ACCs Law Firm Project: ReConnecting Costs to Value

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ACCs Law Firm ProjectRe-Connecting Costs to
Value

• Michael Roster
• Former Chairman of the Board, ACC
• Retired CLO and Former Law Firm Managing Partner
• Susan Hackett
• Senior Vice President and General Counsel
• Association of Corporate Counsel (ACC)

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ACCs Law Firm Project

• The Premise / The Proposition
• What we envision and how it would work
• A roll-out in October of 2008 at ACCs Annual
  Meeting in Seattle

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ACCs Law Firm Project

• How did we come to this place? Will corporate
  counsel support this effort? How will law firms
  respond?
• Everyone complains about the billable hour
  firms, practice groups, and in-house departments
  want change
• Turnover, balance of life and professional
  dissatisfaction
• Revenue per partner/profitability at all time
  highs, while in-house departments getting leaner
  and more efficient
• Law firm rates/costs continue to rise, with no
  readily apparent increase in value or service
• Associate and partner incomes / media coverage of
  them

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ACCs Law Firm Project

• What does history tell us?
• Retentions used to be simple - one page bills and
  law firms costs and strategies unquestioned
• Clients invest in in-house departments part of
  their function is to better manage the spend
• Clients begin to demand detail from firms
  they look at efficiencies and comparatives
• The rise of alternative legal services providers
  legal services increasingly are commoditized
• Clients share responsibility with firms for the
  billable hour system they now complain about

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ACCs Law Firm Project

• Law firms made billable hours into a business
  model
• Firms became focused on profit and less aligned
  with professionalism or client service
• The views of the General Counsel when and why
  are law firm services not aligned with client
  needs or the value provided?
• The General Counsel increasingly is asked by
  senior management to control costs, reconsider
  the purchasing methodology and/or bring more work
  in-house

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ACCs Law Firm Project

• Once average profits per partner becomes the
  target, law firm structures and operations get
  distorted
• How average profits per partner gets managed
• How associates are trained (or not)
• How associates are retained (or not)
• How clients are served (or not)
• How firms compete for clients, talent, reputation
• How the business model functions

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ACCs Law Firm Project

• The movement toward mega firms
• The challenges for medium and smaller firms, as
  well as their competitive advantages
• The alienation of talent and loyalty and loss of
  personal satisfaction

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ACCs Law Firm Project

• Audience Discussion and Questions
• Have we identified the right problems?
• Have we articulated an approach toward a
  solution?
• Who stands to gain and who stands to lose?
• How can your firms consider these developments
  and take advantage of them?
• How will the marketplace react?

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Thank you for your time and attention.

• Susan Hackett hackett_at_acc.com
• 202/293-4103, ext. 318