by Deb Baker / June 29, 2018
The organizers of the GC Thought Leaders Experiment, a study of the data contained in the in-house evaluations of more than 1,400 legal matters, recently released a remarkable finding: the largest and most pedigreed law firms, the AmLaw 20, lag behind the rest of the AmLaw 200—that is: the AmLaw 21-200—in providing high-quality client service. In other words, the assumption that the most lauded and most expensive firms will deliver work that is, on average, superior to their smaller competitors turns out not to be supported by the data.
Specifically, the AmLaw 21-200 are outperforming the AmLaw 20 on key service metrics such as legal expertise, responsiveness, efficiency, quality of work, and a “solutions focus,” meaning the lawyers exhibit creativity and strategic thinking to help their GC clients get to solutions. To be clear, the findings do not show that the AmLaw 20 are performing poorly, but the difference in client service is statistically significant and should serve as a major wake-up call to large firms relying too much on their historic reputations to preserve client relationships. The takeaway for large firms: inertia is not going to save you.
Ask Bill Deckelman, executive vice president, general counsel, and secretary of DXC Technology. He wrote in The American Lawyer last week about his choice to migrate work away from the legacy firms he worked with in the first 15 years of his GC career and try firms outside the AmLaw 20. He has been very pleased with the quality of the work there, just as the data supports.
And yet so far we have not seen a mass exodus of clients moving their high-stakes work to smaller firms. Why not? Study authors Firoz Dattu and Aaron Kotok posit that this may be a recent problem—growing associate-to-partner ratios may have reached a tipping point at which service quality began to diminish, and many AmLaw 21-200 firms have only recently acquired the depth of expertise needed to compete on high-stakes work and provide an alternative choice for clients. It’s also possible that the costs of switching, both in terms of fees and continuity on ongoing work, have so far been high enough to keep clients where they are.
But there is a third and very powerful explanation for why clients haven’t yet moved their business: as Dattu and Kotok put it, “the legal market has an information problem: we don’t know which firms are performing better, so we are forced to default to brand (and high cost) as proxies for quality.” That information gap is closing, which means the clients will begin to make decisions based less on legacy and more on concrete elements of performance. AmLaw 20 firms must be able to deliver superior service across the key service metrics, or they will lose business to smaller, better-performing firms.
The change is coming. The silver lining is that what serves as a wake-up call for the top firms is a moment of opportunity for mid-size firms. Doing things differently—embracing that all-important “solutions mindset” and providing the high-quality service clients expect—has enormous benefits. Clients are listening and planning carefully for the future. Will your firm capitalize on this opportunity, or will it be one that clients leave behind?