Posts Tagged: ‘large corporate clients’

Small Firms, Big Clients

October 25, 2013 Posted by Halling Meza

More and more Fortune 500 companies are making the shift –at least partially- to smaller law firms. According to CounselLink, a legal software provider and a division of LexisNexis, overall legal billing has dropped from 26% down to 20% for the largest firms, while mid-size firms have increased their market share from 18% to 22%.

Why the switch?

One big reason is that smaller firms cost less. A lot less.

“The larger the firm, the higher the cost,” Don H. Liu, general counsel for Xerox, told The Wall Street Journal.  Liu helps keep costs in check by sending non-critical transactions to smaller firms. “Big firms don’t have a monopoly on talent,” he says.

In fact, many savvy companies know that a lot of money can be saved by hiring a mix of firms. It doesn’t take a math whiz to figure out that it makes good financial sense to retain a big international firm for a crucial matter, such as a class-action lawsuit that puts the company’s reputation on the line, while hiring a small firm for smaller matters such as patent protection or small acquisitions.

In the Wall Street Journal article, Smaller Firms Grab Big Slice of Corporate Legal Work, Ronald S. Milstein, general counsel for Lorillard Inc., said, “Not everything is a bet-your-company kind of case, and not every case warrants the big guns from New York. Smaller firms – they want you more, they value you more.”

Of course quality matters as well.  Hiring a small firm to save money is no bargain if the quality of work is sub-standard.  Small firm lawyers without the protection and prestige of big firm names know they have to work harder and smarter to attract large corporate clients.

Another important factor, in fact what as viewed as the most important factor for working with a small firm, is building long-term trust-based relationships. In a recent survey by AdvanceLaw, nearly 60% of the general counsel polled stated that lawyers at the most elite law firms were less attentive to their concerns than those at other firms.

“Never count yourself out,” Cathy Lamboley, former senior vice president and general counsel for Shell Oil Company, told Kathleen Balthrop Havener in this American Bar Association article. While Lamboley was general counsel at Shell, 100% of Shell’s intellectual property work was handled through a firm with no more than eight or ten lawyers.  “If you’re comfortable with the lawyers and you know they can handle your work, nothing would stop a Fortune 500—or even a Fortune 50—company from hiring a small firm.”

 

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