Biglaw, General Counsel, In-House Counsel, Partner Issues

Inside Straight: Hiring Law Firms Or Lawyers?

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Ed. note: This is the latest installment of Inside Straight, Above the Law’s column for in-house counsel, written by Mark Herrmann.

Can we just put this one to rest?

At every conference, and in many articles, people pose the question: “As a client, do you hire law firms, or do you hire lawyers?” The clients dutifully respond that they hire lawyers, not firms. Hasn’t this become sufficiently obvious that we can stop asking the question?

Why does any rational client hire lawyers and not law firms?

Because law firms are an aggregation of lawyers. Once a firm grows beyond a relatively small size, the quality of lawyers will vary. As a client, what matters is the quality of the lawyer working on your matter, not the quality of people not working on your matter, or the identity of the firm. (An exception may exist when a timid client is protecting itself against the possibility of a bad result: “We hired the biggest, baddest law firm available to handle this matter for us. Now that things have gone poorly, you can’t blame me, because I hired the best and sunk a lot of money into the matter.” But that reasoning is foolishness, and I hope this doesn’t happen often.)

The truth is that law firms themselves are uncertain about the quality of their own lawyers. Why?

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At many firms, partners rarely see or evaluate each other’s work. A partner does work for a client, so the client sees the work. But other partners often don’t. So long as the client is happy, associates are engaged, and the bills are being paid, there isn’t a perceived need to review the partner’s work.

The firm is thus relying heavily on what it knew historically about the quality of the partner’s work. That may not be much.

It may not be much for many reasons. First, the partner may have been hired laterally. Perhaps the firm hired the lateral partner exclusively because of the quality of his work, but it’s more likely that the incoming lateral partner’s book of business had something to do with the decision to hire. And, even if the quality of the lawyer’s work matters, the new firm may be only very gently aware of that quality. The new firm, after all, may have worked with the lateral on a transaction or a case or two, but the new firm hasn’t seen the lawyer in action on a daily basis over the course of many years, as it has with homegrown associates.

Second, many partners may have joined the firm as a result of mergers. When Big Firm chooses to open a Denver office, Big Firm may acquire a smaller firm with, say, fifty lawyers in Denver. A few of those Denver lawyers may be truly extraordinary; others, not so much. But they all come on board, many as partners, and Big Firm’s lawyers in New York are then touting the folks in Denver, pretty much oblivious to whether or not the Denver guys are any good.

Third, over time the quality of lawyers may vary dramatically in a firm’s different offices. Think about the Denver branch in the situation I just discussed. Next year, the Denver partners (who, by hypothesis, are really not as good as partners in other offices) will be asked to evaluate new partners. The Denver partners will apply their own judgment and assessment of quality, and the number of partners in Denver will grow. But the new partners are being judged by lower quality people; over time, the quality of the Denver office may decrease significantly.

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Fourth, even in a firm with generally high quality, few laterals, and little growth by merger, less competent lawyers will make their way into the partnership ranks. This can happen for reasons of finance (“He’s only average quality, but he’s a client magnet.”), because of other perceived benefits of admitting the person into the partnership (“With a one handicap and membership at that elite club, we can put him to use.”), or because of pure politics (“There are plenty of partners in this firm who can’t think through tough issues or try significant cases. But if Fred Big can make a lawyer a partner in this firm, then so can I. And Joe Associate has worked hard for me the last few years; I’m going to make him a partner.” Or: “If we don’t make more partners in Atlanta this year, people will think that our Atlanta office doesn’t have any clout, and our Atlanta associates will be demoralized. We have to push two people into the partnership.”). In that environment, hiring by the name of the firm, rather than the quality of the individual lawyer, is nuts.

Frankly, this same institutional lack of knowledge of the quality of a firm’s own partners also explains why clients must be wary when partners cross-sell services. The lawyer who’s doing the cross-selling may or may not actually know the quality of the work of the person whose name she’s pushing. In some situations, the lawyer who’s doing the cross-selling may not care that much. When a client calls to ask for IP advice in Shanghai, the correct answer for the partner in Chicago to give is: “It’s your lucky day! We have the leading IP lawyer in China in our Shanghai office. Let me get back to you with contact information.” And then the Chicago partner starts frantically calling around the firm: “Hey! Do we have anyone who does IP in Shanghai?”

Some partners may be restrained from aggressive cross-selling for fear of ruining their client relationships. “The client loves me. If I foist off Joe Schlock in Denver on the client, the client may be unhappy, and I may lose business.” But the institutional pressures to cross-sell are often great, and concern for a client’s welfare may take a back seat.

So let’s just stop asking whether clients hire lawyers or firms. If clients have any sense at all, they hire lawyers. Let’s put that issue to rest and start asking instead how clients should react to cross-selling, which at least remains a live issue.

Mark Herrmann is the Vice President and Chief Counsel – Litigation at Aon, the world’s leading provider of risk management services, insurance and reinsurance brokerage, and human capital and management consulting. He is the author of The Curmudgeon’s Guide to Practicing Law (affiliate link).

You can reach him by email at inhouse@abovethelaw.com.

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