Running a successful panel review—an interview with Rob Booth

Law firm panel review in house lawyers

Law firm panel reviews are an intense process for in-house teams. How can you ensure that all the effort you put in reaps the right rewards for the business? Sophie Gould talks to Rob Booth, General Counsel and Company Secretary at The Crown Estate, about how the value model he developed for running panel reviews has become an integral part of how firms are chosen.

 

Tell us about your team…

We have five internal lawyers. On an even keel that feels lean, but when there are spikes in activity, that feels very lean. The company is worth about £12 billion. At that scale, real estate is a legally heavy area, not because it’s so highly regulated but because every dealing involves a solicitor.

Due to the size of the team, we need a very tight delivery model and a well-defined concept of what value means for the organisation and how to leverage that value. We’ve done a lot of work to ensure we are confident in where we are as an internal resource. I took advantage of rewriting the governance and executive structure for our organisation to create, with input from the team, a fully integrated model for legal service. At the same time as crafting the fundamental infrastructure for the organisation, we could very elegantly weave into that the role that legal plays.

The senior legal counsel layer that sits beneath me has got the best part of 60 years’ post-qualified experience. Looking at where you want to be and how you align that with the business is much easier when you’re doing it with experienced people who talk in sophisticated terms.

What is your approach to panel reviews?

We’ve produced a structure that ‘cradle to graves’ our relationships with external law firms. The value model, and what that drives out of the relationships we’re looking for, forms an integral part of how we pick our firms. It is central to how we assess our firms throughout the year and leverage continuing improvements during the five-year cycle for panel appointments.

That drive for improvement gives the business the confidence that they're getting a good service. It also gives the external law firms transparency on our approach. They know what we’re looking for and that allows them to operate with confidence. Hopefully, we end up with a longer term solution that binds firms in through the life of their appointment.

Internally, we’ve spent a lot of time working with the business to devise the model we wanted to use. Now, it’s about finding firms who understand that model. They need to be able to take the process and run with it, with a view to outperforming in their service to us. I want them to work with us in a way that is seamless.

What criteria do you use?

We adopt an approach that probably isn’t a million miles away from what others do. We put together a very detailed description of what the mandate is and what the services are that sit within it. Time spent doing that is enormously valuable because it ensures firms know exactly what they’re pitching for. If you're going to use criteria, then it’s incumbent on the in-house team to properly describe what it is that’s on offer. It’s unfair to firms if you don’t give them a position from which to pitch with knowledge.

As value is central to our model, the criteria are driven by that. We have a small team and a heavily outsourced model, so administrative efficiency is vital to us. Other criteria cover how a firm is structured to ensure they can smoothly and cost-effectively administer a mandate. A firm’s ability to demonstrate they’re a market leader in the area of expertise that you're looking for is obviously also important.

We also look really hard at diversity and a firm’s policies on it. We need to understand their concepts around resilience and sustainability because that’s very important to us as an organisation.

Cost is of course a factor, but using cost as a criterion is an unsophisticated way of looking at it. Instead, we talk about cost management and look at a firm’s ability to demonstrate that. How they administer cost and work out their fees should be based on value. It’s a far more difficult thing to measure.

For the questions that require a written response, there’s a 250-word limit. This forces firms to think about their response and prioritise what they want to say. You can get quite a good impression of a firm from a short answer if they're clever about it.

How we score the criteria is bespoke to our organisation and what we care about. Your criteria should be specific to what you are as an organisation. Firms need to understand the role that they play within that and how damaging it can be if they get it wrong.

What process do you follow when running a panel review?

We try to keep it simple. There’s an initial period where we’re out in the market talking to people. At the same time, we are engaging with the business to make sure that the criteria are right for the specifics of that particular mandate. I can't emphasise enough the importance of talking to the relevant parts of the business about what’s important to them. The pre-engagement period is vital as it’s an upfront investment in the process.

Next, we send out a pre-qualification letter. This seeks to ensure that we’ve removed from the process anybody who would be conflicted in some way and couldn't act. It might also eliminate a firm where you see from their people numbers that they wouldn’t be able to handle the mandate without scaling up in a big way.

Once we’ve got through that pre-filter, a tender pack goes out to the firms. When scoring responses, it’s done by two lawyers and two non-lawyers to ensure that we’re getting a business perspective on the answers. We use the scoring, together with a little bit of subjectivity, to shortlist a small number of firms. We then bring them in for interviews and rescore the same metrics to see if the interview has changed our view.

Normally, you come to a unanimous result. The process itself should be driven by hitting the criteria so that you have a clean decision at the end of it. If there isn’t agreement, then you need some sort of deadlock mechanism to ensure that you can still go forward. What you don't want to do is rerun the process because it takes a lot of time and effort.

The number of firms we consider depends on the mandate. With energy, minerals and infrastructure there aren’t that many firms who can credibly say that they can deliver everything, so we start with maybe six or seven firms. For some of our mainstream property mandates, we started with a list of around 50. The depth and breadth of the process should reflect how much of an impact the mandate has on the business. It’s better to have gone to too many firms than for the list to be too lean to start with, leaving you with a decision of one.

What’s the biggest lesson you’ve learnt from the process?

The effort you put in is very much correlated to the result you get out. It’s incumbent on in-house teams to put in that effort if, as a function, you want to deliver value and a competitive advantage for your business. If you use any element of outsourcing, your ability to pick the best lawyer to provide the best service for the best value forms a big part of how successful you are. It’s worth putting that extra effort in.

Rob Booth was interviewed in October 2018 on the role of technology for legal in-house team and you can watch his video here.

 

 

 

 

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