I came across an article in Crain’s Chicago Business entitled “Why law firms are turning to non-lawyers for sales help” where they talk about law firms hiring sales/marketing professionals to develop business. In a profession where advertising was once banned, this is considered a radical move. According to the article “law firms are reacting to customers who have learned how to strip out components of legal work and value them accordingly, an unbundling of services that echoes what hit the computer industry decades ago” and “what’s happened is that the buyers have become smarter than the lawyers.” Score one for Strategic Sourcing.
But law firms are fighting back. Many have moved toward hiring business development professionals to sell their services while others have provided sales training to their lawyers. Some firms are experiencing up to a 60% increase in client requests for proposals where that same work was automatically awarded in the past. The economy and competition has forced law firms to think more like a business. But getting a lawyer to think like a sales person is not without its challenges. Many feel that they didn’t go to law school to become a sales person. “Traditionally, lawyers believed their knowledge and expertise spoke for itself, and it would be a sign of defeat to start marketing.”
Another role has emerged as law firms fight against Strategic Sourcing – Pricing Director. Two years ago there were only a few such roles and now there are over 300 across the industry. The upsurge has been caused by pressure from clients. Clients have adopted more savvy purchasing practices and law firms have been forced to react. In 2013, two thirds of law firm revenue involved flat rates and other “alternative fee arrangements” such are pre-negotiated discounts to billable hours.” The days of open ended agreements and highly paid lawyers billing for work that could be done by paralegals may be over. Some law firms are starting to be more judicious (no pun intended 😀 ) in pushing lower value added work down to paralegals, contract attorneys, document processors or to low cost countries (e.g. legal research in India) as a reaction to the market.
This shift has not happened without a great deal of pain. The long standing culture within many law firms can be a tough nut to crack. Business development professionals entering these firms, name decision making as the number one biggest issue they face. Partners see the change as optional and need to be convinced that the shift is necessary. In addition, sales cycles for professional services firms can take two years or longer which can be frustrating for both the sales person and the firm. Like any change, it takes time and expectations need to be managed along the way to be successful.
So what does this shift mean for Sourcing professionals? Where legal services were once a sacred cow for strategic sourcing – that is changing. Use this as a call to action to at least consider legal services as an opportunity. This does not mean you need to switch to new outsides law firms but can be a way to add value to your internal legal group by helping them to buy smarter. If law firms have recognized the market has changed by thinking more like sales people, then it’s time our internal business partners (legal) recognize that change and capitalize on it.
Let us know what you think and join the conversation . . . . . .
1 Comment
Anne,
This trend actually started quite a while ago. In the early 2000s I was approached by a law firm that wanted me to create their IT transactions group. The firm was primarily a labor relations firm but their clients had essentially said that they wanted “full service” law firms that could deliver all or most of the required services. In return for getting more business the firm would be expected to lower their rates.
The next major shift occurred when the whole “many associates work like dogs (and bill accordingly) to support the partners model collapsed a number of years ago, with a number of firms basically dumping entire “classes” (year in which they hired a group of new law school graduates) because they could no longer afford to pay the enormous starting salaries that competition for top grads had created.
Clients also sought to lower their overall legal fees by requiring that certain legal tasks be outsourced. This basis of this model was to have US trained lawyers in countries such as India perform many tasks (typically complying with discovery requests) at a far lower rate than was possible in the US. This was permitted by the courts if the Indian lawyers were under the supervision of a lawyer here in the States. A friend of mine made the transition from large law firm to the one of the legal outsourcing companies a number of years ago and now coordinates the delivery of services by Indian lawyers. It will be intriguing to see what happens at the point when few US based lawyers will have actually handled discovery requests themselves, which means that they will not be all that qualified to supervise such tasks.
Dave