March 17th in Credit Crunch, Larry Demont by Editor .

Trusting a Firm Under Pressure

Cash strapped businesses fighting for survival, professionals reducing headcount for lack of work. Potential for a clash of wills or a loss of trust? The Greatest American Lawyer asks the question in its appropriately entitled (if a little long-winded) article, "Why Would Any Client Continue to Trust Their Law Firm Once They Realize that Firm is Under Severe Financial Stress?"

We all know how it works.  Law firms start to see workloads lighten, and they start generating a bunch of …

Charles Tyrwhitt UK
 

Cash strapped businesses fighting for survival, professionals reducing headcount for lack of work. Potential for a clash of wills or a loss of trust? The Greatest American Lawyer asks the question in its appropriately entitled (if a little long-winded) article, "Why Would Any Client Continue to Trust Their Law Firm Once They Realize that Firm is Under Severe Financial Stress?"

We all know how it works.  Law firms start to see workloads lighten, and they start generating a bunch of "make-work" for their partners and associates.  The work that is generated has little or no value to the client.  It is designed exclusively to generate revenue for the law firm.

We’re not sure firms necessarily need to see workloads lightening for this, with associate targets often stratospheric, bill padding is not unheard of even in the good times.

What I don’t understand is this.  Why would these clients, knowing their large law firms are under severe enough financial stress that they are having to lay off large numbers of lawyers, trust those law firms to avoid "make-work" billing.  One of the many challenges posed by hourly billing is that it requires a high degree of trust between the law firm/attorneys and their clients.  In a growing economy, a client might believe that the law firm has more than enough work to keep it busy and will only allocate hours to things that are meaningful.  If I were a client of any of the law firms on the layoff list, I would actively be seeking other alternatives in the market from firms which are financially stable or growing.  There is no way I would trust that my law firm was going to put my interest ahead of their own instincts for survival.

Not quite sure of the logic in seeking alternatives in this market as there is hardly a firm around that hasn’t seen at least a few layoffs. Plus scrutiny of bills is no-doubt extra sharp right now. But there probably is some sense here and it might go for other professional services too. One Solicitr reader noted that their accountants had gone from doing quick signatures in the firm lobby to using a boardroom with tea, biscuits and half an hour of time billed for the pleasure on their invoice, thanks very much…
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4 Comments

  • Anonymous
    March 17, 2009
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    March 17, 2009
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    March 17, 2009
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    March 17, 2009