It’s pretty obvious that the world has changed with the Great Recession. In many ways we are still not clear on how or why things have changed, we just know they have. Financial decisions have been forever impacted by the terrible effects of the recession. Businesses face new concerns as a result of the sharp and protracted turn in the economy.
Professional services have not been immune to the effects of the recession. In addition to the recession, there is a new generation of decision makers emerging who are comfortable with and use the internet in ways that prior generations have not experienced. In particular, clients who purchase legal services are exploring and requiring changes to the delivery of legal services. This article will explore how, in this new economy, businesses may more effectively use legal counsel.
Lawyers play a significant role in helping businesses succeed, including helping business avoid liability in general, comply with regulatory requirements, charting a course that protects the business from legal landmines, minimizing risk when engaging in transactions, and when disputes arise, helping to work through and resolve the disputes.
There are many excellent lawyers who are bright and provide good legal analysis. But not all lawyers are effective at meeting the needs of clients. A superior legal analysis may be good for understanding the problem, but if legal counsel cannot help craft a cost effective and meaningful solution, the brilliance of the lawyer is of no use to the client. Similarly, if the business client is looking for a “Chevrolet” contract with a vendor, but their lawyer spends countless hours preparing a “Mercedes” contract, the client is not well-served.
Particularly in the aftermath of the Great Recession, the goal for business clients is to find a lawyer who can meet all of their needs. When evaluating the effectiveness of legal counsel, a business should consider the following:
- Lawyers should be responsive. Historically medical patients listened to a doctor’s diagnosis, accepted it, and never questioned the medical decisions. Those days are over. It is now accepted practice for patients to question doctors and medical staff on every healthcare decision. Similarly, clients need to discuss with legal counsel their analyses and proposed courses of action. Lawyers are simply people who provide a service, and just as patients should not shy away from asking their medical team hard questions, clients should not fear asking their legal counsel questions or discussing why a particular decision is being recommended. There is one caution. Sometimes simplistic or frequent questions from clients can indicate a lack of trust and confidence at any level, and become annoying. Asking too many of the wrong kinds of questions, or demanding too much of a lawyer, may lead the lawyer to fire the client, long before the client thinks about firing the lawyer. Similarly, if the relationship is strained, it is difficult, if not impossible, for legal counsel to be effective.
- Lawyers counsel; business managers decide. Business clients need to remember they are ultimately responsible for all decisions made. If a decision is flawed, there may be a lawyer to point a finger at, but at the end of the day, the business manager is responsible for the decision. Lawyers work for their clients, and not vice versa. Business managers manage the business, and all aspects of the business, and that includes the acceptance of legal services.
- Lawyers should be treated as counselors. Lawyers have unique training, but after years of practice, they should have developed good judgment. Although the role of lawyers has changed over the years, a lawyer is still fundamentally an independent and thoughtful third party who can counsel the client on how to address the business issues at hand. Clients should be able to trust and have confidence in legal counsel. If you as a client do not have confidence in your lawyer as a counselor, it’s probably time to look for new counsel.
- Lawyers need to understand the client’s business. Decisions can no longer be made in a vacuum. Although a legal analysis may be made perfectly, if it does not make sense in the context of the client’s business, or given the economic and other constraints, the analysis has little value. Industries and competition within industries are changing, and legal counsel should have sufficient knowledge of the business and industry to be an effective counselor and problem solver.
- Lawyers should be problem solvers. There are many lawyers who would love to take a dispute to trial, but in many cases, that is not in the best interest of the client. With unique training, years of experience and good judgment, legal counsel should help clients solve their legal and business problems with the least cost and disruption possible. It may not necessarily be in the lawyer’s best interest to solve a dispute quickly, but lawyers should always put the interest of their clients first when providing any legal services.
- Lawyers should be cost-conscious. There is significant pressure on lawyers to deliver services more cost effectively. Clients should ask their legal counsel about how a matter is being staffed, and if the services are being delivered by the best person or people for the matter. Often is it more cost effective for a more senior lawyer to handle a matter than to have a young lawyer spin his/her wheels trying to work through an agreement or understand a complex legal problem. Clients should be willing to ask legal counsel about alternative billing arrangements, such as fixed fees, blended fees, modified contingent fee arrangements, or any other creative way of billing that makes sense for both the client and the lawyer. Keep in mind that if the arrangement does not work for both the client and the lawyer, it is destined to cause contention and fail.
- Lawyers should be proactive. In today’s environment, an ounce of prevention is now worth ten pounds of cure. Lawyers need to think ahead and anticipate potential problems. Clients should invite legal counsel to be proactive. For lawyers to be proactive, clients need to keep their lawyers informed of important business plans, directions, and strategies. Lawyers need to engage in early risk detection. Clients need to understand that in the long run it is more cost effective to bring counsel in on critical decisions at an early stage. There is a natural tendency to want to avoid paying legal fees until it is absolutely necessary, but avoiding talking with counsel to save money will frequently result in a much larger bill for legal services later.
- Lawyers should manage the delivery of services. Legal services don’t just happen. They need to be thoughtfully planned for and provided. Lawyers should watch the amount of legal fees being incurred for a particular matter, and if the costs of the matter are becoming too high given the nature of the matter, he/she should inform the client. Lawyers should not simply handoff a project to another lawyer and assume and hope it will be done in a cost effective manner.
- Lawyers should add value. LegalZoom and non-lawyer providers of legal services argue that they are filling a void. However, the perceived value of paying less for a form document than engaging counsel to work through an agreement may be nothing more than a mirage. If a client does not understand the value being provided by legal counsel, ask. The lawyer should be able to explain the value being provided.
- Lawyers should use technology effectively. Lawyers need to understand and use technology in a manner that will reduce the cost of the delivery of legal services, and enhance the value of the services provided. For example, proving a client portal can provide a significant benefit to clients, and also reduce the cost of communication regarding documents.
- Lawyers should communicate. There is simply no excuse for a lawyer not to communicate with his/her clients. There may be a rare exception when a communication is delayed, but all client inquiries should have a response within a reasonable period of time. Lawyers need to keep clients advised at all stages of a matter. The client should never have to ask about the status of the matter or what will happen next.
Effective use of legal counsel takes work on the part of the client, but it is well worth the effort.