How Corporate Counsel Buys Legal Services
There continues to be a disconnect about how corporate counsel buys legal services. Misconceptions and wrong assumptions are clouding the process of who gets the work – along with why and how.
It’s no secret that corporate counsel has the first and last word in what is now a permanent buyers market.
One of the challenges law firms face is that they’re mostly populated with lawyers who have never worked on the client side or have not taken the time to thoroughly study and fully appreciate how in-house counsel works with various stakeholders within their organization along with how outside counsel is viewed, sized up, considered, and chosen to handle some of the outsourced work.
Misunderstanding of the in-house world is one of the reasons why corporate legal teams are staffing up. And who can blame them since bulking up means having people on staff who fully understand and protect the business. They are also aware that outside legal spend is a huge budget line item that must be reconciled on a monthly or quarterly basis and that they will be held to account if the numbers go awry.
On September 16, 2016, a panel of current and former in-house lawyers from some of Canada’s top-tier industries — financial services and transportation — provided astute observations and commentary on what they want, need and expect when hiring outside counsel.
They were Richard Brzakala, Director, External Legal Services (Global Project Management Strategies) CIBC; Susan Kennedy, General Counsel and Corporate Secretary, Ornge; and, D. Casey Flaherty, Principal, Procertas.
Nancey Watson, a proposal and pricing consultant specializing in the legal, accounting, engineering, and telecommunications sectors, moderated the discussion in Toronto.
Proposals, Pricing and Evaluation
From the get-go, law firms need to understand their place in the process, and that client-centric focus is first and foremost.
“Respect the RFP process and the rules around it. They have been created for everyone’s benefit in order to maintain a fair and level playing field. If you have received an RFP, chances are probably pretty good that the client knows enough about your firm that they to want to partner with you. So, focus on the scope of the RFP by providing information that highlights your firm’s capabilities, historical experience and how your firm will add value to the relationship,” said CIBC’s Richard Brzakala.
Expanding on these remarks, Susan Kennedy said, “I want to make sure the information asked for corresponds to our needs.”
As General Counsel with a broad mandate, limited time and small staff, Kennedy appreciates brevity, no puffery, and cutting to the chase. Having been external counsel before joining Ornge, she also knows costs and how to manage them. “We typically ask for fixed fees for volume work. We know how much time it takes us to perform the tasks and what the fee should be.”
Brzakala said, “Some AFAs are very creative, but we need to be able to measure and monitor them.” As for hourly rates he cautioned, “We compare peer billings by year of call, expertise, and geography to see if fees are in line with the market.”
So, the underlying message is to know your numbers and prepare to be called on them.
CIBC isn’t the only organization that tracks data. Many organizations are awash in data and use it for evaluation, buying decisions and performance measurement.
As Casey Flaherty observed, “Data-driven dialogue is a missing ingredient in many of our long-term supplier relationships.” He suggested that key performance indicators can help both parties. “While there is no one measurement to rule them all, a bundle of key performance indicators can be quite useful for facilitating conversations within law departments about law firm performance and, just as importantly, conversations between law departments and law firms.”
Data is a sore point. Many law firms tend to have data that could best be described as basic. The upshot is that critical client details tend to be housed in various places, including people’s heads, which means that unless everyone else at the firm is a mind reader, this information is not accessible and therefore, not an asset.
This is where competitors, such as the Big Four leave many law firms in their dust due to having invested millions of dollars over the last 20 years in sophisticated client databases. These systems continually collect, cull, track, relate and report invaluable information on client needs, expectations, nuances and behaviours.
In a nutshell: Abide by the Golden Rule, and respect the client and the relationship.
Kennedy said, “We don’t have time to go through voluminous proposals. Answer the questions, if in doubt ask us to clarify any questions.” And details count: “Make sure you don’t have spelling errors and that the document is properly formatted. If the proposal is full of typos and poorly laid out, it is disregarded because it demonstrates a lack of quality regarding your work and attention to detail.”
“Ultimately a firm’s goal should be to move from a transactional to a strategic relationship where the firm is valued as a strategic partner. Don’t make assumptions during the RFP process. If a firm is uncertain or unclear about something, don’t be afraid to ask questions. Clients want to partner with firms that are engaged and want to get things right, not firms that can’t read simple RFP instructions and make assumptions,” said Brzakala.
Excellent legal expertise is an expectation and relatively easy to access. Creativity on matter management, lean teams and pricing are table stakes. Add to this, soft skills such as careful listening, asking for clarification, confirming understanding, responsiveness, and project speed.
These traits combined with no over-lawyering, nickel-and-diming or other nonsense are solid building blocks for long-term, mutually beneficial client-law firm relationships.