Learn the ins and outs of law firm panel management

For most legal teams, controlling outside counsel costs is one of their top goals. According to a recent report, 78% of legal departments called it a high priority and at the same time about a quarter of those respondents said they were looking at law firm convergence (or a preferred panel program) as a high priority strategy for controlling costs.

Preferred law firm panels are an important cost-savings tool for legal departments that work with many law firms, however they also provide other just as important benefits like increased efficiency and improved relationships with law firm business partners. 

We recently had the pleasure of speaking with three legal operations leaders about their experiences with panel programs and outside counsel management. Karen Helten, Outside Counsel Senior Manager, Salesforce, John Crawshaw, Legal Operations Manager, PNC, and Juanita Luna, Managing Director, Luna Legal Ops (formerly with PG&E), explained how they think about law firm convergence, the impact it’s had on their companies, implementation successes and challenges and much more.

In this article, we dig into their advice for proactively managing a law firm panel program, as well as how they measure the success of their programs. If you’re curious about what goes into the panel creation process leading up to the information shared below, you can read the panelists’ insights in this companion piece on the Priori blog.

The Importance of Outside Counsel Data 

When implementing a law firm panel program, the place to start is, unsurprisingly, with the law firms you currently do business with. You can narrow the list down before you start reaching out to firms about panel membership, but it’s very common to provide the information to all of the firms your department currently works with and have them respond, often through an RFP or similar process. 

Data is also a critical part of this step. 

Collecting the quantitative and qualitative data is great, but it needs to be organized to make it useful for your in-house counsel and legal ops teams during discussions with law firm panel members (and potential panel members). 

The way you visualize this information will likely be influenced by the data tools that your organization uses, but a general rule is to make the data digestible at a glance. If possible, a one-page summary or dashboard of the key information is ideal, so that not only your legal team members can understand the relationship quickly, but it is also easy for your law firm partners to grasp. 

Some of the information you might want to have on your dashboard includes: 

• Accruals

• Staffing ratios

• Invoice timeliness

• Invoice hygiene

• Forecasting

• Performance – standardized business reviews and ad hoc comments

• Market benchmarks

• Diversity information

• Pro bono information

• Additional value adds (e.g., CLEs, workforce training, etc.)

While creating a document or dashboard or scorecard that displays this information is not an easy task, it is incredibly important to a successful panel program and you only have to do the heaviest lifting once. When you’ve created something that works, you can use the same resource that helped you decide which firms fit on your panels for your ongoing conversations. Of course, the resource may evolve as you learn more from operating the panel program, but the bulk of the work comes at the beginning.

The Basics of Law Firm Panel Management

After reviewing your outside counsel data, creating criteria for your panels and reaching out to firms about panel membership, it’s time to see your panel program in action. This means continuing the analysis performed to create the program on an ongoing basis. 

As part of the panel creation, most organizations set periods during which no new firms are added (barring exceptions that will differ for every company, depending on business needs). During that time frame—which for two of our panelists was two years—your legal team should have regular meetings with your panel firms, whether that means as often as every month or just once a year. 

These conversations are key to a panel program’s success. They provide the foundation for the benefits of a panel program: cost savings, efficiency, strengthened firm relationships and more. They should involve the data you’re collecting, as mentioned above, and the conversation can be formal or informal. One panelist recommended sending a survey asking for data from your panel firms and then comparing it to your internal data to see if you’re both on the same page regarding your relationship. 

The panelists also explained that often legal ops takes a backseat during these check-ins and the meetings are led by the in-house counsel who work directly with the firms on projects. It’s important to give the in-house attorneys the room to manage the relationship the way they see fit. Of course, this doesn’t mean they can ignore your departmental goals for outside counsel (whether they are related to spending, quality, diversity or anything else), only that approaching these conversations as relationship-building rather than purely data-based negotiations goes a long way in strengthening your partnership and achieving your goals. 

From this point, you can adjust your panel management and membership process as your business goals evolve. For most organizations, when the defined panel period comes up, they look at the data they’ve collected and conversations they’ve had with firms and decide which firms’ memberships they want to renew. Additionally, this is when new firms are vetted and considered for panel membership. After that, the cycle continues and the process repeats, with refinements based on stakeholder feedback.  

Measuring Law Firm Panel Program Success

While getting a panel program up and running is an incredible success in and of itself, it’s just as important that the project creates value for your company. When the panelists looked at the performance of their panel programs, they generally separated it into two categories: the hard (quantitative) results and the soft (qualitative results). 

Hard Results

The clearest way you can measure the success of a law firm panel program is whether it saved your company money. For example, looking at the categories of outside spend that you targeted with panels, how did the activity level compare to the spend? Did you spend with a particular set of firms go up or down year over year? How was your legal team’s workload affected? One panelist said they were able to do a significant reallocation of internal resources, bringing more work in-house after implementing their panel program because the management time required for outside counsel projects was reduced by so much. 

Soft Results

In addition to looking at the data regarding reduced spend and increased internal efficiency, the more qualitative successes of a panel program are also important. For some stakeholders, they may be even more important than saving time and money. These include questions like: Do our attorneys have the expertise they need to complete their work? Are they happy with the day-to-day work they do with outside counsel? Are the firms providing our team with strategic insights and making us aware of trends in the industry? 

The answers to these questions in both the hard and soft categories can inform your panel management strategy going forward. If the results match your expectations, then you probably don’t need to make many changes. If there is a disconnect, you can reexamine your processes and correct your course. Coming back to a common legal operations theme: As one panelist said, “data data data.” The more you track, the easier it is to determine where you need to focus to improve results.