How Should A Business Pick its Law Firms? Brand Name Method Fails the Empirical Test

As we both awaited the start of a meeting, I struck up a conversation with the general counsel of a publicly traded company with $2BB in annual sales. We agreed that great law firms and attorneys are available beyond the most prominent brand name law firms.

But my friend was emphatic: Departure from those brand name law firms his client company was used to retaining would amount to a career risk. And — as the ads proclaimed a generation ago — “No one ever got fired for hiring IBM”.

One year ago 25 general counsels signed a letter announcing empirical reviews, “to test industry assumptions and understand how to improve the legal market and relationships between law firms and clients”.

Under the auspices of AdvanceLaw — a consortium of 200 general counsels from Sony Electronics, Nike, Peabody Energy, and the like — they announced that they would, “move beyond the anecdotal to measure what really works.”

These 25 general counsels — with the help of their consortium companies — announced their first set of empirical findings on June 12.

It’s a performance comparison between the largest 20 law firms by revenue (AmLaw 20) versus the next 180 law firms by revenue (AmLaw 21-200):

“We write today with what may become the most controversial finding from the [study]. Based on in-house evaluations of over 1,400 legal matters, the largest and most established law firms lag the rest of the Am Law 200 in delivering high quality client service. There are exceptions, but this overall finding holds, and it is statistically significant.

“More specifically, the Am Law 21-200 is outpacing the Am Law 20 (the largest 20 firms by revenue) on several key service metrics, including responsiveness, efficiency, quality of work, and solutions focus. Likewise, when we look at firms with high revenue per lawyer (an even better indicator of a firm’s prestige and ability to charge premium rates) we see a similar storyline.

Note that this isn’t an opinion survey: no one ranked firms. These are 28 companies’ evaluations of over 1,400 legal matters; and because we knew which firms and lawyers handled each matter, we were able to determine which firms performed better or worse, as well as identify trends. We also controlled for many variables (such as type of legal work, length of client/firm relationship, size of legal matter, amount of spend with the firm, and the like) to test and re-test our findings. But the result was the same. On the whole, when clients look to hire firms, bigger or more pedigreed is not necessarily better.”

One of the participating general counsels — Bill Deckelman of DXC Technology — commented separately:

” … During my first 15 years out of 20 as a GC [general counsel], I subscribed to the conventional wisdom that the most esteemed, branded firms were the place to go for top service …. I disproportionately hired these firms. But over the last five or so years, I’ve started migrating work, in part because I was witnessing more service missteps than before. At the high prices we were paying, this felt inexcusable. I’m referring, for example, to times my relationship partner didn’t have our back, and didn’t (or couldn’t) address problems created by other partners at the firm ….

“My view isn’t that the top lawyers at these firms aren’t knowledgeable or that they don’t understand how to serve clients. It’s that they’re stretched thin, and can’t be as attentive to my (or any single GC’s) work as they used to be. This is the case because many of these firms achieved high partner profitability through increased staffing leverage. We’re essentially paying for more junior lawyers, and when we get senior partners on the phone, they’re often a step removed from the facts.”