Increase the value from your external panel – part 1

In 2018, it is unsurprising that in-house legal teams are continuing to look at the way they work with their external suppliers and law firm relationships remain under a bright spotlight. Amidst unprecedented choice in terms of legal service providers - increasingly in-house teams apply price pressure, more frequently switch providers and re-tender panels, bring a larger proportion of work in-house, and engage non-traditional players.

Building on previous research, LexisNexis partnered with Judge Business School to explore the dynamics of the relationship between in-house legal teams and their law firms in more depth in our latest report “Trust and Transparency between in-house legal teams and their law firms”. You can also watch an interview with Dr. Kishore Sengupta for a summary of the main conclusions from the report.

Setting the scene: a deep disconnect

Last year’s research showed that in-house legal teams often view their law firm relationships differently from law firms – with a significant disconnect between what in-house teams want and what law firms deliver. You can read the 2017 research report here: The Voice of the Client.

From the ability to deliver commercial solutions in a timely manner - in a format that enables counsel to make decisions quickly versus just good diagnoses. To gaining more certainty and predictability on the work being undertaken, costs incurred, and timelines.

In fact, 40% of general counsels interviewed noted that senior partners in their law firms lacked more than a basic knowledge of their business.

Importantly, it was found that an important factor in this disconnect was a perceived lack of transparency in the actions of law firms by in-house legal teams. This perception was seen to damage the trust that underpins meaningful supplier relationships leading to a deterioration over time.

Our latest research explored the role of trust in deepening or damaging these relationships. Rather than being a “soft” concept that is inherently intangible and difficult to measure, our research our findings revealed three practical steps to consider.

Step 1: taking a deliberate and focused approach

The research investigated the law firm-client interactions across all four stages of engagement, from pre-instruction, through instruction, execution and the evaluation of outcomes. Common patterns of engagement that are repeated consistently were identified, albeit with variations revealing three “archetypes of interactions” from a transactional approach to a strategic partnership.

A key learning was that having a robust methodology and structured approach, particularly at the instruction phase of engagement, enables joint exploration earlier in the process increasing transparency, trust and in turn the value attributed to the outcome.

Surprisingly, the research revealed that 40% of large law firms lack experience and knowledge to structure joint exploration at instruction stage. This directly impacted the value attributed by the in-house legal team to work delivered.

If there is one thing that someone should take away is that there is a deliberate structure and mechanism by which law firms and in-house legal teams need to interact.” Dr Kishore Sengupta, Judge Business School, University of Cambridge.

What the research also made clear was that it is important to understand all three archetypes of engagement and when to employ which to best effect. As such, a more sophisticated, thoughtful approach is likely to yield the best results for both parties.

Part 2 of this series will look at another two ways of increasing the value from your external panel. Part 2 will be published in the coming week...

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