I’m currently taking part in an intriguing conversation at Legal OnRamp about the reasons why GCs hire prestigious, big-name law firms. A recurring theme in the discussion is that in-house lawyers often default to using big, well-known (and often highly inefficient) firms because of the protection these firms’ prestige affords to corporate counsel. Just as no one was ever fired for buying IBM, as the old saying went, no one gets fired for sending important and potentially calamitous work to Famous & Expensive LLP: “I paid top dollar for Top Law Firm, so don’t blame me for what happened.”
My contribution thus far has been to ask (a) whether that protection actually materializes in practice, (b) how much outside counsel work is so important that it requires the F&E imprimatur, and (c) if any GC has yet been fired for failing to rein in outside counsel costs. The whole conversation might eventually form the basis of a separate post. But it does lead me to a related and I think pretty important subject: what “law firm prestige” itself actually represents.
“Prestige” is one of those words, like “professionalism” and “value,” that we throw around a lot in the law without establishing exactly what we mean by it. Interestingly, trace its etymology back to Middle French and you’ll find it originally referred to an illusion or a conjuror’s trick, a sleight-of-hand; if you’ve ever wondered where the old magician’s standby “Presto!” comes from, you have your answer. That’s something to keep in mind when considering law firms’ “prestige” — that we’re talking more about the appearance or suggestion of merit than we are about the actual presence of merit itself.
Let’s say an in-house counsel purchases a law firm’s services at least in part because he expects that firm’s “prestige” will provide effective cover against adverse outcomes. The clear implication, I would think, is that that prestige reflects a higher quality of service and/or results, as compared with less well-known or less “prestigious” firms — otherwise, why would it be relevant to the question of whether the corporate counsel made the right call? This implies that there’s a rational, measurable connection between a prestigious, well-known name and better, more reliable results.
But is that actually the case? And it it’s not, are clients who rely on “prestige” when making their legal purchasing decisions doing little more than buying smoke and mirrors?
Let’s break this down: what are the elements of “prestige”? Does it involve longevity? Maybe — but Thacher Proffitt & Wood just disappeared in its 160th year. Is it about having a stable of famous clients? Maybe — but Bear Stearns, Merrill Lynch, Northern Rock, Circuit City, Nortel, the Tribune Company and many others, not to mention GM and Chrysler, all retained prestigious firms. Is it about having the “best” lawyers? Maybe — but considering that partner movement is now so frequent among large firms that the AmLaw Daily has a regular section called “The Churn,” I’m not sure how the fleeting presence of individual lawyers can affect prestige.
It seems to me that, like the old SCOTUS definition of obscenity, many people believe they know prestige when they see it. I’m dubious. As far as I can tell, among the constituent elements of law firm “prestige” today, along with longevity, name clients and name lawyers, are tony corporate addresses, marble-lined reception areas, old masters on the wall and in the corner office, a collection of long-past accomplishments, massive marketing expenditures, and often, just sheer size (a factor ably assisted by a legal media disproportionately interested in the largest of large law firms). Roll all these together and Presto! You have a prestigious law firm.
When a general counsel tells the board of directors that he protected the company’s interests by hiring a prestigious law firm, those directors assume that a law firm’s prestige is rationally and demonstrably connected to a higher quality of service and results. I don’t know that that’s a safe assumption. I don’t know if there’s a direct correlation between a firm’s prestige and its excellence or reliability. And since that assumed connection is actually the fundamental premise upon which is based many general counsels’ hiring rationales, I’d say this is something worth exploring in some more detail.
Because if that premise is flawed — if prestige, however we define it, isn’t rationally connected to quality of service, results or satisfaction — then that’s a pretty major obstacle to the efficient operation of the legal services marketplace.