Contributed by ron friedmann

    Offshoring and Outsourcing. Report from ILTA Session

    This is a live blog post from the International Legal Technology Association annual conference.   The panelists for the session Offshoring and Outsourcing are Toby Brown, Vinson & Elkins, Kevin Colangelo, Pangea3, and Jordan Furlong, Edge International.  [This is a real time blog entry, posted as this session ended; additional commentary available at Twitter #ILTA11 #INFO2]

    Agenda:

    • Have you analyzed your business?
    • Where should you focus your energy?
    • What do LPOs bring to the table
    • What does this mean for you and your firm?

    Jordan:  We should start the discussion by looking at what clients want.  Clients no longer just think all legal work is the same – they view it as stratified:  At the top of a pyramid is “mission critical.”  In the middle is the “ordinary course of business“.  At the bottom is “commodity.”   The amount of mission critical work is fairly small.  Clients will pay top dollar for this work.  The volume of ordinary course work is fairly high volume but it does not matter much which lawyer does the work.   Commodity work occurs in very high volume.   Most law firms say they do not do commodity work   Clients are now asking if they even need a law firm for commodity work.   LPO, for example, is an option.

    Jordan: Most firms say they want the mission critical work.  But the volume available will not sustain that many law firms.  What does this mean for law firms?  Jeff Jarvis says “do what you do best and outsource the rest”.   Jarvis is in the newspaper business.  His view is that there is not point in 50 reporters each covering the same news.  Journalists need to focus on topics on which they have a unique perspective.  Jordan applies this thinking to lawyers.  [Editor's note:  see Jordan's blog post The Rise of the Super-Boutique for more details of this thinking.]

    Toby: Distinguish between “core v. context”  This is from Dealing with Darwin by Geoffrey Moore.   Core is what clients hire you for.  It is any activity which creates sustainable differentiation in a target market.   Context is all other activity required to support the delivery of core activities.  Until recently, law firms did not have to think about business and practice in this way.  At one time, law firms thought that copying was the only non-core activity.  Today, many activities may not be core, for example, e-discovery.   Toby is now “Director of Pricing”.  In this capacity, he needs to think through the different elements of work and price them appropriately.

    Kevin: “Current market drivers for law firm use of LPO are primarily reactive, while evolving market drivers focus on proactively growing the business and deepening client relationships.”  Cites Michael Porter’s work on competitive forces, saying that until recently law firms have not had to think about competition deeply.  Today, it is not just other big law firms that are competitors, but various alternative providers.  In early days of LPO, it was law departments that sought the service because of cost control.   Today, law firms talk to LPOs as well.  Talks to law firms about “weaponize”, meaning using LPO to improve competitive positioning.   There may be 20 firms that do not have to worry about pricing and competition.   There are also firms are actively talking to LPO about competing more effectively.   The vast number of firms in the middle have to figure out what they will do to compete.

    Discussion and Audience Questions:

    1. For Toby:  how, as a firm works on the different elements of a matter, should it consider outsourcing?   Toby uses patent work as an example.   Patent work falls into three tiers, from easiest / lowest value to hardest / highest value.    To succceed at each tier, firms must figure out (A) what work to do and what can be skipped altogether and (B) of the work that must be done, who should do it.   The who may be different levels in the firm or outsourced providers.

    2. How should firms split out work on a single matter (to different resources or an LPO)?   Kevin:  law firms have different thinking about this.  Discusses the issue of onshore v offshore resources, time zones, and the need for both the right technology and communication protocols to coordinate work.   It’s easist for an LPO to “bolt in” to litigation because the process is well-defined.   But thinks LPO is not at the “plug and play” stage yet.   Many legal organizations are not yet ready for integrating their operations to work seamlessly with external providers.

    3. Recently HP acquired Autonomy.  How do acquisitions play out in legal and LPO?    Jordan says that many big companies have ‘outsourced’ R&D by buying small companies with new technology.   He thinks that is what Thomson Reuters did in acquiring Pangea3.

    4. How should firms think about outsourcing multiple functions?   Kevin says that what is hard to think about in legal market is commonplace in most industries.  Most industries have outsourced a range of functions for a long time.  In terms of job security, the real issue is that many law firms are still over-staffed in many areas.   Individuals have to work hard to make sure they focus on work that is strategic to their law firm.  Outsourcing may force everyone constantly to make sure they are keeping up their skills.   Toby:  most in law firms are not worried enough about the job they do.   Many jobs and roles are at risk because of the underlying economic pressures.  Uses himself as example: worked at a firm where he transitioned from KM to AFA because firm saw more value in latter.

    5.  What percent of work is tactical and what percent is strategic?  How will this look in 3 years.    Kevin says 1/3 strategic and 2/3 tactical.   It will be a slow march.   Lawyers take time to develop comfort using alternate providers, whether it is an Axiom or an LPO.

    6.  In UK, we see firms setting up their own near-shore centers.  Is that happening in US?    Jordan cites Dayton [WilmerHale], Wheeling [Orrick\, and Carrollton [Pangea3].

    Both LPO and Contract Attorneys Growing in US

    Two recent publications point to continuing changes in the legal market:

    • Lawyers Settle… for Temp Jobs in the Wall Street Journal (15 June 2011) reports on the “growing field of itinerant ‘contract’ attorneys who move from job to job, getting paid by the hour, largely to review documents for law firms and corporate clients.”  About 10% of 2010 law graduates accepted temporary work, double the rate of 2009.  Contract lawyers earn as little as $15/hour; the highest average hourly rate is $35/hour in Washington, DC (according to the video associated with the article).
    • Separately, a recently released Altman Weil report, Law Firms in Transition by Thomas S. Clay and Eric A. Seeger, finds that 8% of large US law firms used legal process outsourcing (LPO) in 2010 and 11% expect to do so this year.  That is an almost 40% growth rate.  (Note that Legal Week recently found that 15% of UK law firms use LPO.)

    The global economic downturn still has law firm clients demanding better value.  Both LPO and contract lawyers lower clients’ legal costs.  Which option should they choose?  My answer turns on my suggestion last week in Explaining Onshore Legal Outsourcing Growth: lawyers must examine the process of how law is practiced.

    A focus on process will favor LPO because LPO includes not just the labor cost benefit of contract lawyers, but also a managed service that incorporates automation, streamlined processes, metrics, service level agreements, and a governance system.  With LPO, clients and law firms can also keep a core dedicated team on a full time basis, which offers continuity of knowledge and staff and so supports better repeatability and scalability.  (Our November 2009 post Next Gen Legal Models: Service vs Staffing explains differences between LPO and staffing models in more detail).

    The age of large law firm associates spending weeks or months reviewing documents or conducting any other high volume, routine, and repeatable work is over.  Delegating this work to technology, to contract lawyers, or to LPOs frees associates to focus on what the documents really mean and craft winning arguments.  The growth of both contract lawyers and LPO is a win for clients.

    Explaining Onshore Legal Outsourcing Growth

    Legal process outsourcing (LPO) has long meant “India” to many lawyers.  We have often written that LPO is about working smarter, not where the work is done.  A New York Times article last week drives home this point.  And an American Lawyer op-ed explains the “news behind the news” in the Times.

    Legal Outsourcing Firms Creating Jobs for American Lawyers, a June 3, 2011 front-of-the-business-section NY Times article, describes how LPOs such as Integreon and Pangea3 are creating jobs for American lawyers in low-cost US locations. It contrasts the growth of LPO, both onshore and offshore, with the challenges US law firms face, noting that “[t]op American firms have cut hiring or moved to a lower-tier pay system for many new associates.”

    American Lawyer Editor-in-Chief Aric Press’ June 2011 commentary explains both LPO growth and U.S. BigLaw challenges. In  The Am Law 200: A Chasm with Consequences, he reports “a $1.1 million gap between the average profits per partner of the top 23 firms on The Am Law 200, as ranked by PPP, and the average of the next 27 firms.”

    This gap, Press suggests, stems from how the market now segments legal work, with bet-the-farm matters on top and commodity work at bottom.  The highly profitable 23 firms get the lion’s share of less price-sensitive premium work; the rest face increasing price pressure to win non-premium work. Addressing the question of whether this gap will continue, Press offers two “safe” observations:

    1. Price pressure likely will continue when the economy rebounds.
    2. “[W]hat’s striking about the behavior of many law firms over the past two years is that they managed their way to profitability by shedding colleagues who did not have enough work, not by examining how the work itself is done.” (Emphasis added.)

    We think the phrase “not by examining how the work itself is done” links the Times and American Lawyer pieces.  We talk to many firms and law departments that now do examine how they practice.  Most conclude that old ways of working must improve.  They realize that large swaths of legal work must be industrialized with standard practices, appropriate technology, and cost-effective human resources.  Many turn to LPOs to accomplish this.  As more and more lawyers examine the process, we expect to see LPO growth continue, both onshore and off.

    Insight and Innovation are the Real Drivers of Legal Outsourcing Benefits

    Last month I read an insightful blog post at Horses for Sources, the advisory business of respected outsourcing analyst Phil Fersht.  In a guest post, Where have all the consultants gone?, Deborah Kops, principal of sourcing strategy firm Sourcing Change, looks at developments in the business process outsourcing (BPO) industry.  Because the roots of legal process outsourcing (LPO) lie in BPO, following the latter can help better understand the former.

    Ms. Kops observes that BPO success was originally driven by consultants who had intimate client and hands-on industry experience.   She writes

    “the pioneers of the outsourcing industry, primarily BPO, came out of consultancy backgrounds…  Consultants from the Big-whatever-it-was, the then Andersen Consulting and even the likes of the white shoe strategic firms, got a bee in their bonnets that their intimacy with and knowledge of their clients could be harnessed to improve and deliver business processes. They formed business lines with skin in the game, exclusively focused on doing rather than just advising, tapping not only into their own expertise, but that of their partners and colleagues.”

    These BPO founders, she notes, are now exiting the business.  Current BPO managers are capable but lack “the soft and problem-solving skills that come from having the training, intellectual freedom, proximity, and the ability to connect the dots that only consulting experience allows.”  So she expresses concern that the “real sourcing benefit” will be lost because it “comes from the ability to solve a problem, the skills to develop a relationship with a client team at the highest level, and the knowledge of what drives value in an industry from the top down.”

    Fortunately, LPO does not suffer this issue.  Ms. Kops’ post nonetheless helps illuminate the real benefit of legal outsourcing.  Many lawyers think labor cost savings drives legal outsourcing.  We disagree.  The real value lies in providers’ deep experience solving lawyers’ problems.

    In LPO, the BPO analogue to consulting experience is a deep pool of  legal management, operations, and process improvement experience. For example, Integreon management includes former practicing lawyers who pioneered outsourcing, lawyers who managed document review for law firms or for corporations, senior law firm managers such as COOs and CIOs, and process improvement consultants.  Hands-on law firm and law department operational experience extends deep into our middle management team.  Our competitors could make similar statements.

    This collective wealth of experience gives a provider deep insight into law firm and law department operations and ideas about how to improve practice and support.   My Integreon colleagues and I all feel the same sense of “there has to be a better way to do this”.   We all sought out a place where we could work closely with lawyers to help them improve what they do and reduce costs.  So reading Ms. Kops’ post triggered a very personal reaction – that’s us, without the problem of exiting experts.

    Of course access to teams of associates in low cost locations is an important benefit for our clients.  The real value, however,  is our ability to improve how lawyers work and how law firms operate through process improvement and technology.  Fortunately, as a still-growing industry with a plentiful supply of experienced legal managers interested in outsourcing, we do not face a brain drain.

    New Legal Week Survey Finds 15% of UK Firms Use LPO

    Legal Week just published No LPO Rush Despite Cost Pressure (Legal Week, 5 May 2011),  an in-depth look at the UK legal process outsourcing (LPO) market that includes in-depth analysis, numerous charts, and a key findings summary.  It is based on a 575-lawyer survey by Incisive Media Research that Integreon co-sponsored.  We present some highlights and comments here.

    ——————-

    LPO Penetration is Up and Rising. The survey found that LPO penetration in law firms is up substantially from other recent reports.   For example, in a June 2009 blog post, we reported on surveys that found only about 5% of firms had used LPO.   Now, Legal Week finds 15% of UK law firms use LPO services.  Furthermore, over half of respondents – both LPO users and non-users – believe that law firm use of LPO services will grow over the next year.  Given another trend the survey identifies – growing cost pressure – it is reasonable to conclude that LPO penetration will continue increasing.

    On the law department side, 6% report using LPO.  We think this lower penetration reflects a client preference that law firms partner with LPOs.  The survey results support this view:  both firms and departments “give the biggest vote to a solution where the law firm supervises the outsourcing. Amongst law firms, the vote here represents nearly 52 per cent of respondents. In the inhouse sector, nearly 29 per cent support this approach.”

    Work Suitable for LPO Spans Several Practices. The survey provides insight on the areas most suitable for LPO work.  Scoring highly among both inside and outside counsel were litigation document review, e-discovery (e-disclosure), and contract management .   Significant minorities also believe compliance, library/research and know-how, debt recovery, and conveyancing are suitable for LPO.

    Using LPO is Not a Risk to Law Firm Brands. Some law firms seem to worry that using an LPO might send clients the “wrong” signal.  The survey show this fear is unfounded.  A vast majority, about 75%, of both inhouse and firm lawyers believe using an LPO “does not diminish the brand.”   The article also notes that some of the largest and best-known UK law firms use LPO and so observes   “If the leading firms are using LPO, it is difficult to see LPO as a sign of weakness.”   This is consistent with our view, summed up by my colleague Matthew Banks in the article, saying

    “Rather than see their brand diminish, those law firms that embrace LPO will gain a competitive edge. What we term ‘LPO 2.0’ involves close collaboration between law firm and LPO provider. The LPO provider’s solutions are so closely integrated into the firm’s overall value proposition that they are simply viewed as part of the suite of solutions the firm provides to its clients. The firm’s brand is enhanced.”

    The Real Issue is Lower Cost, Not LPO. We recently suggested that the question is no longer “outsource or not” but rather “what’s the best way to centralise non-core support functions in a low cost location?” (See Legal Outsourcing – A Changing Conversation by Mark Ross and Ron Friedmann in Outsource Magazine, 17 Nov 2010.)  Legal Week reaches a similar conclusion:

    “Outsourcing is typically seen as the relocation of repetitive work to India. But LPOs can take many different forms…  LPOs are being developed by many firms in the UK. Some are doing forms of it by outsourcing routine work from their City offices (where salaries and other costs are higher) to regional offices where they can offer lower charge-out rates. Other firms – particularly the big name international firms – are working with regional law firms to outsource those processes on which they can add little extra value.”

    ——————-

    We think the results confirm our view that lawyers have become comfortable with LPO and that market pressures will continue to favor LPO adoptions.   We understand, however, that not all share this view.   For those who remain skeptical about LPO, the article does a nice job presenting contrasting opinions.

    Value: How do we define it? How do we measure it? (live from Georgetown Law)

    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

    Panelists:

    • 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.

    Discussion

    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.

    Getting on the Radar Screen: How Important is Brand? (live from Georgetown Law)

    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?

    Panelists:

    • 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:

    1. Know the client’s brand.
    2. Know the client’s industry.
    3. Know to whom you are marketing. Know your customer.  References the type of customer segmentation Wolverine and other consumer companies do.
    4. Know who influences the buying decision (e.g., references are key, so is the ACC Value Index)
    5. Know your own brand
    6. Know your own brand promise.   Every lawyer needs to be able to articulate it.  All need to have same elevator pitch.
    7. Know your product, what you are really selling.
    8. Know what your product is not.  Complains of lawyers who pitch him and who know less than he does about the issue at hand.
    9. 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.

    Empirical Overview: The Life Cycle of the Client-Law Firm Relationship (live from Georgetown Law)

    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.

    Defining Good Support for Lawyers

    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.]

    Document Review Best Practices – Pushing the Outside of the Envelope

    This is a live blog post from Legal Tech NY 2011. Foster Gibbons, Vice President, Legal Solutions (Global Lead / Document Review), Integreon presents on:

    “Pushing the outside of the envelope” is an aeronautics expression that implies taking design, implementation and execution to the next level through performance improvements in technology and technique. This concept is mirrored by best practices in the legal realm which imply a repeatable standard that delivers the most efficient, effective result. This session will help legal professionals understand better how to define consistent practices and processes for managing review in the context of legal discovery and in a manner that balances efficiency, effectiveness, and adaptability for leveraging technology.”

    Session notes:

    Introduction. Lawyers who perform document review apply legal know-how but are not practicing law; they act under the supervision of licensed lawyers to determine if documents are responsive and if they are privileged.  The goal of the review team is to approximate as closely as possible the judgment of the case lawyer who knows the most about the case.

    The old practice was to put a room full of junior associates to work reviewing boxes of documents.  They might start with 100s of boxes.  Their goal was to winnow the collection down to a few boxes that more senior lawyers would read in more detail.  The mid-level lawyers would further winnow the collection to a relative handful that the partner would review and use.

    The process today is similar except the equivalent is 100-million boxes of paper. There is no way humans can review all. So it’s critical to use technology to winnow the collection. But this has to be done properly.

    The three goals of the document review are to

    1. maintain quality – correct and consistent results; the selected docs must match with senior counsel’s view of the case.
    2. cost containment - use appropriate tools (e.g., workflow), winnow the collection intelligently
    3. defensibility – this means minimizing risk of sanctions because of errors in discovery process

    Best practices in document review reflect a point in time, the state of the art in the most appropriate use of technology. “If there is a lot riding on the outcome of litigation, there is a lot riding on the manner in which discovery, and by extension, document review, is conducted.”

    Document Review Models. There are several models for conducting doc review today. The old model of armies of junior associates is no longer effective; clients are not willing to pay junior associate rates for this task. “Staffing model” and “managed review model” are two common models today. In the former, it is up to the law firm to select and manage reviews, typically hiring staff through an agency. The law firm must design the review process, and develop the appropriate training for the review team. In the latter, a vendor provides a review team, facilities, tech support, and project management. The vendor shares responsibility with counsel for managing the process and defensibility.

    Best practices in document review include tailoring the project plan to counsel’s specs, following current industry practices, vetting people appropriately (e.g., reference checks and use of lawyers), maintaining appropriate metrics on performance and quality, and providing the review team comprehensive, substantive and platform training.

    Workflow deserves special consideration. The simplest is a “linear” review, where every document is reviewed in the order in which it is ‘found’. This is not a good practice. It is better to prioritize the review by factors such as custodians, date ranges, or document types. It may also be necessary to assign documents by substantive type, for example, scientific docs may need to be reviewed by those with science training, so this requires matching document substance to reviewer qualification.

    Quality control means approximating as closely as possible lead counsel’s judgment about documents. It also requires internal (across the review team) consistency, using formal statistics to ensure high quality results, and tracking performance of all reviewers.

    Communication should be conducted on a formal schedule. Especially early in the case, the review team should be in regular contact with lead counsel. There will be many questions and sample documents for counsel to review. This helps refine the criteria for reviewing documents (and adjusting the review documentation).

    Documenting the review is critical for being able to defend the process. For example, you need to be able to explain / justify custodians chosen and review criteria. These and other decisions must be documented in real time. The documentation binders end up being quite thick. If opposing counsel challenges the production, having thorough documentation is essential to defend the process and outcome.