- May 8, 2012
- Posted by: admin
- Category: News
A legal eco-system where different parties collaborate to deliver better practice solutions for clients is closer than ever, argues Robert Gogel
After having enjoyed years of autonomy in managing outside relationships and ever-growing budgets, corporate general counsel are facing austerity and cost-cutting edicts, forcing them to rationalise their spending, bring costs down, and increase efficiency.
Their activities are now increasingly on the radar of chief financial officers. Along with other service functions, corporate legal departments are required to do a great deal more, with less; they are being challenged to bring more transparency and predictability to their spending, and to make use of contractual arrangements that connect cost to value and risk, rather than concentrating merely on the traditional value standard of the billable hour.
Rethinking the mix
GCs are rethinking how they deliver legal services to their organisations, including considering the proper mix of internal and external staff and how to incorporate automation, process and project management. The less innovative law firms are being driven by GCs to reduce costs through discounts or alternative fee arrangements, while providing greater transparency on bills. Many GCs are insisting that their chosen law firms work with legal services outsourcers to provide cost-effective solutions to the legal projects.
The legal world is built on networks and personal rapport — and many GCs have embedded professional relationships with law firms and individual lawyers. The likelihood remains that lower rates cannot compete, in the minds of in-house counsel, against the value they see from advice delivered by trusted advisors. However, transparency, panel selection processes and on-line bidding are now commonplace — and what used to be known as the ‘old school network’ carries less weight than before.
Although some suggest there is a perceived danger of asking non-lawyers to evaluate the reputation and competence of lawyers, procurement specialists can help in-house counsel improve how they manage legal matters and outside counsel relationships. Procurement specialists are experts at clearly identifying value-for-money solutions.
Efficiency and predictability
Nevertheless, if procurement organisations want to be welcomed into a corporation’s law department, they have to do more than just offer to reduce law firm rates by threatening to move the work. To illustrate that they add value, procurement practitioners have to produce the knowledge and the tools to help shape fee arrangements that reward innovation, efficiency and predictability. This added value can also come in the form of looking beyond just law firms for solutions and service providers that can help GCs fulfil their overall objectives – delivering quality services within a budget that meets an organisation’s financial objectives.
Meanwhile, if law firms are to offer an attractive value proposition, effective resource management is going to be critical in creating client value, enhancing profitability and maintaining a competitive edge. Work needs to be planned, resourced and executed in a way that allows a law firm to find the right combination of team members and sector knowledge to maximise billable hours at lowest cost and achieve the best possible margin. Law firms, too, must look beyond their own internal resources for solutions for their clients.
Legal process outsourcing (LPO) providers can play a significant role in providing support to both GCs and law firms, in pursuit of enhanced value for their businesses.
A strategic and collaborative ecosystem is evolving whereby in-house counsel, law firms and LPO providers forge relationships to design solutions and shape a new model for the delivery of legal services. Neither LPO providers nor law firms alone can provide the holistic, end-to-end service that corporate clients require – it is difficult to imagine law firms maintaining the ongoing investment in process improvement and cutting-edge technologies required to sustain a new services delivery model.
However, under a collaborative model, law firms can work effectively together with LPO providers to expand their offerings to clients.
LPOs are well placed to play the role of service integrator and project manager, within the parameters of defined service level agreements, objective metrics, a governance structure and regular reporting. They can also provide valuable support and experience in unbundling a complex legal service, determining which pieces are suitable for outsourcing, and then to ensure that those tasks are performed well.
The pace of change remains unabated. But a thoughtful approach to collaborative legal services will result in significant cost savings and focus the in-house legal workforce on higher-value activities, while creating additional capacity for unanticipated legal needs.