I’m reading Tim Corocan’s most recent blog post, Don’t Tell Me What You Think I Want to Hear, Tell Me What I Need to Know!, and I came to a hard stop on this:

At a recent discussion on the topic, a Chief Legal Officer explained the impact of a cost overrun in her legal department.  As a big box retailer with profit margins in the mid-single digits, there is very little excess spending in the organization from which they can divert funds to address cost overruns.  As a result, some cost overruns are distributed as a sort of “tax” on sales, or in other words, for every $50,000 overage in the legal department, the organization must sell an additional $1,000,000 of product above forecast.  And since there are incremental costs associated with additional sales, and in some cases revenue cannot be fully recognized immediately, the actual surcharge is something on the order of $2,000,000. Think about that for a moment.  Imagine the GC addressing her peers in the boardroom in late Q3 of the fiscal year.  She claims that because legal matters are so uncertain there’s no way to submit a proper forecast, and as it turns out she’ll need an additional $50,000 in her budget, maybe more, and so Sales must step up and deliver an additional $2,000,000 in revenue.  Someone’s going to be eating alone in the executive cafeteria.

Have you thought about that? Have you thought what your clients must do to earn the ability to hire you? I know a lot of conversations in law firms deal with how to increase billable hours. But, while you are thinking about increasing billable hours, think about the impact on your clients’ department, and their social and political role within their companies. What VALUE are you bringing with every dollar they spend? I relate to the legal counsel’s predicament. They are viewed as a cost center, not a revenue generator, for a company.  They have a budget that can be cut by the bean counters, because the bean counters don’t really appreciate that spending money on outside legal services might be the cheapest route the company can take. Maybe that’s why we legal marketers have turned more towards business development when discussing our successes. It’s a lot easier to find someone to eat lunch with when you’ve helped them land a $2 million client, rather than asking for $75,000 to fund a new project that cannot measure its ROI in cash.

  • Great follow up! As I was writing my post, the Eagles song “Already Gone” was running through my head: “…and you’ll have to eat your lunch all by yourself.” Whether it’s lawyers and clients, or marketers and their internal lawyer clients, how many of us are eating lunch alone because we aren’t adding value to someone else’s day?

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