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Want prosperity? Add value for your clients

By MARC GUSTAFSON, Special to Lawyers Weekly

For most of us, the last few years of legal practice have been a little shakier than we would have hoped for. We’ve all seen the figures, but they are worth repeating.

According to the Law Shucks website, over 15,000 people have been laid off by large law firms, including nearly 6,000 lawyers, since 2008. The American Lawyer site calculates that over 3,000 lawyers were laid off in the first three months of 2009 alone.

And this doesn’t account for the large number of practitioners in small and medium-sized firms who have lost their jobs or the solo practitioners who have left the profession.

Threatening to shake things up even more is Hildebrandt Baker Robbins managing director Lisa Smith, who recently warned the ABA that another 17,500 large firm jobs may be at risk in the coming years. Numbers like these could wipe out entire graduating law school classes.

What is scarier to most of us, however, isn’t the news about the latest round of bloodletting, but the lack of serious focus on the fundamental changes our profession is undergoing. The failure of many attorneys to see what people in other professions seem to already grasp can be spotted in Smith’s comments denouncing even deeper job losses as some sort of evil scheme by law firm management across the country.

So how do we change a system that seems to date to the beginnings of our country? One method I experienced in my former in-house role, and which I have attempted to implement in private practice, is to identify ways to add or create value for clients. I’m not talking about value that comes from working for an Am Law 100 law firm, graduating from a top tier law school, hanging diplomas on the wall with Latin phrases under our names or feigning an aura of self-importance. I mean real value.

Below are a few simple suggestions to create real value for clients.

  • Don’t promise what you can’t deliver. Lawyers should assess and clearly communicate whether they can achieve their clients’ goals. As an in-house lawyer, I always appreciated an attorney who honestly evaluated the legal landscape facing our business and who was clear in his/her ability to achieve our goals, even at the risk of losing the engagement. No matter the size of your client, an honest assessment of your clients’ goals and the chances of achieving those goals add value. No client wants to spend money to only fall short of the desired result.
  • Align your incentives with your client’s. I’m not advocating abandoning hourly billing (not yet anyway), but I do believe a firm’s goals should be aligned with the client’s. Too often it appears attorneys permit matters to linger so that he or she can bill more hours to the file. In the transactional arena, coming under-budget for a project demonstrates to a client you understand its goals and are working hard to reach those. As costs become more important to clients, they will look harder and harder for service providers who align their interests with their own.
  • Outsource. And I don’t mean overseas. Our communities are full of great experts who charge at or below going legal rates. Consult with accountants, doctors, engineers and other professionals when the issue presented would otherwise require time-consuming legal research. Likewise, lawyers should avoid straining to fit a client’s problem into his or her legal practice. Finally, clients may be best suited to solve their own issues. Encourage them to actively negotiate a resolution, knowing you are there to assist should the need arise.
  • Work earnestly with opposing counsel. Too often matters become adversarial either because lawyers are under the mistaken assumption that clients prefer this approach or because they are unsure about their own footing in the matter. Neither of these will result in effective representation of clients. Moreover, issues tend to inflame and become even more confrontational the closer they get to resolution. Revisiting your initial assessment and focusing clients on their interests may help diffuse some of this tension. Advocate vigorously for your client, keeping in mind that a compromise may be the best resolution.
  • Focus clients on interests, not positions. It has taken me years to realize it, but the most important thing I learned from law school was surprisingly not the statute of frauds or the rule against perpetuities but that the most effective way to achieve a solution to a conflict is to focus the parties on satisfying their underlying interests, not on a particular position at stake. Positions are often conflicting and non-negotiable while interests reflect actual needs and can be satisfied in a variety of ways. Focusing clients and opposing counsel on the parties’ relative interests leaves open the possibility that more of these interests can be satisfied.

It would be easy to dismiss the items cited above as a casualty of the recession that will be cured by a reinvigorated economy. Such a view misses the point. Even before the financial services meltdown and the onset of the recession, law firms were admittedly over-leveraged. But skyrocketing salaries, high turnover and decaying practice areas ate into profit margins. (That’s not to mention the effects these models had on lawyer morale.) Add to this an increased focus by businesses on cost cutting, and it is easy to see why the high leverage model appears to be destined for collapse. Firms that can identify value and provide it to their clients have the best chance of surviving and prospering in this new environment.

Editor’s note: Marc Gustafson is an attorney with Essex Richards in Charlotte. His practice focuses on general, commercial and employment litigation. He also counsels small businesses on lending, corporate and real estate matters.

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