Five Keys to Successfully Transitioning Clients Across Generations

This yields an increasingly important opportunity in the current competitive landscape in which many clients are using fewer and fewer firms over time. Over the past 10 years, legal departments have decreased rather than increased their spending on outside counsel. Many high-performing firms are successfully growing the size of their client relationships of strategic importance, increasingly serving them across the firm's platform. And consistent with that trend, 60% of GCs say they send nearly all of their work to their top 10 firms, according to a 2018 CounselLink survey.

In other words, many law firms are competing to attract and retain client relationships that are increasingly larger pieces of a shrinking overall pie of client spending on outside law firms. In addition, traditional client relationships face four growing competitive forces that are taking market share away from Am Law 200 law firms and creating impediments to transitioning client relationships:

1. Firms outside the Am Law 200 are capturing an increasing percentage of market share over time — this trend may accelerate in an economic downturn;
2. Alternative legal service providers are winning discovery, due diligence and other work that traditional went to large law firms;
3. Technology is increasingly handling tasks traditionally performed by junior lawyers, with many firms investing in new approaches that will help them compete more efficiently in a rate-pressured market; and
4. The Big Four accounting firms are becoming a more significant competitive threat, particularly outside the U.S.

Many firms also struggle with internal factors that impede successful transitions. According to the ALAS survey, these include an “unwillingness to let go” on the part of relationship partners, a disconnect between compensation systems and effective client relationship transitions, fear of mortality, lack of appropriate successors, and communications challenges.