Here is the third and final installment on some of the highlights from this year’s Futures Conference of the College of Law Practice Management held at Georgetown Law School at the end of last month:
What General Counsel Want From Their Outside Law Firms
The panel’s top considerations reflected the same ones outlined in the ACC’s GC Value Insights, prepared in cooperation with a number of Fortune 50 general counsel:
- Understanding the Business and Goals
- High Quality Work in Cost Effective Manner
- Innovation and Flexibility
Responsiveness. Michael Finn, GC of General Dynamics Advanced Information Systems, pointed out that responsiveness is his primary consideration in evaluating outside law firms, yet no law firms have ever offered to show him their record on this point—they either don’t track it or don’t bother to share their results. He noted that law firms obsessively track metrics that relate to their own business model—lawyer time, overhead and expenses—yet the metrics important to their clients, like this one, are often not tracked.
Accurate Predictions. Finn also said that predictive accuracy was a very important factor in his company’s consideration of law firm performance, yet no one offers metrics on that either. See our entry Decision-Making on Trial: Are We Promising More Than We Can Deliver? for why law firms may not want to publicize their track records in predicting case outcomes, but also for where the opportunity is for promoting your firm as a standout performer.
AFAs. Toby Brown of Akin Gump is that firm’s "Pricing Officer," who works to make sure he understands the client’s needs and objectives before recommending a pricing model.
There was quite a bit of discussion over whose responsibility it is to take the initiative in sculpting the terms of AFAs. While there was general agreement that law firms have the best information to do that in a way that assures a continuing quality of advice, there is no economic incentive for them to do so. “If clients will pay cost plus, why would a law firm offer a possibly less profitable alternative?”
The GCs on the panel admitted that clients don’t often do what they could to spur the offering of AFAs either—in part because they are also from the old school of hourly billing, so they may not be comfortable evaluating the cost of handling a matter without that guidepost.
Alignment. Finn said that finding a law firm that aligns with his company’s collaborative culture is a high priority, which "just doesn’t happen with a firm that values eat what you kill.” There appears to be a fresh backlash out there from clients over expenses and at least some firms are making a fundamental shift towards reducing endemic costs. The GCs reiterated that their outside firms have to share their companys’ interests in cutting costs and raising efficiency, which is not consistent with rewarding lawyers for billing the greatest number of hours.
Listening. Brown noted that listening to your clients’ greatest concerns is the best way to fashion a billing format that is satisfactory to everyone. Often predictability of legal fees is highly important to a GC’s budgeting process, for example. Mark Chandler, GC of Cisco Systems, emphasized the importance in some matters of having a predictable quarterly cost but also said that fees had to support the success of both parties in the end: "I don’t let my law firms take a bath."
Innovation. Susan Hackett noted that 90% of law firms still don’t have e-bill. Most panelists agreed that, as with all disruptive technologies, people are slow to react to the pressing demand for changes, but that five years from now, the changes will be apparent.
Legal Services for the Masses
With a legal system historically centered around "high-touch" services with their inherently high cost, over 62 million people in the United States are without lawyers primarily because they can’t afford them. That situation has given rise to a cascade of online providers of basic legal services with different orientations, such as RocketLawyer, LegalZoom, LawGuru, LawGives, myRight.me, SmartLegalForms, UpCounsel and others. Some provide only forms while others offer consultations with licensed lawyers.
These startups have been dogged by questions as to whether they are engaged in the unauthorized practice of law. LegalZoom, for example, has been sued in several states on that basis. Texas is the only state that has explicitly acknowledged that these providers are not practicing law. The proliferation of these type of services and their more sophisticated brethren, like Michael Mills’ Neota Logic, which provides an interactive online expert system for companies that repeatedly encounter questions in highly regulated areas, shows how the traditional practice of law is being squeezed both from the top in terms of price and also from the bottom in terms of competition.