Firms Have Opportunities in GC Shuffle

If in-house legal departments are holding tighter to their company's legal work and going to fewer law firms when they do send out work, the best time to get an “in” with a legal department may be when they switch general counsel. And that is also when existing firms need to fight to keep their relationships.

Former DuPont general counsel and current Ballard Spahr partner Tom Sager says that in-house counsel continue to be under pressure to control costs and the landscape is “very competitive” for outside law firms. For every client a firm picks up, it might lose another, he explains. “It really behooves firms to solidify relationships with major, sustainable clients,” Sager says. “Those are the anchors to either stabilize or further build their practice.”

The Pros and Cons

Displacing an existing outside counsel is hard to do. Sometimes the biggest opportunities arise when leadership in the law department changes hands. “Someone should be tasked with identifying when a GC is retiring or replaced, or the No. 2, who is often the one who assigns a lot of work,” Sager says, suggesting that firms should have more formal programs in place to identify those opportunities.

Firms could have their marketing teams implement a “disciplined process” by which any time there is word of a leadership change, the firm has a way of canvassing all of the attorneys in a proactive way to see if any of them have relationships with the new general counsel, Sager says. In his opinion, “That's where I think a lot of firms miss the boat.”

Playing offense may prove difficult in this situation because new general counsel are often elevated from within and will use many of the same law firms or, when joining from outside the organization, will bring existing relationships with them.

But Cozen O'Connor partner R. Christopher Raphaely, the former deputy general counsel to Jefferson Health System, feels that the concept of pitching a new general counsel for work could be taken a step further. When a firm knows of a pending switch in top-level law department leadership, it could suggest some attorneys it feels would be good for the role, but also friendly to the firm, Raphaely suggests.

Offering Suggestions

Altman Weil principal Ward Bower believes there is a benefit to law firms in offering up suggestions for incoming law department leaders. He says the alumni networks of law firms are “incredibly valuable” to the firms, and that having a former partner as a general counsel can be a major benefit. But for the most part, Bower has spent the last several years advising clients on something that he feels should seem pretty obvious: identifying likely successors in the law departments and business units of existing clients and making sure the firm builds relationships with those people in advance of a move.

Client Convergence

In The Legal Intelligencer's recently released 20th annual Managing Partners Survey, there was an increase in the percentage of firms that lost work due to client convergence policies, or the consolidation of client work into fewer outside law firms. Nearly 38% of firms said they lost clients due to convergence, which was up from almost 31% last year. And only 51.7% of firms said they gained work from convergence, down from 59.3% last year.

“It's amazing to me that something so obvious as preserving or zippering those relationships with clients” is still a problem for many firms, Bower says.

According to Sager, they all speak to the importance of institutionalizing relationships rather than keeping them with a single relationship partner.

Gina Passarella is a reporter for The Legal Intelligencer, an ALM sister publication of this newsletter.

If in-house legal departments are holding tighter to their company's legal work and going to fewer law firms when they do send out work, the best time to get an “in” with a legal department may be when they switch general counsel. And that is also when existing firms need to fight to keep their relationships.

Former DuPont general counsel and current Ballard Spahr partner Tom Sager says that in-house counsel continue to be under pressure to control costs and the landscape is “very competitive” for outside law firms. For every client a firm picks up, it might lose another, he explains. “It really behooves firms to solidify relationships with major, sustainable clients,” Sager says. “Those are the anchors to either stabilize or further build their practice.”

The Pros and Cons

Displacing an existing outside counsel is hard to do. Sometimes the biggest opportunities arise when leadership in the law department changes hands. “Someone should be tasked with identifying when a GC is retiring or replaced, or the No. 2, who is often the one who assigns a lot of work,” Sager says, suggesting that firms should have more formal programs in place to identify those opportunities.

Firms could have their marketing teams implement a “disciplined process” by which any time there is word of a leadership change, the firm has a way of canvassing all of the attorneys in a proactive way to see if any of them have relationships with the new general counsel, Sager says. In his opinion, “That's where I think a lot of firms miss the boat.”

Playing offense may prove difficult in this situation because new general counsel are often elevated from within and will use many of the same law firms or, when joining from outside the organization, will bring existing relationships with them.

But Cozen O'Connor partner R. Christopher Raphaely, the former deputy general counsel to Jefferson Health System, feels that the concept of pitching a new general counsel for work could be taken a step further. When a firm knows of a pending switch in top-level law department leadership, it could suggest some attorneys it feels would be good for the role, but also friendly to the firm, Raphaely suggests.

Offering Suggestions

Altman Weil principal Ward Bower believes there is a benefit to law firms in offering up suggestions for incoming law department leaders. He says the alumni networks of law firms are “incredibly valuable” to the firms, and that having a former partner as a general counsel can be a major benefit. But for the most part, Bower has spent the last several years advising clients on something that he feels should seem pretty obvious: identifying likely successors in the law departments and business units of existing clients and making sure the firm builds relationships with those people in advance of a move.

Client Convergence

In The Legal Intelligencer's recently released 20th annual Managing Partners Survey, there was an increase in the percentage of firms that lost work due to client convergence policies, or the consolidation of client work into fewer outside law firms. Nearly 38% of firms said they lost clients due to convergence, which was up from almost 31% last year. And only 51.7% of firms said they gained work from convergence, down from 59.3% last year.

“It's amazing to me that something so obvious as preserving or zippering those relationships with clients” is still a problem for many firms, Bower says.

According to Sager, they all speak to the importance of institutionalizing relationships rather than keeping them with a single relationship partner.

Gina Passarella is a reporter for The Legal Intelligencer, an ALM sister publication of this newsletter.