Legal mistakes, overcharging, stealing staff, what does it take for a client to drop a law firm? Angela Priestley reports
For Nestlé's Richard Anderson, his relationship with a large law firm really turned sour when one of the firm's partners stole his secretary.
The staff poaching incident followed a long list of fatal flaws by this particular firm, including a misdirected fax Anderson received detailing a partner's plan to buy a new yacht.
Needless to say, the firm in question no longer receives Nestlé's work. During a panel discussion at last week's Australian Legal Practice Management Associations (ALPMA) annual conference, Anderson was blunt with his assessment of such behaviour. "There are some things you just don't do," he said.
In a legal services market still strained from the fallout of the GFC and facing a number of game-changing pressures - the rise of mid-tier firms, the increasing use of LPO, the arrival of international law firms to name a few - it would seem that law firms should be aware of just what they should and should not be doing for clients.
But according to the ALPMA panellists, which included three general counsel, plenty of law firms still fail to get the basics of client relationships right.
And in 2010, the basics matter. Clients are changing. They are growing in influence, number and power, and they're expecting more from their law firms in the process. As Trish Carroll from Galt Advisory noted, clients are getting more "sophisticated, discriminating and very, very smart."
Even more game-changing is the fact that clients are catching on to the games that law firms play. "They [clients] can see through superficial efforts of many private law firms who pretend to know about their industry or care about their problems or convolute their pricing to the point that hourly rates look like the only model you can actually trust, compare and test," added Carroll.
For Margaret Taylor, the general counsel at Boral, the basics she expects from law firms come down to consistency. Having been a partner at Minter Ellison before jumping across to the client side, she said there are plenty of things she now knows she should have done differently at Minters but, "you do realise on the other side of the fence that it's not rocket science".
According to Taylor, it's about consistently delivering a good client management approach. "It's the motherhood stuff about accessibility, responsiveness, working with the in-house counsel as a partner rather than treating them like they're brain dead, being cost conscious on the client's behalf, understanding the industry, providing advice that's relevant, being solutions oriented and providing the advice in a form that's digestible to the client," said Taylor.
"All those things that I'm sure you've heard a million times before, they really do matter because it's amazing the number of firms who don't do that consistently.
"You will have a number of partners in a firm do all that, but then you'll be let down by somebody else."
And Taylor has technically "sacked" her fair share of law firms. She arrived at Boral a number of years ago to find the organisation was using around 75 different law firms. "There's a lot of leverage required to develop relationships with 75 firms, so putting a panel in place was one of the first things I did after I arrived."
At Sucrogen, formally known as CSR, legal counsel Duncan Glasgow believes managing the client's expectations is essential for a law firm. While he does not foresee the death of hourly billing in the near future, he is increasingly utilising blended rates and said that law firms must assist by better scoping work and taking on more risk. Glasgow has also sacked at least one law firm. During the CSR demerger process earlier this year, it was widely reported that CSR switched from using one top-tier firm for the associated legal work to another. "There was a feeling that perhaps the matter should have been better managed," he said. "Freehills got appointed, they won the appeal."
But it was Anderson who really saw just how bad a law firm relationship could turn. While he refrains from naming the firm in question, he cites four reasons why he dropped a national firm from his organisation's panel. The first came down to subtle legal mistakes which, he said, could have been forgiven. The second revolved around a conflict of interest. The third reason was the fact he found out the firm was acting for a major competitor and the fourth was that ultimate deal breaker involving the partner stealing his secretary.
The experiences of the above three general counsel were all too much for panel member Jay Shepherd, a visiting lawyer from the United States, in Australia to share his unfavourable opinions on the billable hour. "Are you crazy?" he frankly asked the three in-house lawyers in reference to how they have allowed themselves to be treated by law firms.
For Shepherd, many of the issues facing general counsel come down to billable hours and the "terrible" job law firms have done in explaining how they price.
He also believes that deploying a panel of law firms is counterproductive to encouraging competition from law firms.
"I think what happens is that these law firms get on these pedestals of a panel where they're one of four, one of seven or eight law firms and they suddenly feel like they're untouchable and quite frankly, they don't have to work so hard," he said.
The issue is also that law firms, even those firms on a client's panel, are still, in some circumstances, not meeting the expectations of clients.
And such client expectations do not seem to relate solely to pricing.
Instead, it comes down to a need for clients to see their law firms displaying honesty, loyalty, common sense, accurate estimates and to have their expectations managed during the course of a matter.
Such expectations, and the fact that general counsel are more than willing to sack law firms, also present opportunities for firms to get a look in with prospective clients.
But according to Taylor, fresh firms looking to jump in where other firms are failing must be cautious in their approach. "What's not welcome is when someone knocks on your door and says 'we want to do your work', or sending some ghastly capability statement," she said. "Show you're prepared to put in an investment, don't pester the client ... Remind the client you're there without making a nuisance of yourself."
Meanwhile, winning a new client is one thing, but retaining them is not an automatic given.
And stealing a client's secretary certainly won't help.