The “2006 Chief Legal Officer Survey” was released earlier this month by the Association of Corporate Counsel. It contains both hope for additional outside law firm work, and warnings to firms that are not performing as they should.

The Good: 25% of CLOs plan to increase the use of law firms in 2007.

The Bad: 32% reported that they fired a law firm in 2006. And, 20% of those firms had a “significant relationship” with the clients, according to the survey. So, why were they shown the door? The top three reasons (out of 8 cited) were:

  • Cost management (fees/expenses) – 8%
  • Mishandling one or more matters – 7.8%
  • Lack of responsiveness – 7.2%

The latter is a significant legal marketing issue (actually, there is very little a firm does that isn’t related to marketing). Firms that are unresponsive simply are not going to get follow-on work, or obtain referrals, from those clients. Both of which are major sources of business for law firms.

More and more clients are holding their law firms responsible for what they do, and how they handle client matters. As Fred Krebs, president of ACC states in a press release on January 9, 2007:

“While in-house counsel are prepared to spend the money to get the legal advice they need, they are equally prepared to hold their law firms accountable for their performance.”

And that can be either good or bad for a firm’s marketing efforts.

Thanks to the WiredGC for the alert about the survey, and for its wise advice to "…compensation committees: throw a few dollars to partners minding active client matters. Retention is the foundation for expansion.”