Do you want to be one of your primary firms’ profitable clients?

Since some law firms care about the profitability of individual clients, law departments ought to pay attention to that possibility. Legal Week, Vol. 9, Dec. 6, 2007 at 3, states that this year Lovells, the top 10 London City law firm, “went through a process of rankings its major clients by profitability” (See my post of Nov. 27, 2007 about law firms who fire clients.).

I assume the term “profitability” refers not to mere volume of business but to the margins Lovells maintained on its major clients (See my posts of Oct. 31, 2005 on low-ball fees that reduce profit; Feb. 24, 2007 on six drivers of law firm profitability; Nov. 24, 2005 about minimum levels of law-firm profitability; Feb. 16, 2006 and the importance of it; and July 20, 2005 about transparency of firm profitability.). If I were a general counsel, it would disturb me to rank high on such a list of profitability. Somewhat like effective billing rates (See my post of June 13, 2006 on effective billing rates.), every law department should want to be below the median (See my posts of Oct. 30, 2005; Nov. 21, 2005; and Jan. 25, 2006 on difficulties with on most-favored-nation rates.).