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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.
Research has shown that transparency is key to fair process in social exchanges. A lack of transparency creates ambiguity, which can lead one side to perceive a lack of reciprocity from the other side. This leads to suspicion, and reduces trust.
Our findings showed that 80% of the time this (the exploration stage) is conducted by the in-house legal team with no involvement of the law firm.
A live trust simulation at the briefings demonstrated to powerful effect just how important transparency is between the in-house legal department and law firm. Attendees were presented with the same decision to make but two different experiences of how
a similar scenario had been handled in relation to clarity and transparency. Results from attendees were markedly different with the decision selected determined entirely by the level of transparency described in the scenario they were given.
A key recommendation from the study is that in-house legal teams need to give law firms visibility of their underlying business problems. From investing in joint problem search to providing visibility on actions during life of engagement that could affect
law firm work and renegotiate scoping actively.
The impact of increasing transparency at all stages of engagement is summed up by Dr Kishore Sengupta:
“The cycle of transparency needs an extra bit of effort. That extra bit of effort may seem a little bit superfluous…but in the long run that piece of work done in a structured way pays very rich dividends in creating a virtuous cycle
of fair process.”
Results from the research showed that in only 20% of cases, a substantive part of the evaluation is done in conjunction with members of the law firm team that worked on the instruction. For the rest, reviews were primarily internal or with the law firm
What’s more, further in-depth investigation found that in evaluations completed, there was little reference to issues such as lessons learned, sharing of best practices, proposals forchanges in how the respective teams could work in future
engagements, improvement projects, etc. In fact, there was hardly any sign of intentional relationship building.
As such, it is in this final engagement step that the most progress is required. It is also the step where the legal sector lags its peers in other professional services.
Recommendations from the research include promoting greater involvement of the law firm in evaluations, a focus on the process not just the outcome, considering joint third party appraisal for select engagements and an emphasis on after action reviews.
Moving toward a deeper structure of evaluation does require significant effort on the part of in-house legal teams and law firms. Nonetheless, the benefits should outweigh the investment.
“There is a cycle of fair process that underpins trust and transparency. The cycle is highly structured, it needs work and it needs visibility at all stages of the cycle” Dr Kishore Sengupta from Judge Business School, University of Cambridge
These words best capture the overall findings from the research report.
It is promising to know that there are definitive steps that can be taken by both in-house legal teams and their law firms to bridge the disconnect.
After all, an open, mutually beneficial, collaborative relationship between client and law firm is often a key driver of success to ensure expectations are aligned, a consistent service is delivered, and commercial efficiencies are measurable.
Read the full research report, including a checklist of the recommended actions for both law firms and in-house legal teams across all four stages of engagement.
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