Norman H. Levine, managing partner, Greenberg Glusker Fields Claman & Machtinger LLP, remembers when, ten years ago, the firm used one of the “Big Four” accounting firms and banked at one of the five largest banks in the country. Their thought was to align their firm with other professional services organizations that offered the highest level of skill and broadest range of services.
“It turned out that our thinking was wrong,” says Levine. “Because of the nature and size of our business, or perhaps because of the nature and size of theirs, we did not command the attention of the top accountants and bankers within those organizations. Maybe we were a small fish in a big sea, or maybe their seas were just too big to give anyone individual treatment. Whatever the reason, no one took the time to understand the unique aspects or needs of our business. No one made it a priority to know our people. No one was focused on our costs. When we called, we were passed from one person to another.”
Smart Business learned more from Levine about the lessons they learned in their search for the right accounting and banking partners, and what business leaders should know about partnering with the right law firm.
Our bad decisions were as much a result of our failing to understand how accounting firms and banks work as their failure to understand us. Businesses can make the same mistake when they choose lawyers, unless they understand how law firms operate and give careful thought to what their own needs are.
Over the past three decades, law firms have grown dramatically in size, and changed from local to national businesses. The largest U.S. firms in the 1970s had fewer than 200 attorneys, generally in a single office, or perhaps with a satellite office in New York or Washington, D.C. Today, the profession is dominated by 75 firms of between 700 and 3,500 lawyers, some with as many as 20 or more offices. Firms have focused on offices and practice groups as profit centers and increasingly emphasized attorneys as rainmakers to a greater degree than as practitioners and problem-solvers.
Like our clients’ businesses, law firms have survived the Great Recession by paying serious attention to profitability, a significant element of which is cost control. Historically, even while they watched their clients conscientiously manage expenses, law firms’ managers acted as if their profitability (or, more precisely, as if the matrix of “profits per partner”) was driven primarily by revenues — billing rates, hours billed and leverage. The most profitable law firms were those that could assign the greatest number of attorneys, billing the most hours at the highest rates, rather than solve client problems. As they look at the trends in the economy in 2011, managers ask whether they can push on the revenue side, increasing rates, hours and leverage, rather than continuing to focus on expenses.
This, of course, will not necessarily benefit the client, whose needs and objectives are no different today than they were in the past — getting the best value for their legal dollars. This means having ready access to highly skilled professionals who can handle legal problems as efficiently as the circumstances allow, and at a fair cost. In most cases, achieving this value has nothing to do with the size of the law firm, its leverage or its hourly rates.
Some businesses have fallen into the trap of making decisions regarding legal services based on the “bigger is better” philosophy, the same mistake we made with our accountants and banks. Of course, we recognized our mistake years ago and moved our business to a regional bank and a local accounting firm. No surprise — everything changed! Now we can reach the key people in charge of our accounts at any time, day or night. Our advisers know us, our attorneys and our professional staff. Because they know our business, and because their clients include other businesses like us, they not only are sources of necessary services, they can adapt the services to what we need. In addition, they are advisers, sources of information regarding best practices and industry trends. They think like we think because they are entrepreneurial, flexible and responsive. In short, they are like us.
When evaluating the value your legal professionals provide, consider the following:
- Does your lawyer take the time to understand your business, your pressures and your opportunities? Do they know your key executives and staff and understand their needs? Do they see the world like you do?
- Does your law firm mirror your business culture? Does it consider you an important client and treat you accordingly?
- Are your legal matters staffed in a manner that provides you the best value, not the one that serves the law firm’s interests? Are there more attorneys assigned to a matter than seems necessary? Are legal teams changed for no apparent reason and without consulting you? Do attorneys appear to be reaching their billable hour goals on your back, and do your cases appear to be a high-priced training ground for the firm’s newest lawyers? Moreover, staffing needs vary from matter to matter. Routine matters like collection cases or minor equipment leases might not require the attention of a senior practitioner; but major litigation, financings or the lease for your headquarters will require a seasoned lawyer with a particular area of expertise. If the firm does not have the personnel and flexibility to handle different types of matters differently, go elsewhere.
- Are your matters being handled at appropriate billing rates? It can be as inefficient to assign a complex matter to a relatively inexperienced attorney at a low rate as it is to give a routine one to a senior lawyer.
- If your business has offices in multiple locations, are your legal needs best handled by a law firm in one location, or are you better served by lawyers on the ground in each of the regions you serve? If you have similar legal issues in multiple locations, is the best lawyer in each region likely to practice at the same law firm? Can you achieve efficiencies or share information or strategy within a single law firm? Or, will you be better served by the most experienced or practical attorney in each place, regardless of his or her law firm affiliation. And do you really need to be paying for someone to travel across the country to meetings and court appearances when there are plenty of qualified attorneys across the street from the courthouse?
Just as the largest service providers available were not the right fit for my law firm, not every law firm is right for every client. Neither are all law firms interchangeable.
Our philosophy started with a focus on client service more than 50 years ago and it continues today.
Greenberg Glusker was formed by three young lawyers in 1959 in Beverly Hills, California. In 1969, its offices moved a couple of miles west to Century City, and we have occupied the same office space ever since. From the beginning, we sought out attorneys who have practical business experience, and who understand what it is like to be a purchaser of legal services.
We have resisted the urge to expand geographically and to add practice areas that are not essential to our clients. Being located in West Los Angeles, we seek to achieve expertise meaningful to businesses in our community: real estate and entertainment, estate and strategic wealth planning, corporate and tax, environmental law, employment, intellectual property, insolvency and creditors’ rights.
Because we understand the needs not only of our largest and best known clients, but also of successful mid-size and family businesses and high-net worth individuals, we seek to avoid excess leverage, overstaffing and leading the way in rate increases. We emphasize efficiency from the time a new lawyer joins the firm. And we continually strive to be more attentive and responsive. The result has been long-term relationships with clients, some going back many decades. That is why we are known as, “Greenberg Glusker – The Counsel You Keep.”
Over the next twelve months, it is our opportunity to introduce you to our attorneys and practice groups. We hope to provide you with practical and helpful information. I hope you find our contributions enjoyable and informative.
Norman H. Levine is a managing partner at Greenberg Glusker Fields Claman & Machtinger LLP. Reach him at [email protected].