Cravath Partner Offers Tips on Cost Cutting
You know times are tough when Evan R. Chesler, the head partner at Cravath, is dispensing advice to Business Week on how clients can economize on the legal front. Given that, up until recently, large firms took the position that you get what you pay for and that top quality comes only at top rates, Chesler's advice on economizing seems as incongruous as say, Warren Buffet offering tips on clipping coupons.
So what advice does Chesler have for belt-tightening clients who need legal services? First, clients should realize that they don't need a name brand firm for routine legal work, and should choose lawyers "who are commensurate with the assignment." In other words, you don't need to buy a Mercedes to take you to the train station, when a taxi cab will suffice. Second, hire lawyers who are busy so that they're forced to be efficient, and don't pad the bills. Third, try to negotiate alternative fees and avoid the billable hour, which can create "all the wrong incentives."
Lest you think that Cravath is stacking the decks against itself with this kind of advice, Chesler reveals that his firm is "trying more and more to come to alternative fee arrangements that make the billable hour irrelevant." For Cravath, this means charging flat fees to handle cases, often with "success fees" for extraordinary results.
Finding ways to serve clients more efficiently makes sense. But are firms exploring these changes as part of a long term strategy to change their business model? Or are these changes simply temporary acts of desperation to salvage profits in a brutal economy?
Posted by Carolyn Elefant on November 24, 2008 at 11:19 AM | Permalink
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