“Everybody keeps saying the legal services industry is at a tipping point; that it’s so broken radical change is badly needed. But until recently, nobody had taken the time to try to define what kind of comprehensive change was needed. No one had tried to set forth what true north is for this industry? And only a few, like industry thought leader Richard Susskind, were even looking at the issues industrywide. Most were looking only in silos, and most focused on law firms as the only ones really needing to change,” said Jeff Franke, Assistant General Counsel of Global Legal Operations at Yahoo and founding member of the Corporate Legal Operations Consortium (CLOC).
But the challenges the corporate legal services industry face go way beyond the billable hour; beyond the intransigence of law firms to change their basic operating model. Jeff Franke added, “Corporate legal departments own their fair share of the blame for the current dysfunction and inefficiency in the system. Fortunately, corporations have started making changes, and we will see more radical change over the next three to five years than we have seen in the last twenty years.
"Corporate legal departments own their fair share of the blame for the current dysfunction and inefficiency in the system..."
The fundamental shift that has led to the impetus for change in the corporate legal services industry, that led to the formation of major industry players like the Corporate Legal Operations Consortium (“CLOC”), has been the evolution of the role of the General Counsel. Over the last twenty plus years, the GC role has taken on a strategic focus, with many GCs owning the role of trusted advisor to the CEO and executive leadership of leading corporations.
This has been a driving force in the development of legal operations.
What about Law Firms?
Law firms can begin their own internal analysis of their capabilities by considering the 12 Core Competencies produced by CLOC. Relationship partners should offer to meet with clients to explore their requirements and preferences. Clients will value productive conversations leading to more client centric service delivery.
With the exception of a finite group of proactive law firms, most are struggling to adapt. According to the 2017 Survey of Law Firms in Transition conducted by Altman Weil, “Law firms are slowly changing – more slowly than we think is wise, but changing nonetheless. Of the firms surveyed, 72% believe that the pace of change in the profession will continue to increase. Sixty percent of the partners responding said their firms aren’t doing more because their partners are resistant to change.”
Law firms must change or risk getting left behind.
Perhaps there is a higher level of awareness to change with younger leadership who seem to have caught on to the critical importance of incorporating legal operations as a critical client staple. But why would a law firm wait three to five years until these younger leaders get into more senior leadership positions? Many firm partners, per se, seem to have a general lack of knowledge of legal ops. Lawyers tend to be focused on the delivery of their goods but not the process or areas that can create closer relationships with clients and greater efficiencies. To date, law firms have been coping with the current decline in services required from outside firms by cutting expenses. For those firms that want to keep their clients and expand their client base pro-active conversations are critical. Law firms must change or risk getting left behind.
One Big Law Firm That’s at the Top of its Legal Ops Game
Gavin Gray, Regional Operating Officer for North America with Baker McKenzie, was an early adopter in the legal ops game. He works directly with business professionals driving legal ops internally within the firm across North America, and also is a key sponsor supporting Baker McKenzie's engagement with corporate legal ops professionals - a group that helps address the changing landscape from the law firm side and finds itself increasingly engaged with clients on these topics.
In line with the firm's ability to, as Gavin puts it, "see around corners" for clients, Gavin started meeting informally with these pioneers of legal ops over 5 years ago before CLOC was fully formed. In those early days, these like-minded operations professionals would meet to share ideas and best practices, and puzzle over how to improve the state of affairs around legal operations.
So how is it that Baker McKenzie has come so far even before legal operations has reached a mature position in the legal space? Gavin states, “Innovation isn't new to us. Baker McKenzie has always been a disruptor, historically as the first global law firm operating across borders and in new markets. Addressing the need for commercial change in the industry continues that tradition.
“For us it is about seeing the world through our clients' lens. That means we see business problems and challenges - not just 'legal problems'. And so we have, for many years, been developing our capabilities around project management, knowledge management, technology, and other disciplines - it's a platform not a pipeline approach.
“Our work with CLOC has highlighted how critical it is to be proactively connecting with legal operations professionals. This connection is not only critical to further improving client service - it's a way for us to learn how to best innovate our own internal processes, leverage technology, and drive efficiencies with client needs front of mind.
When our attorneys hear first-hand about the issues legal ops professionals are working on ... it creates a new awareness and further opens the door for new ways we can partner and solve some of those issues together...
“The chair of our Innovation Program, Erik Scheer, and our recently appointed Global COO, Jason Marty, came with me to a meeting with CLOC leadership some time ago, and very quickly saw the importance of what CLOC is doing, and the mutual benefits that relationships with legal operations professionals would create. We have engaged with CLOC in a number of ways, both publically as a significant sponsor of the CLOC Institute, and individually, helping drive connectivity between legal operations professionals across the ecosystem. For example, after the CLOC institute, where we gained some really fascinating insights with attendees around change and prioritization issues for legal operations professionals, we were fortunate to be able to have some CLOC members attend a partner briefing after our Policy Committee meeting, where we shared our learnings and helped educate our lawyers about the important role of corporate legal operations professionals. When our attorneys hear first-hand about the issues legal ops professionals are working on, and the challenges they are facing, it creates a new awareness and further opens the door for new ways we can partner and solve some of those issues together. Put simply, it is an example of change at its best.”
According to Gavin, the CLOC membership is on a learning curve, just like most law firms are on. He suggests 1/3 of these professionals are pushing their legal departments solidly ahead creating collaborative and meaningful relationships around legal operations issues between their organizations and outside firms, creating enhanced relationships as they go. The middle 1/3 of CLOC members are perhaps beyond the novice stage and are figuring out how to better apply the core competencies with outside law firms, and how to bring their own internal operations, and lawyers, on a journey towards improved processes and better efficiencies. The final 1/3 are nascent and just starting to dig into the issues, often focusing on internal challenges and how to drive change within their organization before focusing as heavily on outside providers.
“This is about much more than being a 'Good lawyer'. Going forward lawyers will be expected to become more aware and savvier about the issues surrounding legal service delivery. This will be critical to creating true enterprise-to-enterprise relationships between clients and firms. Legal operations as a discipline and focus is truly a way to create more value in the relationship - it can and should be a win-win for both the law firm and legal department. Proficiency will benefit everyone. Firms need to proactively approach their clients and clients need to proactively approach their firms to start the conversation. The genie is not going back in the bottle,” added Gavin.
Baker McKenzie "Philosophy on Legal Operations"
Not A Zero Sum Game: We firmly believe that the relationship between law firms, clients, and other technology and service providers in the legal industry is not a zero sum game, but rather an opportunity to create value where it has not previously been, identify new opportunities and new relationships, and help reinvent the practice of law to meet the demands of an increasingly complex world.
Solving Problems Together: We also believe the challenges that the legal ecosystem faces cannot be solved by the efforts of one or two players but require us all to come together and collaborate to find solutions. To this end we’ve engaged with the CLOC Institute and have spent significant time meeting with various members, including several design thinking workshops held live at the 2017 CLOC Institute to understand how we can accelerate change. Our goal is to gain a deeper understanding of the priorities, and related barriers – not just with outside service providers, but within the corporate legal department itself. Our work with CLOC helped us put a spotlight on some of these challenges, and has informed our approach to engaging with the legal ecosystem which will help us be an effective partner in driving needed changes.
Outreach: Business as usual will not create high quality relationships nor the necessary understanding of legal operations issues between law firms and clients. It’s our responsibility to reach out to legal operations professionals through various engagement points to learn more about their priorities and challenges, and to help connect our enterprises in ways that are more efficient and effective.
Education: Lawyers at law firms need to know who the legal operations professionals are at their clients, what they do, and the business problems they’ve been asked to solve. Similarly, corporate legal operations professionals need to know their counterparts at law firms who are often working on the same challenges related to improving legal services management and delivery. As the industry has evolved, there are many more senior business professional roles within law firms and we believe we should be working together with legal operations professionals to add value to the relationship. We encourage our business professionals to get involved with CLOC initiatives where they have relevant expertise to contribute.
Davis Wright Tremaine Gets it in a Big Way
Brian Fanning, Pricing Director for 500 attorney firm Davis Wright Tremaine, has been involved in the field of pricing and profitability for almost 7 years. He spent three of those years analyzing pricing for Stoel Rives. He joined Davis Wright to help broaden their capabilities to use pricing as a tool which better aligns with their clients’ service expectations. Brian initially asks clients, “What are your objectives? How can we align our service and pricing strategy to meet your needs?”
Working in conjunction with Brian, the firm formed DWT De Novo, an innovation and consulting group which partners with clients to leverage new processes and technologies between their legal department and firm attorneys. This proactive approach offers great dimension as it combines Brian’s pricing work in conjunction with De Novo’s consulting services.
"Our partners have empathy for our clients."
There are only a handful of law firms that have taken an early leadership position such as this working with clients to develop more accurate pricing for every matter. The law firm is committed to focusing on the business of law with its clients.
“Our partners have empathy for our clients. They understand the continued and increasing pressure legal departments are under to create more predictability and efficiency in partnership with outside law firms. When we work with clients we focus on their business problems; we bring legal expertise in combination with innovative approaches to people, processes, and technology to help them solve those problems. We are not there just to innovate a solution, but rather to focus on continuous client relationship improvement. This is how we do business at Davis Wright.
“We help facilitate meetings with corporate legal departments to deepen their understanding of pricing and legal operations. We create transparency to avoid surprises. It is not uncommon for a relationship partner of the firm to introduce our De Novo consultants to their client contacts in order to deepen the firm’s relationship and explore how we can better partner with our clients across various aspects of service delivery, pricing and process improvements.”
How is it that Davis Wright is so evolved in legal operations? Brian commented, “Our partners are very open to new things and in investing in our future. I am fortunate to be at this firm which supports this type of innovation. It is most important for our clients and for firm growth into the future.”
Steps to Take at Any Firm Size
Gia Altreche is the Director of Business Development and Marketing for the 75+ attorney firm of California-based Newmeyer & Dillion. Gia was a panel member at a recent Legal Marketing Association regional conference which covered pricing, procurement and the roles of legal operations. This firm has carefully listened to the marketplace and knows if it wants to continue to remain competitive in the marketplace, it needs to elevate its legal operations capabilities. Education and forward movement are a must.
Gia, and the firm’s Director of Finance, Lisa Waligorski, spoke of the importance of internal analysis as a step to onboarding a legal operations program.
“We looked inward, at first, to see how we can optimize our resources to increase our competences. Process improvement is a major focus for the firm. We questioned everything such as: How can we streamline our finances and internal structure to better support our interest in exploring legal operations with our clients? What is our bandwidth? How are our fee agreements and AFA? What technologies do we have? Can any be expanded? What other technologies are important for us to consider?”
In conjunction with this internal analysis, the firm is continuously engages in meaningful conversations with clients and prospective clients about each company’s expectations and how the firm can best partner with them for the years to come.
A Highly Professional Outside Perspective
Michael Rynowecer, president and founder of BTI Consulting, has been a force in the legal field conducting, directing and analyzing the results from over 14,000 independent one-on-one interviews with corporate counsel, legal decision makers and C-level executives. BTI has been consulting with law firms for over 25 years.
“Legal operations is a horse race. Firms are slowly realizing they need to adapt and change in order to grow. Those firms able to improve performance will get more work at the expense of others. There are about 25 law firms, from Am Law firms to boutiques, with just 15 to 40 lawyers, who are invested in making this change. I predict this number will be significantly higher by the end of 2018.
“The relationship partners need to get on board first. But firms are realizing they need dedicated professionals to increase client research and visits, analyze the technical capabilities of their firms, explore other ways to increase efficiencies such as AFA, use knowledge management, act on data analysis and listen more attentively to what each client is hoping for in their legal operations efforts.”
There is no doubt that legal operations is a growing force in the competitive landscape for law firms to keep and expand client relationships. Corporate legal department are in the driver’s seat. If the steady and impressive growth of CLOC membership and legal operations professionals who take advantage of the numerous legal ops offerings from CLOC and ACC continues, it will not be too many years in the future when firms who resisted too long will wish they hadn’t.
[Merry Neitlich is managing partner of EM Consultants located in Irvine, CA. She can be reached at merry@EMconsults.org or 949-260- 0936.]