Monday, September 04, 2006

Client Hoarding -- A Profession Ruined By Greed

Client hoarding is said by legal market experts to be one of the biggest problems plaguing our profession today. Most experts take aim at the elementary compensation systems that give lawyers what amounts to a "sales commission" for bringing in legal work. From the outside, you might now see your "biglaw" lawyer in a different light when you realize that he is being paid as a salesman rather than a servant. So, what is behind client hoarding anyways? Well, here are some of the things I hear from big firm partners:

1) I can't trust that if I hand my client off to my colleague that it will get done right!

Response: First, most large law firms have some of the smartest attorneys in the country working in their ivory towers. If you cannot trust them then perhaps the real problem is that you really cannot trust anyone. You have officially cast your "no confidence" vote in your firm and your colleagues. Congratulations, you have just sent the client to the competition for their other needs! Imagine if you went to McDonalds to order to McAnything and the clerk said to you "I really think you would be better off at Burger King." or how about heading to the Ritz Carlton and being greeted at the front desk by someone who tells you "This place is good, but you may enjoy the beds at the Four Seasons better." How much longer do you think they would be working there? What would Donald Trump say? ("Yer Fired!"). That's what we would say at Exemplar. Funny enough, this happens every day at the large law firms across this nation. A systemic failure of trust is one of many reasons why professionals
fail to cross sell services and lose their firms tens of millions of dollars.

2) I'm not going to give my colleague the origination credit. Cross selling is like giving my colleague my paycheck!

Response: You are right! Most firms talk the talk about cross selling yet the largest components of compensation as a partner in most firms is origination credit followed by billable hours. What you incentivize is what you get for behavior, so it should be no surprise that your partners don't want to hand their paychecks to someone else. Interestingly enough, it is unlikely to change because the lawyers who hold the power at most big firms are the ones who control the largest books of business and benefit most (financially) from the origination credit scheme. Which do you think will happen first? A) Hell with freeze over OR B) Big firm partners will become altruistic?

Compensation scheme aside, our industry is making a statement about what it values in people every day by what information is puts out in the marketplace. You need only look in the legal newspapers to see that all they care about is money. You will regularly see ads like "Be a Partner at BigLaw! Bring your book $1.25 Million." Yes, that's right, they want to buy you for your book. So, as long as the big firms are selling partnership positions for a book of business, do you really think that partners are going to "share" the business they get in the name of loyalty to a brand when their book is their golden ticket out of there when someone else offers them more? At the very highest levels we have become a profession ruined by greed, with professionals who shop their books in search of the "green carrot." So, where your attorney could be serving more of your needs, he instead is serving his own self-interest.

At Exemplar, we only hire professionals who trust the colleagues they work alongside, who believe in their firm, and who are more interested in serving all of our customers needs than hoarding a book (pretending they own you, the client) for a potential career move. Greed has no place in a service industry and certainly no place at Exemplar. It has already infected the power structures of many of the largest firms in this nation. Fortunately, Exemplar has created the next generation law firm with a chance to get it right! With an uncompromising commitment to our core values, we are well on our way!

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