A modern day Aesop’s fable: the GCs and their budget

Much has been made of what you might call (only if you are a lazy blogger) DLA-gate.  The story of the associates and their jolly email japes about bill padding.  Except the jokes don’t look so jolly now they have escaped the DLA-servers.

Amusing as it might be to see the joke now turned on the jokers, it would be wrong to draw any conclusions about DLA as a firm or its culture from the content of those emails.  I’m willing to bet that most organisations, not just law firms, have some emails hiding on their servers that would – if taken literally and out of context – show that organisation in a bad light.  That’s email for you and you can’t control the uncontrollable.  So anyone doing too much hand-wringing at the email etiquette of others had better keep their fingers crossed that their luck holds in the future.

For me, the most interesting thing to come out of this little saga is this extraordinary article by Mark Harris, the CEO of Axiom, on Forbes.com.

As legal-watchers will know, Axiom is a so-called new model alternative law service (its detractors claim, unfairly and to their own detriment, that Axiom isn’t really a law firm).  I only say so-called because Axiom isn’t really very new.  It speaks volumes about the general inertia of the legal market that Axiom is still in some way regarded as a new kid on the block, an outlier, a disruptor.  And I’m willing to bet that Axiom management are only too happy to cultivate that image.  After all, it continues to set them apart from Big Law, or perhaps more realistically, Medium Law, and gives them somewhat of a USP – “we’re different”.

I found the article extraordinary because you rarely see law firms turning their fire on other law firms so publicly.  Mr Harris pulls no punches in his (admittedly self-interested) view of Big Law, the charging model, the incentive model, the culture and the conflict those models have with their own client’s interests.  Whilst they are fair points well made, I was still surprised to see an article from someone within the mainstream legal services community turning their fire on competitors in such a direct way.  One can’t imagine the managing partner of Clifford Chance writing a similar article about his friends down the road at Linklaters.  It’s just not the done thing old chap.

But extraordinary does not mean wrong.  Perhaps it takes the odd sabre-rattling moment to remind the legal market to wake up and smell the coffee.  Despite constant (in fact boringly consistent) talk of market change, believe me (or if you don’t believe me, then at least believe the New York Times), the hourly rate is alive and well and remains the starting point of most fee negotiations and the cornerstone of law firm metrics, even if it is usually possible to avoid its direct application after a conversation or two.

And in terms of who needs to wake up and smell the coffee, I’m not sure that the real target of Mr Harris’s article is actually his competitors in Traditional Law.  I suspect he is more than happy to see them continue hourly billing themselves to an inevitable death for as long as they like.  As is evident from a couple of references towards the end of the article, his real target is clients.  Clients hold the purse-strings, money equates to control and control can effect change (as Jon Busby outlined succinctly in a recent tweet).  No amount of blogging, tweeting, or legal ceremony award giving is going to change the fundamentals of legal service provision.  Only the reallocation of client budgets is going to do that.

DLA-gate says nothing much at all about DLA.  It is a high calibre firm, who really cares if a couple of associates went off piste for a bit of an in-joke, no doubt after pulling yet another 12 plus hour day.  You’ve got to get your kicks somehow. But the real side-message of this episode as articulated so well by Mr Harris is really about clients and, dare I say it, GCs.

To quote Mr Harris,  “if we’re going to see real change, then clients must allocate their business accordingly, as many are starting to do. How does that saying go? Fool me for 100 years, shame on you. But fool me for another 100 years…”

The market might be ripe for change.  But it’s up to those of us on the buy-side to make it happen.  The next few years really are put up or shut up time.  Some email joshing isn’t a crime.  But a failure to deploy legal budgets in a way that ensures shareholder value is.

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3 thoughts on “A modern day Aesop’s fable: the GCs and their budget

  1. Great post Tim – Some GCs are driving change, and there’s no doubt that the profession as a whole senses the change in the balance of power between buyer and seller. Part of the challenge is that many GCs don’t make the time to think about how to effectively change the structure of their relationships with law firms. Similarly there are plenty of firms that are willing to change, put just need some direction from their clients to actually take the plunge.

  2. Pingback: Risk management: the strategic, sustainable way to reduce long-term legal costs | Lexis Nexis

  3. I agree with the comment above to a certain extent but i would stress that whilst I would like to invest the time in looking at the structure of my relationships with external providers, I simply don’t have the time. I appreciate that the onus is on me to make the time and I will take that, but if firms are willing to make changes, surely they as the service provider ought to be making that happen and not waiting for GC’s to point them in the right direction? Otheriwse, I would expect a hefty rebate/discount on my fees!

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