Midsize Firms Seek Former Large-Firm Clients

Primary Firms Versus Others

Aside from a client's two primary firms, Shunk said corporate clients use 15 secondary firms and 45 other firms that handle limited matters.

Primary firms maintain the ultimate position with clients as the most valued advisers and bring in the most revenue, Shunk said. The survey showed a client's two primary firms split 30.9% of that client's spending, while the 15 secondary firms take a portion of 50.3%. The 45 'others' earn a small part of the 17.8% of the client's remaining spending, according to BTI's data.

Yet, according to Shunk, it is not primary law firms, but secondary law firms that are in the best position to capitalize on the willingness of clients to switch firms. While secondary firms range in size, Shunk said the situation was an extraordinary opportunity for midsize and smaller firms.

'When we speak to clients about [what firms] stand out, we see it is often midsized firms when we looked at the sheer numbers,' Shunk said. She added that exceptional client focus was the leading differentiator that accounted for more than 40% of recommendations by clients. And she said a firm's perceived commitment to help was key.

Primary firms whose clients consider them the 'best' at client service earn twice as much as primary firms whose clients don't give them that designation ' a ratio that has stayed constant across all market sizes, Shunk said. According to BTI data, Fortune 1000 companies typically spend $3.65 million on a primary law firm, but spend $6.26 million on a primary firm they consider 'best at client service.' A midsize company will spend $2.37 million versus $4.64 million; and a local-market company spends $590,000 versus $1.15 million.

Trying Firms on for Size

Shunk said there was a 'hiring frenzy' as corporate clients were trying firms on for size. According to BTI's survey, the average number of secondary law firms employed by a corporate client was up from 11 in 2005 and seven in 2004, while use of other firms was up from 40 in both 2004 and 2005 to 45 now.

But, she said companies projected they would use only 10 secondary firms and 28 other firms in 2009. The reason, she said, is the legal industry shift from a seller's market to a buyer's market.

Clients want to work with fewer firms, but are currently trying to pick the right ones, according to Shunk.

'Clients don't like doing RFPs. It's a burdensome process and doesn't allow them to truly establish relationships. It puts the onus on them,' she said. 'They see the advantage of having good relationships with a small number of firms they can rely on.'

Stephanie Lovett writes for Philadelphia's daily legal newspaper, The Legal Intelligencer, an affiliate of this newsletter. This article was abridged for A&FP.

Being one of a client's go-to law firms used to be a pretty secure situation. But gone are the days of lifelong client loyalties. In fact, disloyalty is increasingly the norm according to the BTI Consulting Group's latest survey of clients ' a situation that creates challenges and opportunities for savvy firms.

BTI principal Marcie Borgal Shunk presented the consulting group's findings to the Delaware Valley Law Firm Marketing Group ('DVLFMG') at a recent meeting. BTI's data were compiled from a survey of 250 corporate clients with revenues of $1 billion or more, she said.

According to Shunk, BTI data show that in 2006, 61.1% of corporate clients reported they had fired one of their primary law firms in the last 18 months ' up from 53.7% in 2005. Considering that the same clients report they use only two 'primary' firms ' a finding that has remained consistent since 2001 ' the statistic seems worth noting.

Primary Firms Versus Others

Aside from a client's two primary firms, Shunk said corporate clients use 15 secondary firms and 45 other firms that handle limited matters.

Primary firms maintain the ultimate position with clients as the most valued advisers and bring in the most revenue, Shunk said. The survey showed a client's two primary firms split 30.9% of that client's spending, while the 15 secondary firms take a portion of 50.3%. The 45 'others' earn a small part of the 17.8% of the client's remaining spending, according to BTI's data.

Yet, according to Shunk, it is not primary law firms, but secondary law firms that are in the best position to capitalize on the willingness of clients to switch firms. While secondary firms range in size, Shunk said the situation was an extraordinary opportunity for midsize and smaller firms.

'When we speak to clients about [what firms] stand out, we see it is often midsized firms when we looked at the sheer numbers,' Shunk said. She added that exceptional client focus was the leading differentiator that accounted for more than 40% of recommendations by clients. And she said a firm's perceived commitment to help was key.

Primary firms whose clients consider them the 'best' at client service earn twice as much as primary firms whose clients don't give them that designation ' a ratio that has stayed constant across all market sizes, Shunk said. According to BTI data, Fortune 1000 companies typically spend $3.65 million on a primary law firm, but spend $6.26 million on a primary firm they consider 'best at client service.' A midsize company will spend $2.37 million versus $4.64 million; and a local-market company spends $590,000 versus $1.15 million.

Trying Firms on for Size

Shunk said there was a 'hiring frenzy' as corporate clients were trying firms on for size. According to BTI's survey, the average number of secondary law firms employed by a corporate client was up from 11 in 2005 and seven in 2004, while use of other firms was up from 40 in both 2004 and 2005 to 45 now.

But, she said companies projected they would use only 10 secondary firms and 28 other firms in 2009. The reason, she said, is the legal industry shift from a seller's market to a buyer's market.

Clients want to work with fewer firms, but are currently trying to pick the right ones, according to Shunk.

'Clients don't like doing RFPs. It's a burdensome process and doesn't allow them to truly establish relationships. It puts the onus on them,' she said. 'They see the advantage of having good relationships with a small number of firms they can rely on.'

Stephanie Lovett writes for Philadelphia's daily legal newspaper, The Legal Intelligencer, an affiliate of this newsletter. This article was abridged for A&FP.