Confronting the six big challenges of client mindsets and perceptions

Corporate clients often have poor perceptions of lawyers and their firms. I outline below the six main negative mindsets which in-house counsel have about law firms and offer some
possible solutions.

1. Lawyers are self-serving

At a recent meeting I held with a group of in-house counsel, general distrust was expressed of law firms' billing practices. I was surprised by the level of suspicion that law firms will always seek their own advantage in recording hours, find exceptions to fixed-price deals and allocate work between partners and associates to their own benefit rather than the good of the client.

Transparency of billing processes and comparative data between panel firms can clearly help, but the problem still persists when all panel firms are perceived to be indulging in the same self-serving practices. This mindset is intangible and difficult to shift except by the careful and methodical building of trusted relationships to give clients consistent impressions of selfless service.

2. Lawyers are value sapping

As lawyers are often instructed towards the end of transactional negotiations, clients tend to worry that lawyers will get in the way of the deal being concluded or that the transaction will end up as less beneficial as a result of lawyer intervention on each side. In litigation, no-win-no-fee arrangements often leave clients feeling that the lawyers have sucked the blood out of the settlement figure.

Right from the outset of the engagement, it is vital for lawyers to ask themselves how they can add value to the matter and to communicate that clearly to the client.

3. Legal fees are a wasteful overhead

A slightly different point is that, even where lawyers do not sap value, they are perceived to represent an unavoidable cost. In-house legal departments are widely seen as cost centres rather than profit centres and legal budgets are often regarded as an
expense that needs to be cut to the
bone wherever possible.

Whether acting for commercial or consumer clients, one way of altering
this mindset is to think of ways that your
firm can help clients to achieve their economic objectives. Sharing part or all
of the risk by contingency fees or capped fees may be one way of achieving this,
as would identifying ways in which the
legal overhead can contribute to cost
savings or revenue generation.

4. Lawyers are business blockers

Law firms would love to be seen as commercial enablers, but they are instead often seen as likely to impede or disable transactions and deals. When clients have plans that are unlawful or likely to lead to regulatory difficulty, it is a vital part of the lawyer's role to stop expensive mistakes.

Many lawyers rightly see their roles as problem solvers, providing alternatives and options when the original plan becomes impossible. Hence, the role of the lawyer should be that of a business enable who
is commercially astute and capable of
lateral thinking to help clients achieve
their objectives.

Lawyers with sector expertise can often find ways to aid their clients in their negotiations with their knowledge of industry norms, business trends and commercial yardsticks. In the creative sectors, for example, skilled lawyers often employ
their knowledge of standard royalty percentages and the levels of advances available to writers and performers to
assist in advancing negotiations.

5. Lawyers are focused on legalities

Over the past few years involving scores of interviews with in-house counsel, I have heard many criticisms of over-lawyering, prolix opinions and the use of technical jargon by law firms. It can be easy for lawyers to hide behind technobabble rather than talking to clients in a language they understand and providing advice that is founded upon the commercial needs of clients. It is also tempting to hide behind a repetition of
the law in order to avoid venturing
a practical view.

To avoid this damaging perception, lawyers should always spend time learning about each client's business needs and context. Law firms should also learn and train people in the art of modern drafting, avoiding the need for ancient and arcane idiom.

6. Lawyers are risk averse

Risk-averse legal advice is often the result of relative inexperience, which encourages lawyers to default excessively to a strict analysis of the risk without necessarily considering the commercial impact and probability.

The best lawyers have balanced judgement - an important attribute that is highly valued by clients. The risks of tax-avoidance schemes and assessments of the likely outcome of cases are areas where clients need a pragmatic view to be taken which balances risk and commercial considerations.

Commercial advisers

All six of these challenging perceptions overlap. In the new world of legal services, however, there are plenty of business-minded advisers who will move into the space traditionally occupied by law firms unless lawyers work even harder on their rapport-building relationships, commercial mindsets and user-friendly methods of communication.

Nick Jarrett-Kerr advises law firms worldwide on strategy, governance
and leadership development
(www.jarrett-kerr.com)