How Do Law Firms Really Get Hired?

We had in-depth discussions with 45 general counsel in D.C. and San Francisco last month, and much of the conversation revolved around how key decisions get made.  One of those decisions, of course, is how to find the right law firm for a key matter. 

That got me talking with one GC over lunch about the following question: How do we make buying decisions for anything?

I’m from Minnesota, and we have a big State Fair.  Just about everyone goes – 1.9 million of us went last year.  And we go to eat.  Everything you can imagine is available on a stick, usually fried.  There are so many options, from Walleye-on-a-Stick and the Hot-Dish-on-a-Stick (no, really).  How do you decide?

Easy: look for the stand with the longest line in front of it.  That’s what you want.  (Gary Becker wrote a famous economics article about this phenomenon, complete with charts and graphs.  I’ll spare you that level of detail.)

We want what everyone else wants - it’s basic human behavior.

There are lots of law firms, but deciding between them isn’t that easy.  We can’t easily tell what they offer, and there’s no “line outside the door.”

So – how do law firms really get hired?

Four things make it hard to decide which lawyers to hire.

  1. Confidentiality.  We (mostly) can’t tell what others have bought.
  2. Complexity.  We can’t assess quality very easily.  It’s not like buying heirloom tomatoes.
  3. Narrowness.  Practice areas are narrow.  We’re each buying slightly different things.
  4. Reticence.  We follow our mothers’ advice: if you can’t say something nice, don’t say anything.  So client satisfaction is a mystery to others.

Because of these four factors, law firms are hired largely on the basis of brand and reputation.  The result is a market that doesn’t serve clients or firms particularly well. 

We need to see that “line outside the door” – it offers clients better assurance, and firms a stronger incentive to innovate and outperform.  But how do we do it?

Solutions will surely improve over the next 5-10 years, but we’ve found that by confidentially gathering client experiences with counsel, we can use this to inform other clients’ future decisions.  For the four reasons mentioned above, this isn’t quite the “line outside the door,” nor could it ever be.  But it’s a step in the right direction.

And some large companies have started to do this in-house, collecting performance information about law firms and sharing it in their “internal market” so other lawyers know who and how to hire for legal services. 

Each effort to gather and share data, internally and externally, will help in-house counsel make more informed decisions.  We applaud the effort – it’s an important step toward improving our fast-changing industry.

Firoz Dattu