As the legal market remains flat for law firms, the focus naturally turns to clients. How they think. What they care about. How they spend their budgets. Etc. Yet, to the extent that clients vary in significant ways, the generalizations aren’t particularly helpful.
Six Types of Clients
There are many ways to categorize clients, but by my lights the most useful is size and organizational structure of the in-house legal department. As shown in diagram above, this metric varies from zero for individuals (Type 1) and business owners (Type 2), to the equivalent of a specialized law firm embedded inside a large corporation (Types 5 and 6).
A lawyer’s relationship with his or her client will vary in predictable ways depending upon client type. For example, clients in the left and middle of the continuum (Types 1-3) may look to their outside lawyers as trusted advisors. In contrast, for clients in the middle to right part of the continuum (Types 4-6), the clients are hiring specialized expertise, as the GC has become, in most contexts, the trusted advisor to the C-Suite. Thus, marketing and business development strategies will vary by type of client. In terms of the lateral market, clients in the middle are probably the most lucrative and the most portable. Yet, how long will that last?
The main reason we need a typology of clients is that a new type of client is emerging that is changing the rules that apply to the large law firm sector — the Type 6 client.
As I write this post, I am headed to the 2nd annual CLOC Institute. CLOC stands for Corporate Legal Operations Consortium. Legal operations (or “legal ops) professionals from the nation’s largest corporations are gathering in Las Vegas for a 3-day/7-track conference. Last year’s meeting — the inaugural event — was in San Francisco and had five tracks. I was there and was blown away by the volume and quality of the programming. And yet now it’s bigger.
The key takeaway here is that the largest corporate clients are adopting entirely new ways of sourcing legal services. This new more-for-less playbook is being written by legal ops professionals. And eventually these practices will spread. This is because legal departments with legal ops professionals are indisputably the industry’s innovators and early adopters.
Susskind on Legal Operations
[The biggest emerging trend in recent years is] the recognition that operations, innovation, technology and procurement should actually be the responsibility of an identifiable individual, rather than part of the portfolio of the general counsel. I regard the chief operating officers [of legal], as … more influential than the rather scattered community of GCs that we had three or four years ago.
Richard will be a keynote speaker during today’s CLOC lunchtime program. The CLOC Institute is an important, influential event. I’ll do my best to post some timely observations. In the meantime, if you’re really curious, check out Twitter #CLOC2017.
What’s next? See Supply of Law Graduates Is Shrinking, But So Is Demand (006)