Trend toward specialization, relationships with clients

Trend toward specialization, relationships with clients

As a result of the nation’s economic climate, the legal profession is in a state of flux and experts agree that strengthening relationships with clients is the key to future success.

Over the last five to seven years, most law firms have focused primarily on profits per partner, a common industry measurement of success and validity, at the expense of the lawyer/client relationship, said Thomas Jaros, a partner in the Real Estate & Finance Practice Group of Levenfeld Pearlstein LLC.

“There is a movement away from that at the firms that are more forward looking,” he said. “Firms that are going to survive are going to focus more on relationships both internally and externally.”

Up until recently, transaction volumes for lawyers have risen steadily since the turn of the century, meaning lawyers have not needed to invest in relationships with their clients to be successful. That scenario was great for a firm’s bottom line, but attorneys are now realizing that strong relationships are what will separate them from the pack during these unstable economic times, said Jaros.

“Relationship building creates a stable client base that recognizes the value you bring,” he said. “That’s the heart of a successful law firm.”

Complicating the lawyer/client relationship is the shift in types of work, as foreclosures, workouts and loan defaults have replaced the transaction volume of the recent past.

“We’ve seen an explosion of foreclosure cases in the collar counties,” said Tim McLean, a partner in the firm of Clingen Callow & McLean LLC, in Wheaton.

Brian Meltzer, a founding partner of Schaumburg-based Meltzer, Purtill & Stelle, believes this is the worst market he’s ever seen and that the only type of business available for attorneys is in the workout and foreclosure arenas.

“We’re seeing some transactions where property is changing hands but it’s really in the context of dealing with this problem we’ve got in the market,” he said.

“Once the market starts coming back we could be busy with new, positive stuff and still busy working out some of these (current) problems.”

A continuing dependence on technology is also a barrier for attorneys to overcome when trying to develop more personal relationships with clients. With the emergence of e-mail as the primary communication tool in business, attorneys now must make a conscious effort to stay in close contact with their clients through phone conversations and face-to-face communication.

“I try to continue to have face-to-face contact with clients,” said Kenneth Clingen, a partner in Clingen Callow & McLean. “Some younger lawyers are a little reticent to pick up the phone and call clients. They’re more comfortable communicating by e-mail.

“It’s an advantage to those lawyers who will continue to try to have face-to-face contact with their clients. If you don’t have that, it may affect your ability to strengthen the relationship.”

The key to building relationships is for the lawyer to push through the technology barriers and show clients the value proposition of the services they provide, said Jaros.

“Once you’re delivering something of value, people tend to pay for it more willingly,” he said. “If you’re seen as just a service provider, clients start to question your value and whether someone else could have done the exact same thing for a lower price.”

At the same time, technology has helped the profession in a number of ways, including the use of e-mail to render legal advice, filing documents electronically and the use of telephonic and electronic communications to handle distant court appearances—effectively cutting down on travel costs.

“I absolutely believe that the changes in technology are improving the ability of attorneys to serve their clients not just locally but across the country,” McLean said. “The ability to communicate electronically is lessening the need for clients to think that their attorneys have to be 10 minutes down the road.”

The current presidential election also figures to have a significant impact on law practice, as some pressing tax issues will not be dealt with in Washington until after the November election.

“A lot of things are on hold until we know what’s going happen,” Meltzer said. “I think there is a better chance things will improve after the election. That’s why I think 2009 will be a better year.”

Both the estate tax and capital gains tax are sure to be addressed once the new president takes office—two taxes that provide attorneys much work. Throughout the Bush administration, the capital gains tax has been relatively low, encouraging large transaction volumes.

“If (Sen.) Obama wins, we expect to see the gains rate go back up,” said Jaros. “That may have a negative impact on transactions as people will be less likely to sell if they have to pay capital gains.”

On the other hand, Democrats have historically been in support of strengthened government regulations on businesses through anti-trust laws and agencies such as the Occupational Safety and Health Administration and the Environmental Protection Agency (EPA) which would result in a sizeable increase in regulatory work for lawyers.

“Under an Obama presidency, it is more likely the EPA will be more vigorous in its enforcement activities,” said Clingen. “That means there is going to be clients out there that are going to need assistance from experienced people in environmental law to deal with the EPA actions, whatever those might be.”

Even though highly focused specialization in the industry is becoming more and more prevalent, most experts agree that it is crucial for younger lawyers to learn as much about general practice as possible before specializing.

“I think specialization is great once you get a firm base of general legal knowledge,” Jaros said. “After 10 years, then you can make an educated decision on what you want to specialize in.

“It is the wave of the future because clients do appreciate expertise rather than guesswork, and they will pay for expertise.”

Yet, while specialization should be the ultimate goal of anyone looking to become a successful attorney, McLean warns against the dangers of becoming too specific.

“There are areas of the practice of law that are cyclical,” he said. “So it’s good to have more than one specialty because you may find yourself not having enough work in your chosen field.”

Jeremy Stoltz, Staff Writer

Posted on Sunday, July 13, 2008 (Archive on Sunday, July 20, 2008)
Posted by jstoltz Contributed by jstoltz

Return