At this year’s Annual Meeting of over 2000 general counsel and senior in-house counsel, the Association of Corporate Counsel continued its promotion of the Value Challenge–i.e., making sure outside counsel understand what corporate counsel expect from them. So far, over 5000 lawyers have been rated on their competence in six critical areas.  And ACC hopes to double that number soon.

Janine Dascenzo, a member of the ACC Value Challenge Steering Committee and chief litigation counsel at GE, noted that her CFO expects legal spending to be reduced by 25% year-on-year, which far exceeds the savings some firms propose by holding rates for 2011 to 2007 levels. She advocated for lawyers adopting skills business has long used to realize profits on fixed-price contracts. 

Aileen Leventon of QLex Consulting, Inc. led the basic skills session on Legal Project Management, with three firms–Shook Hardy & Bacon, McDermott Will & Emery and Kilpatrick Stockton–demonstrating how they use project management principles and technology applications to profitably manage work priced at fixed fees or other value-based fees.

Leventon has learned a lot about client expectations in the course of teaching project management skills to more than 200 General Counsel over the past year.

According to Leventon, here are the six things GCs want their law firms to know:

1. Law firms fundamentally do not understand that legal spending is corporate overhead and has to be managed aggressively – consistent with every aspect of the corporate budget. Expenses are scrutinized by many internal stakeholders: CFO, Controller’s, Investor Relations, and Procurement.

2 .Legal is not only not exempt, but is held to a higher standard because of the widely-held business perceptions that law firm lawyers make too much money and that legal work is rarely revenue-producing for the client.

3. Law firms must recognize that legal work is not an end in itself. Law firms are engaged because there are business problems – not legal issues. Business problems need results. Legal issues are only one of many factors that are brought to bear in addressing client matters.

4. Law firms must learn how to manage their work better. They need ongoing communication within their firms about how specific work links to the client’s budget so that matters are properly staffed. Firms must learn how to use planning and forecasting tools, just as the general counsel have learned to use matter management systems and e-billing.

5. Law firms should communicate at the beginning of the matter about assumptions supporting budgets and then initiate conversations when matters are coming in over budget. Too many law firms think that if an interim bill is paid, they do not have to discuss being over budget with the client. "They paid my bill so they know what is going on" isn’t sufficient.

6. Predictability is key. Even if a matter is coming in under budget or additional resources will not be required, the client needs to know that as soon as possible. The client’s budget is a portfolio of matters–not just those handled by a particular law firm–and the surprise of coming in under budget at the end of the year is not received as favorably as a law firm might think.

How is your firm doing?