A law firm or a legal enterprise supplies a wide array of services to its clients including individuals, corporates and others. The law firm acts as the supplier in this supply chain while the client is the end user.

Like all good supply chains, this supply chain should offer maximum value to both parties where the worth of the relationship to both parties, is more than the cost expended in managing the relationship. The main aim of all supply chains is to create a win-win situation for both the client and the supplier, where the least possible cost is incurred.

A law firm should therefore choose the best supplier/buyer relationship given the special circumstances of each relationship and effectively manage this relationship for maximum value.

In the past, little emphasis was placed on management of the relationship between a supplier and the buyer. The suppliers usually took advantage of buyers by charging the highest possible price and offering low quality products/ services on a “take it or leave it” basis.

However, the bargaining power has gradually shifted to the buyers due to high competition and rivalry amongst suppliers and increased consumer awareness by buyers. Suppliers of services or products, therefore, have to manage the relationship between them and buyers for maximum value. The three main types of relationships include transactional, collaborative and strategic alliance.

A legal service provider should choose the most suitable relationship for different categories of clients so as to maximize value to both parties.

A transactional relationship is a relationship based on one off transactions. It is not long term and price is the main driving force behind it. It has been touted as a predatory relationship where the supplier takes advantage of the buyer.

Price is the main driving force behind this relationship and it creates a win/lose relationship in favour of the supplier.

The main pitfalls are obviously on the buyer’s side. However, both parties enjoy the added benefit of time saving and further no skilled labour is required to manage the relationship. This kind of relationship is used where the transaction is a one off and no long term relationship is desired.

It is, however, not wholly suitable for provision of legal services as professionalism and ethics have to be observed. Perhaps the only applicable characteristic of this relationship would be the level of relationship management, given the short-term nature of the relationship.

A collaborative relationship is an interdependent relationship between the lawyer and his client.

A lot of effort goes towards managing the relationship including client entertainment, discounts and provision for deferred payments. It is long term and mutually rewarding where both parties are “ there for each other” during difficult times.

A supply alliance is where there is some institutional trust in the relationship. Agreements between the supplier and buyer are entered into and each party has access to the other’s strategic plan in the interface area. It is long term and a lot of effort goes towards managing the relationship. At times skilled labour is required to manage this relationship. Each party has obligations towards the other under the agreement.

The most common relationship in provision of legal services, is the collaborative one given the need to maintain long term relationships with clients.

Most of the marketing is done by client referral, as the professional body has banned direct advertising of services.

The ethical standards in the legal profession may not allow for the whole application of a transactional relationship. It is more applicable in the distribution of products as opposed to service delivery. High quality is demanded in service delivery and transactional relationships are almost not wholly applicable.

High competition and supply in the legal sector has seen a tilt of the bargaining power on the client. This means that adequate relationship management must be undertaken for a legal services provider is to survive.