As we’ve often noted in this series, GCs need to look inward to ensure they have the right skills to match the moment. But they must also look outward to ensure their external advisers are evolving along with them.
In our global research survey, THE GC {RE}DEFINED: In the Face of Complexity and Change, the Time to Lead Is Now, we found GCs hungry for a deeper relationship with their outside legal advisers. But we also heard GCs express higher expectations from law firms in terms of focused knowledge in areas like diversity, technology, pricing, and risk sharing. Offering skilled legal counsel is not enough.
“We expect legal skills to be there,” said James King, general counsel for Randstad. “What differentiates law firms is those with lawyers who are prepared to actually take a position and give advice on which way to go, not just give all the options and just step back.”
Shared ownership
Fundamentally, GCs want advisers who are willing to put themselves in the GCs’ shoes. According to our survey, 40% of GCs said they felt “shared ownership of outcomes” is crucial to a successful relationship.
Not surprisingly, pricing features prominently in that conversation, with 54% of GCs citing it as a determining factor in their choice of outside counsel. This focus on cost has driven an increase in the use of alternative fee arrangements, which spread risks and rewards between clients and law firms. Those arrangements tend to be attractive to law firms whose lawyers have a deep understanding of the issues facing their clients and who see themselves as partners, not just service providers.
“We want law firms to effectively manage their costs and fee structures,” says Karen Linehan, executive vice president of legal affairs and general counsel for Sanofi. “Law firms who have worked with us for many years have good institutional and industry knowledge by virtue of their experience with us, so they’re more inclined to be supportive of alternative fee arrangements.”
In addition to focusing on price, many GCs want law firms to get more comfortable with managing risk. In our global study, 38% of GCs cited greater risk tolerance as a major factor in choice of external counsel.
“GCs aren’t being asked yes or no questions,” says Karen Kerrigan, chief legal officer and chief operating officer of Seedrs. “It’s not: can we do this, can we not do this. It’s: how can we do this. GCs need to work with law firms ready to commit to an answer.”
Tech talk
Of course, getting to a positive shared outcome today often requires the effective use of technology and data. According to the findings in our global study, 34% of GCs said “data-based criteria, metrics, and reporting capabilities” were crucial to their law firms. As many GCs begin to deploy technology-based solutions to control costs and operate more efficiently, it’s only natural that they expect their outside counsel to do the same.
Is your role being redefined?
After years of relative stability, the relationship between GCs and law firms is changing fast, with increasing expectations of the latter. Do your law firms embrace the challenge? Do their values align with yours and those of your company? How can you influence your law firms to maximize the value they offer?
This post is part of a thought leadership series, “GC {RE}DEFINED,” which explores how technology is reshaping the role of the GC.
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