The new panel army – alternative ways of looking at in-house resourcing support

In this article, Paul Gilbert, Chief Executive of LBC Wise Counsel, discusses different ways of looking at in-house resourcing support options.

There are now alternatives to law firms and interesting variations on a law firm theme. The market is moving quickly, but is still shallow and largely untested

  •  The Legal Process Outsourcing market is not something that has developed dramatically and for many teams it will feels irrelevant, the preserve of the banks or the global behemoths.
  •  The world of the ABS (Alternative Business Structures) is still in its infancy. It is as if new maps have been published, but the routes are untraveled.
  •  Instructing the bar direct is an increasingly attractive (and cost effective) solution.
  •  The major publishers, like Lexis Nexis, have an opportunity to not just develop know-how and knowledge management services, but also to broker broader proportionate and cost effective technology and professional support solutions.

However one area is opening up more quickly than others. The world of the interim resource provider is developing fast and providing a fascinating glimpse of a world to come. Businesses such Axiom, Legal Edge, Halebury and Lawyers on Demand etc at one level offer an obvious solution – to plug a gap for long term sickness, maternity cover or the discreet but time-limited project. The potential is to do so much more.

Most in-house teams have work that fits a pattern:

  1.  Repetitive low risk work of predictable volume
  2.  Work that is occasional, unpredictable, but resource hungry when it comes
  3.  Predictable work that relies so heavily on proximity and intimacy that only the in-house team can do it.

The first two should be outsourced, but the law firm solution is clunky and expensive. Clearly an interim resource offers a different opportunity. Then consider as well if the interim resource was also able to look at others aspects of the in-house function from a trusted position of being an accepted part of the in-house resource. Consider if the interim resource could also:

  •  Identify low risk work that could be subject to process and then build the process
  •  Develop and knowledge management and template materials to take demand out of the system
  •  Mentor junior talent

The interim providers in fact have a unique opportunity to help redesign the landscape for legal services. In effect a hybrid resource, but also one much more closely aligned to the in-house client than any law firm can typically hope to achieve. As this model develops we foresee it fundamentally changing the resourcing debate.

Similarly there is a much broader and deeper role for publishers such as Lexis Nexis. Any organisation that has a view across the market should be of interest to any General Counsel. Any organisation that can determine infrastructure needs and match to market solutions that are practical and proportionate should be of considerable interest to any General Counsel.

However before I develop thoughts around what a new type of panel may look like, the question that is often and legitimately asked is “why, if there is all the talk of change, is change so slow?”

There are two aspects to this, first of all it is arguable that change has not been slow, just not evenly distributed (to borrow from William Gibson “The future is here, just not...”). For all the reasons mentioned above there has been a massive shift in the way the market is shaping. What has been slow is the take up of new propositions in volumes of market share to seriously threaten the law firm model. Instead frankly bloated profits have resulted in some strategic complacency and a desire to preserve profitability rather than to invest in change.

The second aspect of this however is that for many in-house teams it is just not feasible to make significant change quickly.

We often fall into the trap of discussing the “in-house sector” as if it were a single market buyer, a homogenous whole or some sort of legal collective. In fact the reality is of course a market of single entity buyers where for most the time they give t genuine relationship management is a tiny percentage of their working year.

Add into this construct the fact that law firms have zero incentive to change the market – indeed they are in reality incentivised to entrench inefficiency. I do not like to be controversial for its own sake, but to me there is an analogy with the way abusive relationships develop.

The in-house model is typically lacking significant infrastructure, typically under-resourced and typically lacking an ability to plan beyond a few weeks. At the same time law firms remain stubbornly able to charge for time, which simply means that they make more money on the back of the lack of their clients’ infrastructure etc. Knowing this is imbalanced, the good firms compensate by focusing on relationship building. It is as if the law firms can wrap key clients in a comfort blanket of relationship support – call me anytime, let’s be friends too, we can dig you out of any hole...

The result is that in-house teams know they have weaknesses, but with friends in law firms who will cover those weakness ...just at a price. The longer it continues, the more dependency is created and the less likely it will be to change.

All the talk of change in the market is therefore mostly just talk. Until the dependency is broken, until the power balance is shifted, change will be slower than seems should be the case.

As an aside it is in fact the great missed opportunity of the panel process “industry”. Although it seems General Counsel have more power as they wield the axe to drop firms from their panel, all that has really happened is that GC’s now are abused by fewer law firms. They have not addressed the context that would stop the abuse!

The energy that is needed therefore is to fundamentality shift the balance of power. My view is that this will happen more quickly when a new type of panel created. A panel that encompasses the wider support those in-house teams require and on terms that reduces the power of traditional law firms.

Instead of selecting a group of law firms with similar experience and expertise to simple fight over the amount of work they get, the ambition should be far more sophisticated and robust. Consider therefore a panel that was developed with the following elements:

  1.  A small number of key law firms for litigation and corporate work. Set up a detailed relationship agreement and devote senior resource to be relationship managers, separate the role of who is managing the relationship and who is using the service.
  2.  Appoint a publisher/infrastructure consultant to ensure access to affordable know-how and to broker/supply other tech solutions. Publishers such as Lexis Nexis have a view across the market and so will know how to help create the technical and know-house infrastructures that suit each team best. The shift here for in-house teams is to engage in this conversation not as if they are buying a book to read and a bookshelf to put it on in one small room of the house. What is in fact happening is that teams are buying the plumbing, the wiring and the connections to services for the whole house.
  3. The specialist bar for deep insight on core regulatory and specialist issues. Cheaper than law firms, now also very accessible and for specific and targeted services a significant quality assurance guarantee as well.
  4. An interim resource provider to meet unpredicted peaks and to work with the in-house team to take demand out of the system. The interim providers in the market are establishing their credentials and doing well. In the near future they will also develop their consulting services to add process improvement and efficiency saving advice. This will accelerate the virtuous circle of lowering cost and reducing risk, while also improving quality.

Imagine therefore a panel that had these constituent parts and which was working with the in-house team to provide a genuinely rebalanced, planned and strategic resource. Then compare it to what we seem content to accept now as a traditional panel of similar law firms.

Filed Under: Analysis

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