Articles Posted in Outside Counsel

A surprising emphasis on technology training appeared in a recent white paper. A chart summarizes the survey responses from 150 lawyers among the largest in the United States and Canada, reported in Future Law Office: Delivering Value-Added Legal Services in Challenging Times (Robert Half Legal 2009) at 6. The question asked of them was “Which of the following techniques, if any, are being implemented by your law firm to enhance your team’s focus on client services?”

What struck me was that the second most common technique, selected by 87 percent of the lawyers was “Technical tools training or training to help employees maximize technology.” From what I see and hear, law department managers do not commonly mention technology use by firms as shaping and improving the delivery of legal services (See my post of Dec. 6, 2007: software at law firms that most helps law departments.). Maybe they are unaware of the strides law firms have taken; maybe firms over-rate the improvements their technical training has brought about.

By law, it seems, all surveys of legal departments must include a mandatory question: “Which of the following criteria is most important to you when you decide which law firm to retain?” Loopholes in the law allow the survey to fiddle with attributes and wording, but over and over the same basic six or seven attributes show up (See my post of Oct. 22, 2008: law firm attributes for selection with 12 references; Jan. 25, 2009: attributized Bayesian analysis; and March 25, 2009: attributes according to Asian legal teams.).

Yet another instance appears in Future Law Office: Delivering Value-Added Legal Services in Challenging Times (Robert Half Legal 2009) at 14. This particular survey found that “practice area expertise” got 45 percent of the responses, followed by “previous experience working with the firm.” So, overwhelmingly this group of 150 in-house lawyers turn to a firm that knows the particular legal area and has demonstrated their skills before (See my post of April 16, 2009: incumbent firms with 11 references.).

What is different about this survey is the dominance of knowledge and familiarity. “Knowledge of the business/industry” scored 9 percent while “reputation of the firm” got 6 percent. Almost unrecognized was “cost or project pricing,” with a sliver at 3 percent.

A recent white paper quotes an article by Larry Bodine, who “advises law firms to meet with general counsel at least once a quarter, at the client’s office” to talk about the client’s business. His quote appears in Future Law Office: Delivering Value-Added Legal Services in Challenging Times (Robert Half Legal 2009) at 5.

A general counsel could be deluged with invitations for such chats, since any legal department with five or more lawyers probably retains thirty or more law firms. Aside from the volume of requests for meetings, the general counsel may be the wrong target; it is usually a lawyer who reports to the general counsel who has the closest connection with the law firm. General counsel have more important fires to put out.

To be brutal, the sense many general counsel would have is that the visits masquerade for selling more work or additional services (See my post of April 2, 2009: pros and cons of cross selling.). To be even more brutal, they might fret that the partners will charge them some or all of their costs (and hourly fees).

To spur your key law firms, tell them how they compare to their competitors. This idea comes from Inside Counsel, June 2009 at 50, which recounts the tactic of Jim Bencer, the general counsel of Williams Co. His legal group “notifies its law firms of its diversity goals along with the fact that it will anonymously share their results, which it measures based on percentages of minorities and women in their firms. Williams then tells the firms how they rank, recognizing those that made the most progress and had the best overall statistics.”

A legal team could apply this tactic to several areas. For example, effective cost per hour, ratios of partner to associate hours, training hours provided the client, matters coming in under budget, percentage of bills processed without rule infractions through e-billing. Any measure of performance could be collected and distributed, anonymously, as a comparative performance metric.

Jeanne Graham, writing in the Texas Lawyer, July 1, 2009, quotes the managing partner of Beirne Maynard & Parsons. His comments on decision trees are grounded in reality (See my post of June 17, 2009: decision tree software with 6 references.)

“The firm uses decision tree analysis when creating budgets for clients, basically looking at a series of ‘what if’ scenarios and their potential costs. For instance, the first scenario might be a settlement with a plaintiff, a second scenario would be the plaintiff bringing in a third party, a third scenario would be whether the case remains in state court or is moved to federal court, he says. The firm can estimate the likelihood of each scenario, and based on the firm’s and client’s experiences, can estimate what legal action and fees will be required to deal with each, Beirne says.”

Well said; better done. Ask your firm on a major matter to project two or three plausible ways the matter might reach resolution and their estimated fees for each way.

Dialectics appeal to me; the push and pull of opposing views exists all the time on any practice worth a discussion. So in that spirit let me present both sides of the decision to charge a lawyer in a legal department with responsibility for the department’s non-substantive dealings with a law firm (a “responsible lawyer”), starting with the positive side (See my post of May 18, 2007: inside counterpart to relationship partner appointed for each major firm.).

1. When there is a single point of contact, the firm’s lawyers who work on matters for the client know whom they should call if there is a relationship problem (as compared to a substantive legal issue about a specific matter).

2. A general counsel can assign these roles, to be responsible lawyers, as developmental steps for subordinates.

The Annual Report & Accounts of Juridica Investments Ltd., a publicly-traded company that finances litigation, cites data from the American Lawyer survey in 2008 of the 200 largest law firms in the US. The group of firms earned aggregate revenues of $81.5 billion. Further, says the Report, “Applying percentages from a survey of litigation revenue for this group conducted by The Lawyer magazine in 2007, total litigation revenues for these top firms were estimated to be in excess of $33 billion during 2008.”

Hence, litigation accounts for about 40 percent of the large firms’ total fees (40% of $81B). If true, the estimates I have commonly seen and written about regarding 60 percent of outside counsel spend by corporations going to litigation may be too high. These two data suggest that 40 percent may be closer to the mark (See my post of March 27, 2009: breakdown of in-house lawyers by practice area.). We need to consider, however, that the aggregate revenue of these firms comes from companies as well as from individuals. The spend from companies may skew more toward litigation than does the spend from individuals.

My most recent article, published in the National Law Journal last month, summarizes why incumbent firms have such a strong hold on the legal departments they represent. That is common sense.

More originally, the article offers ten ways to combat the bias toward the familiar firms and level the playing field for new entrants (See my post of April 16, 2009: incumbent firms with 11 references.). Click here to download a copy of the article.

I learned about another network of law firms, MSI Global Alliance, so I wrote to Giles Brake and asked him for an example of a legal department that uses a member firm.

Brake obliged: “Our Buenos Aires law firm member Garcia Menendez Abogados are the lawyers for an Argentine multinational which is the worldwide leading manufacturer of gas compressors (Aspro GNC). The firm handles all of the company’s agency, distributorship and transfer of technology matters around the world. The CLO has used MSI members in various locations around the world.” (See my post of Feb. 21, 2008 #2: law-firm networks with 7 references.).

“About 280 firms are invited to complete the Vault/MCCA Diversity Survey, and results go into a database that is accessible at no cost to corporate counsel.” This resource of information about law firm diversity, described in Inside Counsel, June 2009 at 48, saves law departments from the effort of collecting their own data and saves law firms from providing basic diversity data to law departments.

The diversity database is an excellent example of a collective activity to help law departments (See my post of June 17, 2008: diversity with 29 references.).