This is a live blog post from Welcome to the Future: Trends in the Delivery of Corporate Legal Services at the Center for the Study of the Legal Profession at the Georgetown University Law Center. This session is Value: How do we define it? How do we measure it?
Moderator: Aric Press, Editor in Chief, The American Lawyer
- Susan Hackett, Senior Vice President & General Counsel, Association of Corporate Counsel
- Mark Harris, CEO & Founder, Axiom
- Lisa Damon, Partner, National Chair of the Labor & Employment Department, member of the Executive Committee, Seyfarth Shaw LLP
Susan Hackett, Senior Vice President & General Counsel, Association of Corporate Counsel
The ACC Value Challenge initiative began before the economic crisis. Its goal is to connect the cost and value of legal services. Value-based service includes a focus on partnering; rigorous cost control; risk sharing; long-term relationships with continuity and predictability; skills, staffing, and training; lean, efficient, process-oriented management; and communication.
Value is hard to define. The value conversation needs to be tailored to each situation. It may begin with fees but it should not end with fees. Key is a better assessment of each matter (scoping and process). Whatever the definition, metrics is key – this means being data driven, even that makes lawyers uncomfortable. This will take work to define a common lexicon so clients can ‘compare apples to apples’. Lawyers will need to look to other industries. They will need to get over the attitude “what I do is unique and unpredictable.” The ACC Value Index offered an early set of categories of common interest to examine but it needs to move the next level of assessment. The future of value assessment will be data-driven.
Higher value will be driven by more careful consideration of how the work is done and by whom – process management. Process assessment requires lawyers to disaggregate and unbundle what they do.
Evaluation is key to sustaining higher value. Need a post-mortem at the end of every matter. (Editorial note: this is often called an “after action review”.)
Knowledge management is the sleeping giant. We place too little value or attention on capturing, sharing, and re-using knowledge.
Lisa Damon, Partner, National Chair of the Labor & Employment Department, member of the Executive Committee, Seyfarth Shaw LLP
The firm started about five years on its own value initiative. The firm looked at Lean Six Sigma. Firm wanted a process methodology to guide its efforts. Got into it and hated it. But then saw a lot of benefit in it. The firm trained 35 top lawyers in the firm on Lean Six Sigma. The firm liked the data-driven elements, voice of the client, and its way of thinking about process. Realized that Lean Six Sigma is not just about commodity work. Today, firm uses it, along with legal project management.
The voice of the client sounds simple but really understanding what clients want and need is not easy. Evaluating lawyers by billable hours misaligns their motivation and the client view of value. So firm had to re-align fundamental metrics internally with what clients want. Suggests firms need to link client satisfaction to lawyer compensation.
The firm is still on a journey to align all of this properly. The firm adopted the ACC value score card. But the score is less important than the conversation about it. Seyfarth continues to consider what metrics it uses and is engaging clients on how they value legal service. Deals are pretty easy to value; for litigation, firm is trying to align client exposure and cost. Whatever the metrics, being transparent with clients is critical. For example, clients can see raw, daily time.
Cautions that unbundling may not be the best approach for clients. It limits the client’s ability to manage the whole process. Suggestion is that law firm needs to coordinate a series of processes, for example, a “union of law firms.”
Mark Harris, CEO & Founder, Axiom
GCs want commercial value delivered but think most law firms don’t deliver it. Presents a 2×2 matrix with risk and profit on axes. This segments legal spend into “good” and “bad” spend and into “cost” and “outcome”. Good spend creates value; bad spend avoids risk or is work company must do (e.g., because of regulations).
How should we define value for bad spend, for example, litigation. Value means reducing cost as much as possible. Need to focus on which resources should be deployed. Should clients pay for big law firm infrastructure for work that does not require it?
Highlights spend on contract management as good spend. Opportunities exist both to cut cost of contracting and to increase revenue by better enforcement of contract rights.
Aric Press asks where / what data we should collect. One suggestion: law firms pool data to determine how much a matter should cost. Panelist Mark Harris suggests you don’t need a lot of data to decide that lawyers at $500/hour should not be doing certain types of work. Audience member suggests that it is more important to focus on client side data rather than law firm data. In-house counsel audience member: start by eliminating waste, don’t focus first on cheaper resources, focus on what you do not have to do. Mark Harris argues that the change and innovation must come from general counsels of the largest companies.
This is a live blog post from Welcome to the Future: Trends in the Delivery of Corporate Legal Services at the Center for the Study of the Legal Profession at the Georgetown University Law Center. This session is Getting on the Radar Screen: How Important is Brand?
- Wendy Bernero, Chief Marketing Officer, Fried Frank
- Dan Ross, President, Wechsler Ross & Partners
- Lisa Hart, Chief Executive, Acritas
- Jolene Overbeck, Chief Marketing Officer, Hogan Lovells
- Kenneth Grady, General Counsel & Secretary, Wolverine World Wide, Inc.
Brand is the promise the firm makes to a client about the experience of working with that firm. This involves what you offer, how you deliver services, and how you communicate.
Jolene Overbeck, Chief Marketing Officer, Hogan Lovells
Brand is much more than just a logo. Holds up a Mac notebook and points out that Apple is now one of the most widely and admired global brands. Law firms aspire to such recognition but are a long way off but observes global firms are breaking out of pack a little bit.
Until recently, law firm brand design was internally focused, what lawyers at the firm liked. Today, forward-thinking firms design their brand around what clients want. To sustain a global law firm brand, the individual lawyers need to have a strong personal brand within their area of expertise. Industry focus is also key to brand because all the research shows industry know-how is key to the client service experience. So Hogan Lovells will communicate its lawyers’ expertise and industry know-how.
Another important part of the firm’s brand is the service experience. So the firm is building a client-centric business. This requires internal processes and mechanisms so that everyone in the firm is focused on what the client wants. This means channeling lawyers ego to the benefit of the client. Good service also means connecting with the client personally and emotionally. So the firm works with young lawyers to help them understand communication styles and personality types. Other ways to support the brand: good team work, good work environment, and client feedback.
Audience Q&A focuses on the challenges of training lawyers to be more client-centric. Some point to law school training, others to lawyer personalities, as problems to address.
Kenneth Grady, General Counsel & Secretary, Wolverine World Wide, Inc.
Discusses brand of casual and comfortable footwear that unites Wolverine’s 12 brands of shoes across 190 countries and 4000 trademarks. Wolverine is a brand company.
When Grady thinks about brands and law firms he thinks of commercial for Bacon Bits: a dog barking and a person talking to the dog and what the dog hears – blah blah blah bacon bits. Says same is true for law firms: blah blah blah firm name.
Law firms have much opportunity to develop their brands. What I hear from law firms is that they have 1000 brands (attorneys) channeled through one distribution channel. Each operates independently – there is no centralized brand. As inhouse counsel, we see 1000 brands that are different.
Grady looks for a lawyer (not a firm) who will work with him collegially and who adds value. He needs to find an individual who has the right skill set to solve a problem. He would like a law firm brand that conveys that all lawyers meet these criteria. The law firm brand should mean something specific. And that does not mean quality because quality and expertise are givens. Likewise, brand does not mean the right practice or geography. Grady assumes that firms that come to him have already figured that part out and would not talk to him if they did not. So much of what firms pitch, Grady takes for granted. S0 law firm pitches are, in essence, wasted.
Grady observes that many lawyers pitch their expertise in other industries instead of focusing on footwear / apparel and retail drivers. Complains that firms come to him and talk about their telecomm experience, which is irrelevant to him. He wants to see a practice built around retail and wholesale business, ideally with apparel experience as well. Wants not just technical advice but also strategic counseling. So industry experience is the key and law firms should be pitching that.
Wolverine was looking for new EMEA counsel a few years ago. Talked to many firms in the region. The firm selected had two appealing brand promises : (1) an organized group of lawyers and knowledge management resources focused on retailing and (2) efficient delivery of services that provided good value for the money.
The Essential Knows:
- Know the client’s brand.
- Know the client’s industry.
- Know to whom you are marketing. Know your customer. References the type of customer segmentation Wolverine and other consumer companies do.
- Know who influences the buying decision (e.g., references are key, so is the ACC Value Index)
- Know your own brand
- Know your own brand promise. Every lawyer needs to be able to articulate it. All need to have same elevator pitch.
- Know your product, what you are really selling.
- Know what your product is not. Complains of lawyers who pitch him and who know less than he does about the issue at hand.
- Know the market for your product. Who is your real competitor. It’s not every firm. Articulate your point of differentiation.
Dan Ross, President, Wechsler Ross & Partners
Brands affect decision making that are not always obvious. Will use an example that may not seemingly relate to legal at outset. A good brand is less about the provider than it is about the customer / client. Customers use brands to define themselves. A pre-requisition of a successful brand is a good product; that’s a given. Brands are about aspirations of its customers. How does this relate to law firms?
Firms need to make clients feel good about themselves. They should feel smart about choosing a firm. For example, rich investors will choose Pimco or a hedge fund over Fidelity, even if returns are similar. The wealthy don’t want to feel like they are mass market. How can firms build successful brands? Focus on content and character. Content is what you stand for; character is who you are. Studied top 25 law firms a few years ago by reading their web sites, which all used the same words to describe themselves. These firms are not differentiating themselves. Among the top 25 firms, 18 firms clustered around global, leader, or excellence.
The outliers were more interesting and instructive. Morgan Lewis positioned itself around collaboration. It is, however, easy to say collaboration but hard to prove. You can only believe it through experience. DLA Piper uses “everything matters” – that’s distinct but it’s hard to know what it means. O’Melveny uses “community”, which is daring for a law firm but the downside is that is not a meaningful attribute for clients. But this may appeal more to an internal audience. Weil Gotshal positions itself as “sound judgment”. This is a strong client benefit but it is very hard to prove. Greenberg Traurig is “built for change” – this is a client driven brand. Clients seek lawyers when they feel threatened by change so this is good positioning. Ross says its easier to own this than other claims.
There were 2 firms among top 25 that did not have clear brand positions. But they were strong on character. Skadden and Gibson Dunn did not boil down to a single statement but both are visually differentiating. Talks about use of color, design, and word choice to create character.
This is a live blog post from Welcome to the Future: Trends in the Delivery of Corporate Legal Services at the Center for the Study of the Legal Profession at the Georgetown University Law Center. This session is Empirical Overview: The Life Cycle of the Client-Law Firm Relationship, presented by Lisa Hart, Chief Executive of Acritas.
[NOTE: The data presented below are from a proprietary survey conducted by Acritas and are copyrighted to Acritas.]
Hart explains the cycle of acquiring new clients: Aware > Favorable > Selection > Satisfied / Loyal > Advocate. She did research to determine what clients want at each of these stages. A group of law firms fund her research of 2,000+ general counsels.
Research looked at what makes a law firm ‘top of mind’. The biggest factor is driven by day-to-day contact with lawyers. But the average firm can increase is awareness by one-third by general reputational factors.
The drivers of how clients develop a favorable view of a firm: lawyer expertise (77%); service is a far second at 44%; then relationship at 25%; price is at 13%.
The driver of selection: For firms retained over the last six months, 30% said practice expertise most important, then 23% geographic expertise. Only 5% cited low cost.
The drivers of selection: When asked about what stood out form a firm pitch: 14% understood our business; 12% understood our needs. Firm reputation barely rates.
The drivers of loyalty: expertise (29%); service (26%); relationship (25%); knowledge of my business (14%); competitive cost (8%).
This is in context of five year market trends: (1) increasing need for international legal services; (2) efficiency drive; and (3) increasing regulatory complexity. The momentum for non-hourly billing is increasing. Buyers are moving from individual relationships (one in-house lawyer to one firm lawyer) to institutional relationships.
I frequently discuss with law firms and law departments how best to provide lawyer support, including outsourcing as an option. Inevitably, the conversation turns to support quality. I am surprised how few have defined what “good support” means.
Defining good lawyer support was a big part of my presentation last week at the Ark Group conference Best Practices & Management Strategies for Law Firm Library & Information Service Centers. Jean P. O’Grady, Director of Research Services & Libraries at DLA Piper LLP (US) and I presented the keynote panel, Outsourcing: Outrage or Opportunity. Marsha Pront, Senior Library Consultant, IMS Legal Research Services moderated. In the audience were 45 people from 35 mostly large US and Canadian law firms.
I said that defining good support requires metrics, service level agreements (SLA), and a governance structure. Without these, managers cannot assess if they provide good service, where improvement opportunities lie, or the viability of alternative support approaches. When I asked for a show of hands of who had instituted metrics or SLAs, few hands went up. This is pretty typical in law firm audiences.
We did not have a chance to discuss what metrics to track but “core” support functions cry out for metrics. Jean, citing Jim Collins in Good to Great, defined core as follows (1) “Good to great” companies focus on what to do and (2) they also put equal focus on what not to do and what to stop doing. She surveyed attendees in advance, asking which library functions respondents consider a core business activity of the firm. She reports the results at her Dewey B Strategic blog post, Outsourcing, Outrage or Opportunity? What is Core?
Once you know what to measure, you have to define the right service level to offer. For libraries that might mean, for example, categorizing research requests by complexity and, for each complexity level, specifying a turn-around time.
A governance structure is also key. One element of governance is a process to recover from errors. Another is articulating criteria for when the SLA applies. For example, appropriate governance might limit in-depth business development research to partners with a demonstrated track record of winning new business.
As for the question of “Outsourcing: Outrage or Opportunity,” many seemed skeptical that outsourced service could be as good as what they provide internally. To understand this view, I asked two questions. First, did the audience believe that every support function in their firm was “good”. The looks and comments confirm what everyone in a large law firm knows: some support functions just are not that “good”. But of course, not mine!
And second, I asked how many had work experience in an organization that provides outsourced services. Only a couple of hands went up. I then pointed out that every law firm employee, in fact, works for an outsourcing organization. In-house counsel can “make” legal services or “buy” them from law firms on an outsourced basis.
I hope the audience left with the message that metrics, SLAs, and governance are key both to judge quality and know where to draw the make / buy line. To optimize lawyer support, law firms must adopt the right evaluation framework. That is true whether they choose to work purely internally or to outsource.
[Update March 3, 2011: Steve Levy of Lexician wrote Outsourcing: Bad Word or Wrong Word? that comments on above. He suggests that managers focus on who is doing the work, not who employs the worker, and that the issue is more one of delegation. I agree.]