Capitalism Doesn’t Exist In The Dark

At my old law firm, I had the pleasure of representing a regional bank in non-compete litigation which ultimately concluded successfully for the client. I developed a relationship with one of the regional managers of the bank through my firm. He and I hit it off immediately and have enjoyed each others company ever since.

I haven’t seen him since I started my own law firm. So I sent him a note two weeks ago asking him to lunch. Today, we met and enjoyed good conversation, some war stories and discussed some of the problems with the professional services sector. But at the end of the meal when they brought the check, I insisted on paying. He looked a little disconcerted at that point. We continued to talk and as we got up from the table he yelled back to the barkeep "Come on over here." He asked the barkeep "In the last thirty years that I have been coming here for lunch, how many people have payed for my lunch?" The barkeep thought, pondered and ultimately responded "Two, I think, but I can’t remember the first." I thought it was a nice touch, but was a little surprised. Clearly, his bank would have bought the lunch for both of us. But that is not the point. I asked him to lunch and looked forward to showing my appreciation.

As we parted ways in the parking lot, he got in his car and I got in mine. As I was shutting my door I noticed that he got out of his car and was heading back towards my car. He motioned to me and I stopped. He said "I have to tell you that in my thirty years of doing this I don’t remember any local attorney ever asking me to lunch. Can you imagine that? With all of the business that I have to farm out." Of course, he takes a lot of attorneys out to lunch.

I was surprised that it was so unusual that not only had I asked him to lunch, but payed the bill as well. Clearly, I had not expected this to be a distinction at all.

We briefly discussed how in the world this could be. My own thought is that lawyers are so consumed by their own obsession to bring in revenue and reduce cost, that they never saw the client relation value of paying for a lunch (especially one with a corporate account). They all knew that the big bank would easily pick up the lunch and it would be no skin off of my friends back. But, none of them realized that it would be the gesture that would be important, not the fact that both lunch participants could have eaten effectively for free.

In my experience, law firms spend very little time thinking about client relationships. There are some clients who just automatically come back, year after year, no matter how much they are abused. They don’t believe that it would be any different anywhere else. The concept of waiving part of a fee in order to strengthen a client relationship, even if there was no particular reason to do so which could be attributed to the lawyers services, would be viewed by many as ridiculous. Recall, I waived a fee recently where the Michigan Supreme Court changed the law mid-case. I am now in line to do all of the corporate business work for that client as a result of that single gesture.

A frequent commentator on this site, Moe Levine, believes that the law is one of the most competitive businesses in the United States market. He correctly notes that the barriers to entry are few. But, Moe is wrong. No market which is effectively insular and for which there is very little publicly available information is truly competitive. Competition in the free market is born of an informed consumer. Taking out the Fortune 500 and a relatively low percentage of other clients, most people and companies have very little information about how law firms are different.  To the extent that they are different, clients have little knowledge about what alternative fee arrangements they can ask about, or hopefully, someday demand.   They don’t generally know how a law firm might deliver more value for fewer legal dollars spent and related issues. Until clients and prospective clients are able to truly educate themselves about legal services, choosing a law firm and lawyer will be as much about dumb luck and social networking as it is market force.