1/18/13

GC's: We Want Firms To Be Proactive (and Free?)

I've been in beautiful Rancho Palos Verdes, California this week attending the Marketing Partner Forum.  Yesterday, I caught a couple of sessions that stood out because they discussed the need for law firms to be focused on the prevention of litigation, rather than the representation of ongoing litigation. That, in and of itself, wasn't new, but the way firms should charge for that type of work did strike me as 'interesting.'

First up, there was Keynote Speaker Trevor Faure, Global Leader & Partner, Legal Services, Ernst & Young Global. Trevor's topic was "The Smarter Legal Model: Replacing the Traditional Zero-Sum Game Client Relationship with a Profitable Partnership." He wrote a book in 2010 entitled The Smarter Legal Model: more from less, through the recently acquired PLC. If you've ever caught a Richard Susskind presentation, the themes would sound very similar, especially since they are both British.

Toward the end of his talk, Faure pointed to an alternative method of doing client work that will sound familiar to many law firm librarians. The idea was to look at the trends in client litigation, say labor disputes, and determine how much they spend in a typical year. The firm would then work with the client to change the structure of the business, the policies regarding the actions leading to the disputes, and training on how to change the behavior of the client as to avoid the disputes altogether. The firm would not charge the client up front for this work. Instead, it would take a percentage of the reduction in cost over a period of time. If the client reduced its spend the next year by $100,000 the firm would be paid $50,000. The idea being that the client is still money ahead and the firm would also be a winner.

For librarians, we have seen this model before in taking a percentage of the saving when consultants come in and evaluate a firm's research collection, suggest cuts, and then take a cut of the saving for a few years. Many of us have done this, and the process can be a bit tricky, and can lead to a bad relationship with the consultant if everyone is not on the same page. It's also something that most firms do once, and then never again.

The issues usually arise around what did the consultant actually do,versus what the firm was in the process of doing already. The same issue could arise around the firm and the client. What was the client already implementing to modify their behavior, versus what did the firm actually cause them to change. It can make a difference in how much actual savings occurred and how much the firm is owed by the client. If not performed carefully, a billing dispute could occur and cause damage to the firm's overall relationship to the client.

I actually think that this can work, and there may be many firms out there already doing this, but I would suggest that everyone involved needs to have clear communications on exactly what the changes are, who came up with the changes, and how much was actually saved.

The second presentation happened later in the day and was comprised of a panel of General Counsel from big corporations and law firm lawyers and chief knowledge officers. The same 'lawyers need to be proactive' theme ran through this presentation, and there was a streak of bitterness amongst the GCs that you could feel as we listened as story after story talked about how the GCs felt that law firms were not trusted to give the best services for a fair price. In fact, one GC gave a blanket statement that GCs hire lawyers, not firms. This sent a visible shutter through many of the members of the audience.

The GCs began telling the audience what they really want their outside counsel to do. They want the partners to better understand their business. They want a better line of communication. They want firms to better manage the matters to a budget and keep them informed, to the penny, on where we are at all times. They want firms to install practice management processes. They want to be able to call the firm from time to time to get answers on immediate needs. They want the firms to send their lawyers into the client's business and walk in their shoes for a while in order to think as a GC would, and not as a law firm lawyer would. They want CLE. They want their outside counsel to make them shine to their bosses.

They want most of these items at no additional cost.

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