By Kathryn Regina

A new Chief Legal Officer survey, conducted by Altman Weil and LexisNexis, reveals an ongoing trend of corporation dissatisfaction with legal counsel.

According to the survey, less than 20 percent of corporations are planning to increase their use of outside counsel. A third of CLOs also report plans to fire one or more of their law firms in 2007.

The top reasons for firing a law firm were reported as “mishandling one or more critical matters,” “poor quality legal work,” “lack of responsiveness” and “cost management.”

The Selection Factor

Almost all CLOs report that their primary method for selecting new legal counsel is references from colleagues, relationship partners and in-house counsel. Building a strong relationship with corporate clients isn’t just important for retaining business, it’s vital for growing new business.

And yet, 40 percent of CLOs report that their outside counsel has not taken any steps towards improving their working relationship.

In the law.com article “Executives Rank Law Firms on Service and ‘Arrogance,’” Michael Rynowecer, president of BTI Consulting Group Inc, says “’Many corporate counsel will tell you that their law firms will do what they’re asked and nothing more. The corporations feel that the law firms ‘don’t try to understand their needs, and that they’re not proactive enough.’”

Inside the Mind of a CLO

In any service industry, building long-term relationships requires a deep understanding of a client’s current situation and future concerns.

“Firms and relationship partners need to have an ongoing dialogue with CLOs and key managing counsel.  This provides a foundation for being proactive about finding solutions,” says John Wallbillich, founder and CEO of Lexvista Partners, a legal advisory firm. “Once you improve your communications with clients, bringing forward ideas to improve services or  offering topical training to in-house counsel will distinguish a firm from the 40 percent who are doing nothing right away.

“I think there a lot of CLOs who would fall off their chairs if a law firm came to them with unsolicited cost-savings or best practice ideas.”

Repair Relationships, Win Business

Addressing concerns about cost and quality of work is imperative to building a strong business relationship. When corporations report dissatisfaction, they may be saying that they are concerned about getting fair value from their law firms.

“CLOs see record starting salaries for associates and profits per partner for firms, and they know who’s footing the bill,” says Wallbillich. “If a law firm isn’t having a dialogue with its clients about issues like fees and quality of work, then that vacuum may be filled with a perception of a price-value gap with legal services.”

Cost Cutting Strategies

Outsourcing low-level tasks like document preparation is a viable means of cutting costs to service the client’s bottom line. Whether it’s sending work overseas or looking to regions of the country with lower billing rates, CLOs appreciate cost management efforts.

“Unbundle the tasks in order to close the price value gap and cut costs for both you and your client,” advises David Galbenski, president and CEO of Lumen Legal. “Law firms that do that get more business because they build trust with their client. They show that their firm is doing what is in the best interest of the corporation they represent. It will ultimately get them more work and lead to greater profitability, even though they initially ‘gave away’ some margin by bringing in contract help.”