Six things modern GCs really want from their law firms 

From his background in major BigLaw firms and General Counsel, now turned independent consultant to law departments and law firms, Steven Walker contributes ‘Six things modern GCs really want from their law firms‘ as the first of a series of posts on The Dialogue.

The role of the modern General Counsel is broader and, arguably, more challenging than ever before. The GC is the principal legal advisor to the client company, frequently chief compliance and risk officer, leader of the legal department and function, executive team member and general commercial advisor, as well as coach, mentor and counsellor.

Today’s GCs, regardless of the size of the law department, are constantly looking for ways to improve department performance, deliver even better legal services, find cost efficiencies and liberate staff time to spend on strategic, value-add or personal growth and development projects. It is therefore timely to examine what might help a modern GC in these efforts in a  series of articles, starting with six things modern GCs want from their law firms.

The views expressed are mine, developed through the gritty business providing legal services over many years in a complex, fast-paced, multi-national business environment while responding to the relentless “more for less” challenge. They also derive from many hours in conversations with peers and collaborators. All opinions are contestable and reasoned dissent is welcome, although naturally, I reserve the right to later pass off any promising ideas as my own.

1. Price certainty and predictability

“Money’s too tight to mention” 

The Valentine Brothers

Leaving aside, for now, how much a piece of work costs and how it should be priced, for the majority of their law firm spend, GCs need cost certainty and predictability through accurate cost forecasting (subject to agreed assumptions and deviations). They also need reliable projections for when and how the costs will be incurred (i.e. burn rate by week/month/fiscal quarter). 

This data is vital for law department financial management processes (budgeting, accrual) and GCs depend upon it. In large corporate environments, GCs may even carry KPIs around forecast accuracy and budget utilisation.

The GC’s business and functional peers typically operate sophisticated financial management practices, and the same is expected of the GC. Legal leaders who repeatedly fall short in financial stewardship put themselves in peril.

Unsurprisingly, if the law department/outside firm financial engagement processes are lacking, resulting in (for example), budget overruns or unexpected bills, and this contributes to a poor perception of the GC within his or other organisation, the GC will remember this when it comes to the next buy decision; it will not matter whether it is the firm or department which is at fault. GCs will increasingly prefer law firms with whom it is easy to do business because they have invested in organising themselves effectively in terms of pricing models to deliver certainty and predictability, optimised e-billing practices which map to the departments own tools and processes, and ideally, real-time online reporting of financial data, helping the GC to manage his or her budgets and stakeholders.

2.  Disrupt yourself

“True disruption means threatening your existing product line and your past investments. Breakthrough products disrupt current lines of businesses”

Peter Diamandis

Many GCs work in corporations whose businesses are under relentless assault from new or existing competitors and are acquainted with the need for constant re-invention to remain relevant and prosperous.

They are also aware that the legal industry is undergoing its own disruptive innovation process, with considerable progress being made in terms of breadth of law firm offerings, service and pricing models. Early-adopter GCs are already enjoying benefits. The majority (those further to the right in the body of the bell curve) are either experimenting, cautiously watching, suffering FOMO, or experiencing apprehension of being left behind by competitors and peers, or any combination of these. 

GCs want, and need, true partner firms who are proactive, creative and open to risk-sharing as the next generation of legal services unfolds. Proactive, in this sense, means that the firm adopts a ‘push’ rather than ‘pull’ approach and is willing to assume some risk and invest in innovative offerings and pricing strategies which may, if successful in the long-term, cannibalise existing revenue or margin. In doing so, the firm can justify a temporary deterioration in revenue or margin performance with the promise of a financially rewarding future partnership through a clear alignment of interests.

Even the largest law departments with sophisticated legal operations capability find it difficult to maintain currency with the latest offerings and thinking. This is a tremendous opportunity for enlightened firms willing to re-engineer, repackage and propose without prompting, new service models, alternative fee arrangements and value-add services which run the risk of disrupting their own traditional business models.

The benefits for the firm include fostering a differentiated, more-enduring relationship of trust and partnership with clients and improved positioning for future GC decisions around which firms his or her company should invest in with legal spend and relationship capital. Additionally, firms challenging themselves in this way deploy both an offensive and defensive strategy to respond to the emerging threats from alternative legal service suppliers, innovative firms and new technologies, which in each case will increasingly target work of higher complexity/risk/rewards typically reserved to specialists in law firms.

3. Technology partnership

“Cars will soon have the Internet on the dashboard. I worry that this will distract me from my texting.” 

Andy Borowitz

Lawtech has reached an inflection point and alongside my suggestion (above) that GCs want law firms to partner with them on industry trends generally, they specifically want guidance and partnership around new legal technology.

From a GC’s perspective, lawtech appears as a bewildering myriad of shiny new objects offered by unfamiliar vendors competing for customers and recognition, with little by way of industry standards or norms to guide them, and in many cases offering features and functions that a law department doesn’t understand or doesn’t need (or at least, doesn’t think it needs). Just as with all disruptive technology, over time, some of the emerging tech will prove game-changing. Some of it will consolidate and standardise. A good deal will sink without a ripple.

It is difficult for GCs to keep abreast of the lawtech explosion, let alone navigate a technology roadmap for their department. While they may appoint someone in operations or an interested staff member to try to keep up, few GCs truly have adequate resources to stay across this rapidly-changing space or have the right personnel with either enough time or the required skillsets to spend their days peering into the horizon. To exacerbate the problem, GCs are repeatedly asked (by board members, stakeholders, job interviewees, peers, journalists etc.,) about their department’s technology innovation initiatives. GCs know they have to get on the bus as soon as they can, but which bus? How? Where is it heading and what is the cost?

Once again, this is an opportunity for law firms. Many GCs would welcome guidance from their trusted partner law firms on technology they might look at. Firms are in a unique position to provide expertise and communicate a point of view; they are vendor-agnostic and have a history of service delivery for established clients, putting them in an excellent position to support their clients on technology strategies and requirements. Such services may not be core to today’s law firms and may even seem incongruous or beyond their current capabilities, but they are most certainly going to be core to the Big Four and the new generation of alternative legal service providers. The latter will be content to provide consulting services to law departments at no or little charge, as part of pre-sales and sell-up/into, with a view to displacing as much of the traditional law firm spend as they can.

4.  Business solutions

GCs of the future will conceptualise service delivery in terms of end-to-end solutions; namely the optimal combinations of people, process, tools and technology, and hybrid inside/outside sourcing models, to meet their client’s business and legal challenges. The focus will migrate to the tooling and solutions which enable the client to adopt a greater proactive posture, rather than solely reactive. GCs will look for innovative cost models for these end-to-end solutions, which produce the right balance of efficiency, quality, flexibility, and predictability. In contrast, law firms conventionally segment clients in terms of types and volume of matters and staffing by particular departments or firm personnel. 

This is a gap for law firms to try to bridge. They should anticipate a shift in the dialogue with GCs away from traditional sourcing, and develop modern legal and business solutions for, as examples, financial services regulatory work, HR support, contracting support or due diligence. These offerings could be made available on a bespoke or productised basis, and either as solutions which clients may purchase to operate on an insourced basis, or acquire from the firm on an outsourced or managed services basis or as an unbundled hybrid. To offer these solutions, law firms will need the help of multi-disciplinary professionals, such as accountants, management consultants, and HR experts, as well as technologists and experienced solution engineers.

While these new business lines may not yet be the natural domain of law firms, they are firmly in the sights of the emerging generation of innovative Alternative Legal Service Providers. ALSPs are investing substantial capital in comprehensive business/legal solutions, including in technology enablement, near-shore and onshore delivery locations, as well as in vertical industry expertise so they may have very different conversations with clients than in a traditional law firm engagement. The wild card in this space is the Big 4, who already understand how to develop fully-integrated business solutions (accounting, finance, HR) and take them to market, and they make no secret of their ambitions to reintroduce legal services into their offerings.

5.  Legal project management and efficiency

“Those who plan do better than those who do not plan, even though they rarely stick to their plan” 

Winston Churchill

Legal project management (LPM) has long since ceased to be a marketing buzz word, optional extra or throwaway requirement in an RFP. The expression now refers more broadly to the efficient delivery of legal services via structured, disciplined, efficient and repeatable project management methodologies, processes and principles.

GCs want, and expect, law firms to have integrated LPM into service delivery for complex projects. Ideally, the methodology adopted will: (a) be consistent and standardised across a firm’s offices, practice groups and locations; and (b) integrate seamlessly with the client’s own processes (on the premise that a firm’s role is to make the in-house team’s life as easy as possible).

GCs will gradually expect firms to supply comprehensive proposals for engagements which accurately predict the scope of services against a project plan at a suitably granular level along with assumptions, dependencies, out of scope items and required client inputs. In other words, with work increasingly priced other than on a time-incurred basis, engagements will proceed on the basis of negotiated service descriptions of a kind long since used in comparable transactions in other industries. GCs will become intolerant of fees for foreseeable services not identified in the agreed plan. 

GCs are also fond of online dashboards displaying easily-digestible data visualisations for key business intelligence and metrics mapped to project phases (e.g. status, progress, cost, known risks and mitigation strategies, resourcing) in real-time (or near real time). GCs use the information to make impactful course corrections and repackage information for executive stakeholder briefings. Firms which invest in the platforms and tooling to deliver this capability will be viewed favourably and in the very near future, it will be the norm. Although GCs may naturally be a high-octane, thrill-seeking cohort, they are not partial to surprises from law firms (even good ones) and the transparency afforded by real-time reporting and collaboration tools will be essential.

For their part, GCs will increasingly need to integrate LPM into their own department’s service delivery and implement the required structures and processes to consume external services delivered according to LPM. Most GCs with whom I speak do not want firms to price in the cost of inefficiencies in their own departments and want the best law firm talents to want to work on their assignments. If the cause of inefficiency is on the client-side, GCs typically wish to know so they can make appropriate management adjustments. Open and frank conversations between firms and legal leaders may not be comfortable, but they are essential for a healthy partnership.

6. Risk/value-calibration

“The best is the enemy of the good” 

Voltaire

Perhaps a preferableformulation for the modern GC is “The best is the enemy of getting stuff done and keeping the business moving”. Leaving aside external spend which is mission-critical, price-insensitive or ‘bet the company’ work generally directed to particular specialists, for the overwhelming majority of a law department’s external spend, when it comes to quality, good enough is good enough.

The frenetic pace of in-house life reflects the speed of client businesses. Time kills deals and business opportunities. For the vast majority of work, GCs need fast, pragmatic and commercially-grounded guidance which is sensitively calibrated to the implications for the company in terms of risk and value. GCs want punchy advice which articulates the reasonably likely risks, outcomes and possibilities, and the most practical strategies and steps in the particular commercial context. 

They rarely need exhaustive risk identification or theoretical corner case analysis, which are commodity products. External lawyers differentiate themselves when willing to go the extra step in terms of decision-support, industry-vertical knowledge and helping the GC understand how to balance the risks of options against the benefits. Typically, a suitably-considered, good response with a fast turnaround is more valuable than a detailed analysis requiring a longer lead time.

This is not a new issue. There has long been tension between, on the one hand, client need for speed and cost-efficiency, and on the other, firm preferences towards rendering high-quality, comprehensive legal advice, which avoids transgression into the business domain and is consistent with the firm’s risk posture and insurance arrangements. What is new is that with ever-increasing competition for legal work and the growth of alternative fee structures, GCs will require greater than ever flexibility from law firms to move out of their comfort zones in providing support which is responsive and good, but may not be the absolute best work that could be performed absent time and budget constraints.

 

Author

Steven Walker is an experienced General Counsel turned independent consultant to law departments and law firms on legal services transformation, lawtech, new service and sourcing models, strategy, law department ops and lean process. He has a particular focus on contracting solutions. He spent eight years in private practice at major law firms and over a decade in-house with a large multinational technology company, most recently as a Vice-President and Regional General Counsel.

Six things modern GCs really want from their law firms was first published on Steven’s LinkedIn page, 27 November 2017 © 2017 Steven Walker, Gen2Law Pty Ltd

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Sacha Kirk
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This is possibly one of the most accurate and insightful articles I have read this year.

George Beaton
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Sacha just goes to show: It takes one to know one. Steve’s experience in both private practice and as a GC, including with outsourcing, enables him to see all sides of the legal services exchange more critically and dispassionately than most.

Steven Walker
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Steven Walker

You are both far too kind. I certainly don’t say that all points are novel, but rather, I attempted to marshal them together in a succinct summary from a GC’s perspective.

I do say that even old challenges (e.g. calibration of law firm work product to risk/value) will become even more pressing as the next generation of services develop.

New developments, such as around E2E business solutions and technology partnership, present entirely unique and unprecedented challenges for firms.