 global offices and over 2,000 legal and business advisers, Eversheds is clearly a top tier firm. Yet the future trends that its report addresses are directly relevant to firms of any size because they clearly indicate a disconnect between lawyers and their business or corporate clients.

That disconnect shows up in various responses, having to do either with what law firms charge or how law firms operate. A sampling of the observations includes:

  • Clients are concerned about continually rising fees and the report suggests that in-house counsel believes that law firms cannot continue to increase their prices; yet law firms do.
  • Priorities between clients and lawyers diverge on controlling costs. Clients want lower fees but don’t put a premium on cost cutting because they equate it with decreased service.
  • Eversheds concluded that most legal advice will not be commoditized—priced at reduced rates for volume work. Most other surveys disagree; this result likely reflects the more sophisticated work of Eversheds clients.
  • Clients and partners disagree about work-life balance, and in fact are split equally on the issue. Approximately one-half of clients and one-half of partners believe that flexibility will solve the work-life balance, while the other half of each disagrees.

Such disparities may be of little more than academic interest, but they do demonstrate that law firms and their corporate clients often look at the world through different lenses. In fact, I quickly came up with a list that illustrates some pretty substantial variances. Here are a few:

  • Primary factors considered for corporate compensation are based on company or operating unit performance, and seniority; law firm compensation is based on billables and origination.
  • The corporate CEO receives the highest compensation, with pay tiered below that; law firm managing partners and group leaders often are not compensated for management duties.
  • Corporate decision-making follows the chain of command; law firm decision-making requires consensus among partners.
  • Corporate culture is focused on organizational performance; law firm culture is individualistic and focused on personal performance.
  • Corporate discretionary spending is set by budgets and strategic plans; law firm discretionary spending often reflects individual partner decisions with seldom a plan in place.

You likely can add your own items to the list, but what this says to me is that, as long as law firms and their corporate clients handle their own money and decision-making differently, they’re unlikely to see eye-to-eye on how the other party approaches these important issues.

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Audience type: Administrators, Associates, Large Law Firms, Small Law Firms, Sole Practitioners