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

Inside Straight: How Do You Displace A Competent Incumbent?

In-house columnist Mark Herrmann tackles a tough question: How do you replace a competent incumbent?

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I gave my “book talk” about The Curmudgeon’s Guide to Practicing Law at Schnader Harrison’s annual retreat last Saturday and then had the opportunity to moderate a panel of six (counting me) in-house lawyers. Three of the gang were from QVC, one from Endo Pharmaceuticals, and one from the Graham Company. Being a rabble-rouser at heart, I started the discussion by posing the question that I often considered during my time as an outside lawyer: How can a law firm that wants new business displace a competent incumbent firm?

My co-panelists were quite good, but I must say that their natural instinct when confronted with this question was to evade. Each panelist started by saying something that was not quite responsive to the question. Only after some follow-up questions did our panel finally tell the audience how to displace a competent incumbent.

Let me start with the evasions, saving the real answers for the end . . .

The first evasion was to say that a law firm can displace a competent incumbent law firm when the incumbent screws up. According to my co-panelists, both QVC and Endo have hired new lawyers when an existing law firm fell short of expectations.

That’s a perfectly nice answer, but my question was about “competent” incumbents. Assuming that the incumbent flubs something (1) means the incumbent is not truly “competent” and (2) requires an event outside the control of my hypothetical law firm that is trying to displace the incumbent to acquire new business.

The second evasion, again repeated by representatives of two different companies on my panel, was that corporations will hire a new law firm when the existing law firm doesn’t have the capacity to help with a particular legal task. One panelist spoke about hiring a larger firm when the existing firm lacked enough overall resources to handle a matter, and another panelist spoke of needing an American-trained, Mandarin-speaking lawyer familiar with Chinese IP law (and a few other things, too; I think maybe the guy had to be left-handed). The incumbent firm had no suitable southpaws, so the client looked elsewhere for help.

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Again, that’s a nice answer, but again it’s an evasion. If the incumbent firm doesn’t have the ability to do the work, then the new law firm is not actually displacing an “incumbent.” The new firm may be supplementing an incumbent, but that’s much easier than displacing a competent existing firm.

Thinking only about you, my loyal readers (and, I suppose, the couple hundred Schnader folks in the audience), I pursued my cross-examination relentlessly. Let’s assume that the competent incumbent is both “competent” (not screwing things up) and “incumbent” (has the capacity to do the work and is in fact doing it). How can a new firm displace a competent incumbent?

Sadly for the new firm, but happily for incumbents everywhere, my panelists ginned up only two examples of when they have actually seen competent incumbents displaced. First, when the relationship partner (or another key player) at the incumbent leaves the firm, then the incumbent is at risk. The cause of the departure is naturally irrelevant — a lateral move, illness, retirement, whatever — but my panelists had all seen competent incumbents displaced when a key player moved on.

Second, an incumbent can be at risk at times of change within the client’s legal department. If a company hires a new general counsel, that GC may prefer to work with people the GC trusts — either colleagues at the GC’s former law firm or firms that the GC had worked with in past in-house roles. Although a change in GC can cause these types of changes, changes of other senior executives or in-house lawyers can naturally have the same result. A new lawyer responsible for European operations, or a new chief of M&A, may have worked with outside counsel in the past and may retain those lawyers to assist the new company. Similarly, a new CEO may have lawyers that he or she trusts, and an incumbent may lose out to the CEO’s preferred providers.

What’s the conclusion?

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First: You can’t displace a competent incumbent. Only events outside your control can give you a chance.

Second: Even a few minutes of thought could easily have replicated the wisdom provided by my sorry panel over the course of most of an hour. Sit in your office and think; it will save you time.

(Note to my co-panelists and the many Schnader lawyers who just got Google alerts pointing them to this post: You guys know that I’m kidding. I chose to save the true pearls of wisdom as our little secret; I didn’t want to share those precious gems with the entire world.)

Third: Consider what this means for law firms in the on-deck position — firms that are not currently doing business for a company, but would be at the top of the list if the incumbent flubbed something, lacked capacity, or saw a key lawyer leave. If you’re looking for a sweet spot, that may be it. Make contact with an in-house lawyer; stay gently in touch over time, forwarding items of (actual) interest perhaps once a month; and make sure the in-house lawyer remembers your name and area of expertise. When an event outside of your control occurs, you want your name to be at the top of the list of possible replacement firms.

The on-deck circle is an important place to be. Spend your time there intelligently.

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) and Inside Straight: Advice About Lawyering, In-House And Out, That Only The Internet Could Provide. You can reach him by email at inhouse@abovethelaw.com.

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