When relationships get tricky - how to get more value from law firms

When relationships get tricky - how to get more value from law firms

Will Long, Client Partnership Director at Alacrity, recently joined our regular senior counsel interactive discussions hosted in partnership with Radius Law and F-Lex.  He shared his market insights and experience on the topic of “Partner law firm management – how do external counsel need to adapt? How do legal teams need to change?”.

Below, Will shares a synopsis of the insights, particularly addressing the law firm / client relationship.

 

Law firm – client relationships: dysfunctional or mutually beneficial?

One of the privileges of my job is that I get to spend a great deal of time listening to leaders of in-house legal functions, and their law firms, about how to make positive changes to their relationships.

That’s not to say these relationships are necessarily dysfunctional. But there are aspects that persist in frustrating both sides. These can run counter to long-term, mutually profitable partnerships.

When things get tricky, the fundamentals of relationships tend to become exposed. Today many businesses are under even greater pressure to demonstrate value and cut costs; and many law firms are working hard to maintain profitability and competitive advantage. Any relationship that is even slightly misaligned might creak under that sort of strain.

At the moment, the industry seems to be focused on three main themes around how to resolve this tension.

The first, unsurprisingly, is cost control and how this relates to value - a key challenge for many businesses at the moment.

The second is around transparency, and what that means in the context of law firm relationships.

Finally, people are interested in best practice when it comes to using data to evolve these relationships in a meaningful way.

 

Cost control and value

How often would you go into a clothes shop, choose an item off the rack without looking at the price, and then haggle with the staff to get a reasonable price on the way out?

Historical approaches to cost control have been retrospective. First, many use tools to review bills and strike out line items. There’s often an endless adversarial to and fro, after the work’s been done. Second, GCs might demand discounts rates for future work - but in the end budget estimates are blown and the end cost is still too high.

There must be a better way to manage costs properly without compromising on value. What if a fair price were always agreed upfront for legal work, with both sides aligning on scope and what the process will be if things go off-piste? The job is then to focus on delivering on commitments and communicating effectively on ongoing matters. Future law firm selection decisions can then be driven by data on business outcomes and quality of service, as well as adherence to budget, rather than bargain-basement hourly rates.

 

Transparency

In this context, transparency might simply mean being alive to what is happening in ongoing matters. But it is also about drawing back the veil on the broader relationship. Who is investing in value-add services with you, and what are they worth? Who is making progress on their D&I initiative and actually supplying you with diverse talent? Who is able to price accurately, and who is winning work through a competitive process rather than from a former colleague? What actually went wrong on that unsatisfactory matter, and how can you and the firm work together to avoid that happening again?

Transparency shouldn’t just be about identifying areas for improvement, or even realising that you shouldn’t be working with a given firm again. It should also shine a light on those firms which are really delivering; maybe punching above their weight in terms of service and creatively thinking of ways to help us manage our budget better. Those firms might be worthy of much more investment, and that is very rarely immediately obvious.

 

Using data to drive long-term relationships

There are so many sources of data on law firm management that the hunt for actionable information almost becomes an industry in itself. Some very large functions are drowning in numbers, unable to see the wood for the trees and often hiring large teams to help them figure out what it all means. Then there are those feeling around in the dark for where value really lies, or having MI delivered to them by their firms 6 months after the event and far too late to do much about it.

There’s a beauty in keeping this simple. Data should drive pragmatic decisions, not muddy the waters further. With the best of intent, there are tools out there that require complex integrations, are painful and confusing to users, or require lengthy training and change management programmes. These are far too prevalent. Where systems and processes become complex or unwieldy, people stop using them consistently and the information on which you are basing your decisions becomes meaningless. Simple, user-friendly and timely systems are much more likely to lead to quick results - allowing you to take long-lasting steps towards better relationships.

 

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About the author:
Will is the Client Partnership Director at Alacrity, a tool that allows in house lawyers to manage and track relationships with law firms. To find out more, email Will on will.long@alacritylaw.com.