Where has the trust gone in client-lawyer relationships?

The confidence that many businesses have in their law firms has been wearing thin for some time.

Yes, most law firms are good at doing the job that they are paid for – providing legal advice. And you would expect this. However, memories of sky-high pre-recession rates (charges are still perceived to be too high), coupled with inconsistent service and little understanding of how to really add value to relationships (such as helping in-house lawyers to get a place at their organisation’s top table and to keep finance off their backs) has led many clients to question whether law firms actually value their custom.

To their credit, many law firms have been trying (although with variable degrees of success) to turn this around. Costs have been driven down, overheads slashed, processes streamlined and anything that isn’t absolutely essential outsourced. Creative pricing as well as risk sharing are being experimented with and refined in an attempt to provide greater financial value.

Some of the bolder law firms are even dabbling with offers of ‘pay what you think our service is worth’. This is either extremely entrepreneurial – uncharacteristic for a largely conservative profession – or very foolish, depending upon both their ability to deliver and client honesty.

Service wise, there continues to be a rush of partners looking to shore up their relationships which – surprise, surprise – usually results in significantly lower hourly rates and, in some cases, to levels not seen for over half a decade.

It’s safe to say that the legal industry has finally woken up to the fact that what clients really want is to reduce the amount they spend on legal fees, the law firms that they use to be run efficiently and to be looked after properly. The question that many businesses are asking is: why has it taken the UK legal industry so long to wake up to this?

Under the microscope

Private practice lawyers provide a service and, frankly, it’s not surprising that many clients feel that they have been played or taken for a ride. It is no great shock then that there is a notable rise in law firms coming under the microscope, with both tendering and re-panelling on the up.

Before the recession, it was hard enough to distinguish one law firm from another. Apart from using directories and personal recommendations, comparing law firms in any meaningful way was a difficult, complex and drawn out process. It certainly required a considerable amount of time, effort and specialist knowledge.

The upshot was that, even though businesses may have been less than happy with the service or advice they received, changing to another law firm and ensuring that they picked the right one required a greater investment than many were prepared to make.

In most cases, the lack of transparency made any sort of performance or financial analysis impossible. As a result, what they frequently ended up doing was using the lawyers that they always had done, just because it was an easier option – very much the case of rather the devil they knew.

With all of the change that is taking place, unless you are a bespectacled business school researcher with an aversion to daylight, it is now even harder to make this comparison.

Impact on relationships

What does this mean for in-house counsel and the law firms that they use? Well for savvy in-housers, they are more aware than ever before that a better offer may be available.

Unless their existing lawyers have done their absolute utmost to reassure clients that they are receiving the best possible value and service (and the truth is, there are few that have done this to the extent required), the trusted advisor client-lawyer relationship that many law firms have spent years trying to achieve has been bruised and in many instances is well and truly broken.

Can it be fixed? The answer is yes, but it will take time – and rebuilding trust isn’t easy. It can’t be done with a new website, brochure, mail shot, seminar or even a piece of thought leadership, no matter how pithy or well written it may be.

It needs to be done by spending quality time with the people buying services and those that influence them and their careers. In a world where technical ability is taken as a given, this is the only way that firms will repair the confidence that has been lost. Those that step up to the plate and do it well will certainly stand out from the crowd and get a place at the front of the queue.