Top legal decision makers added 6 new law firms to their panels, bringing the total up to 42* from a record low 36 in 2014. While up a bit, 42 firms remains the second-smallest panel in the last 16 years.
Client service reached an all-time low in 2014 and the impact on law firms is showing up now. Clients tell BTI they are hiring new firms as part of a longer-term plan to phase out some of their non-performing law firms. These non-performing law firms are not meeting the new generation GC demands, not keeping up with client service delivered by competitors already on the panel, and show little inclination to invest in the relationship.
Clients have expanded their law firm rosters in 7 out of the last 15 years. They have cut rosters in 8. We expect to see clients continue to add and delete law firms as needs change and law firms change—or don’t—as the case may be. Over time, the overall trend will continue to move slowly towards smaller panels.
Top legal decision makers are reshuffling their law firm decks to build a better hand. Clients are facing more matters, bigger risk and are shifting more work to law firms—a near perfect storm for law firm business development. The only missing component is a fast growing corporate legal budget. The law firms who win the new work are taking fees from another firm—which makes keeping and building existing clients vital to success.
As in prior years, clients keep the names of firms to be erased from the panel to themselves—unless you are conducting in-depth client feedback—where you can not only learn about the pending departure, you can use the situation to stage a client intervention and swiftly turn things around as we have done for numerous BTI clients. Most law firms don’t realize they are being phased out until it is too late.
*Based on BTI research conducted between March 2015 and September 2015. BTI conducted more than 300 independent, individual interviews with CLOs and General Counsel at Fortune 1000 companies and large organizations.