I sometimes share my morning commute with Tom, the senior executive of a local investment firm. His company does a lot of financings and M&A deals and predominantly uses a local securities boutique to structure the deals.
Tom knows that my business is coaching lawyers so this morning he gave me his unedited review of his lawyers, law firm, and the legal business model. The fee structure, the billable hour business model, and lawyers insistence at wordsmithing documents on his dollar all got a failing grade.
Here are some of his candid comments:
- Why no flat fee structure for this work? We keep getting told that each deal is unique and there is no way to accurately estimate the lawyer time it will take. Yet, when you look at the total legal bills for each of our deals they always come in at about the same amount. Why not just flat fee us, and leverage your own internal time saving innovations?
- The only reason we don’t put out a request for a law firm who will work this way (see above comment) is that we have a long-standing relationship with our current firm. They know us and our business.
- I can’t stand it when lawyers insist on writing me a long and expensive memo when what I need is a quick answer. I’m a business man; I need my lawyer’s best answer on the spot.
- I recently did a deal where the lawyers on both sides disagreed about how the deal was written. They started to argue, at a cost of 700/hr about wordsmithing. I asked my lawyer, look, does the deal work as it has been written? The lawyer responded yes, it works but I don’t like how it is written. This is about getting deals done, not about writing an epic novel.
In my local legal marketplace we don’t get the biggest and best financings. Tom’s company would count as a very good client and source of lots of good work. Even though they have an existing law firm relationship (who doesn’t?) in my view they are ripe for the picking. What would it take?
- A willingness to invest in developing a relationship with the company, quickly, at your own expense.
- A willingness to work on a flat fee or other alternative structure.
- A lead partner who is able to provide the kind of “shoot from the hip legal advice Tom is asking for.
I would like to point out that Tom is an easy-going, even tempered guy. You’d never know it this morning. It just goes to show how the way our law firms conduct business can be so negatively received by the very clients we serve.
Tom’s rant also points out the value of relationships: He and his company haven’t taken their work to another firm because of that relationship. It would be too much work. However, if another firm was willing to make it easy for them to make the change through investing time in learning their business, and offering a different fee structure, they would likely jump.
What are you willing to invest in retaining your current clients? And growing your business? Could you offer what Tom is looking for?