Susan Hackett is the CEO and CLO of Legal Executive Leadership, a consulting practice in the Washington, D.C., metro area. She is the former senior vice president and general counsel of the Association of Corporate Counsel, where she served for more than two decades as the "voice of the in-house bar" and built a loyal network of thousands of in-house and outside legal executives, as well as a reputation for innovation, excellence and success.
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Susan Hackett's annual "rant" on law firm rate increases stems from her experience as the voice of in-house counsel at ACC for 22 years.
It's that most wonderful time of the year: when law firms and general counsel begin their annual antler bash over firm rate increase notices. Like the stale, dry, and tasteless fruitcake Aunt Matilda packs into the mail each year that elicits a collective moan upon receipt, law firms keep sending their clients these crazy "rate-increase" letters around December.
It's the profession's bad holiday tradition—but one that's not as harmless or easily disposed of as an unappetizing fruitcake.
Some CLOs try to get out in front of the annual fight; during their budget season, they'll pen their own letters to firms to state that they're not only unwilling to entertain rate hike conversations, but that they want further rate cuts or discounts—or they'd like to freeze rates at 2008 (or 1908) levels with any firm that wishes to continue to provide them with services.
Some don't pen letters—they just write into their retention terms that no increases in rates will be allowed unless approved by the client.
But the law firm letters—like migrating animals following some invisible call of nature, or perhaps more aptly, like lemmings over the cliff's edge—go forth anyway.
Here's my question for both general counsel and law firm managing partners: how's this annual process of arguing over rate increases going for ya?
• Firm leaders: Are you feeling pretty good about the odds that your most valued assets—your clients and your top relationship partners—are going to find this an overall productive and happy set of conversations that will leave everyone feeling better about the firm?
• In-house counsel: Even if you "win" and your firms agree that you won't be billed at higher rates (or maybe even that you'll even receive lower rates), would you care to bet on whether the all-in cost of services provided by your firms this year will go up or down?
There are better ways to handle this issue. What both sides want is for firms to profit well from delivering what clients value most: predictable, controlled costs, better staffing options, and measurable results that matter.
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