David Mandell, founder, Mandell Corporate
Opinion: Private clients may be profession’s new sugar daddies
14 February 2011
2 December 2013
19 August 2014
9 July 2014
9 July 2014
21 May 2014
One day Alice came to a fork in the road and saw a Cheshire cat in a tree.
“Which road do I take?” she asked the cat.
“Where do you want to go?” was his response.
“I don’t know,” Alice answered.
“Then,” said the cat, “it doesn’t matter.”
Lewis Carroll might have been writing the opening chapter of a book on law firm strategy, circa 1985.
But after a recession more horrible than any other recent example, the dotcom bubble included, what is today’s big puzzle for our profession, specifically in relation to the positioning of private client work? For years lawyers have been weaned on a business vocabulary comprising ’core and non-core’, ’objectives and strategies’ and ’key performance indicators’. The mantra of grow or shrivel; merge or meander; or go small, niche and powerful is ingrained. Private client teams have become second cousins and non-core to the corporate focus, and shed.
I never fully understood that reasoning. Why send your firm’s best private clients to another firm when they get ’the Knock’ (or, more likely, divorce papers), which is exactly when you want you and your business to look after them.
Distress buying is where client relationships are formed (and broken). And it is not a revelation to say that the most durable client relationships are borne out of crisis purchases where there was no beauty parade or presentation- probably no more than a phone call and a recommendation to the client along the lines of, “See this lawyer - they won’t be cheap but they’re seriously good and will look after you”.
But is traditional private client making a comeback in the corporate law practice? Today, high- and ultra-high-net-worth individuals are the kings of the corporate market. If you consider that in the present climate they have ready access to cash and leverage, then it is clear that a new generation of deal-doers is among us that does not rely on bank lending to make things happen.
My argument is that any corporate firm is going to want to have a comprehensive private wealth capability of some kind. It is not a huge stretch in a well-managed business to consolidate practices relevant to high-net-worth individuals - notably litigation, tax, trusts, real estate and the financial aspects of matrimonial. Find a lawyer with wealthy private business clients and you will find a busy lawyer.
The penny has dropped. You only have to look at the sheer number of top 50 firms that, in recent years, have built white-collar and tax fraud defence practices. Much of this business was once left to specialist criminal, family and tax firms.
Given the absolute business logic of defending your clients when a prosecution of any kind threatens, what other areas does it make sense to incorporate within a cutting-edge business law practice?
I recently read that a well-known City firm has invested up to £100,000 to offer a 24-hour global concierge service - the kind you would find in a five-star hotel to get best tickets to the Cirque du Soleil.
I applaud the way a major law firm is trying to connect more closely with its clients as people to foster long-term client loyalty. Such loyalty is hard to retain when it is held together only by a pitch, a ratecard and an unforgiving service performance schedule.
A tip, however: if you keep the phone numbers of one top matrimonial lawyer, one road traffic lawyer and one good defence lawyer in your pocket, it does not cost you a penny, and when your client needs one their appreciation will sure beat finding them a ticket to a top show.
Or go one better - hire them.