July 24, 2024

 Pratik Patel

 Alyssa Garie

general counsel Consulting law department consulting law department innovation

General counsels frequently ask us, ‘How do I get my outside counsel to work more predictably and efficiently?’

For us, it’s an odd question because outside counsel is essentially an extension of YOU, i.e., a law department. A law firm’s priorities and approach ought to, as a matter of course, align with those of its client (i.e., you, your law department, and the business you and your department support), right?

WRONG!

Why? The answer lies in the fundamental difference between businesses and law firms. Businesses prioritise profits, with executive incentives based primarily on increasing them. But the lifeblood of law firms is, for the most part, revenue. This difference in focus may seem inconsequential. It isn’t, and these different priorities can have a surprising and treacherous impact if, like many law departments, you are managing toward a budget. It is akin to a crew team with the back half (outside counsel) of rowers out of synch with the front four, forcing the latter to row harder to compensate. No fun for the team or the coach – and hardly a winning strategy!

Most general counsel know this dissonance is unsustainable. Yet they struggle to strike the best balance between ‘carrot and the stick’ to ensure the entire team, both in-house and outside counsel, keep ‘rowing together’. These struggles are not only understandable but, according to Phyllis Pollack, an expert in mediation, inescapable because neither carrot nor stick work, whether in law or anywhere else!

Phyllis emphasises that what works best is clearly stating and communicating your expectations before starting the race.

An excellent article, ‘The Best Legal Spend Management Starts with Good Instructions,’ by Lawcadia’s Sacha Kirk, echoes this point and stresses the critical role of up-front instructions on matters. It isn’t enough to rely on e-billing enforcement and penalties on the backend of matters. While legal invoice review is a piece of the puzzle, law departments shouldn’t lead with or rest on it.

The key question is, ’Do your outside counsel guidelines actually clearly state your goals and what you want?’ Most law departments, after taking a hard look at their OCGs and being honest with themselves, will concede the answer is either ‘no’ or, at best, ’kinda.’

That means that until the answer becomes ‘yes,’ predictability and efficiency will remain out of reach. Our experience helping general counsel get from ‘no’ (or ‘kinda’) to ‘absolute!’ has shown that successful OCGs cover five crucial points. To make things easier – whether you are an Elevate customer or not! — we’ve distilled each of those points into paragraphs to insert and communicate in an updated version of your guidelines:

1. All of us – including you, our outside counsel – work for the benefit and success of the business.

As trusted partners, we expect you to think proactively and operate as a true extension of not only our law department but also our business. This includes understanding that many (and perhaps even most) times, winning a matter ‘at all costs’ is not what best serves the business. The correct strategy is always to win (broadly defined) a matter at the right cost.

However, we expect more than timely and cost-effective resolution of matters. We challenge you to take the initiative to spot opportunities for improvements and implement better ways of protecting and enabling the business and helping us stay focused on the ultimate business goals. We prefer you do so based on data. We expect after-action reviews that drive improvements to (including eliminating) future business-activity matters. And we need you to speak up immediately whenever you identify upcoming risks or changes to legal requirements.

2. For all of us – including you – to get paid, matter project management must occur

Our business runs on a budget. Consequently, all of us do, too. Ensuring we manage our budget requires effective matter project management on our matters.

Our project management requirements are simple. They include:

• A matter plan and budget, including key phases and assumptions, formed and submitted within 14 business days of the matter opening
• A monthly matter status update from you that outlines progress, key risks, critical decisions needed, accrued actuals, and projected matter budget to actuals
• Immediate notification to in-house counsel if you believe an adverse matter outcome becomes probable or unanticipated financial risks surface on any matter
• Periodic reviews and performance evaluations based on work performed

We require this level of project management for every matter estimated to exceed USD 50k in spend. Otherwise, we won’t get budget and your invoices will not get paid.

3. The use of software-powered law companies is core to our business strategy

Not all legal work is made for traditional lawyers. Routine legal work and document-intensive review tasks are to be handled by our trusted software-powered law company providers. We’ve worked hard to partner with and integrate this panel of service providers into a centralised model of legal work and require you to engage and leverage them for all the following areas of activity:

If your firm unilaterally performs (and/or sends us invoices for) work that should be delivered through one of our centrally managed law company partners, we reserve the right to reject or modify those invoices. Remember: Leveraging our centrally provided law company solutions does more for our business than deliver cost benefits. We need you and your teams to refrain from working outside of our providers. If an exception is warranted, you must notify us beforehand and provide compelling reasons for our review and consideration.

4. We value technology and innovation

We know technology is not easy to adopt and implement. We also understand it takes significant time and investment to learn and refine technology use so that it provides a net benefit.

But if we don’t try, we won’t succeed. The best legal teams make time for this by weaving technology and innovation into everything they do, including:

• identifying steps in the matter process that tech can support
• finding and testing technology that can support those matter steps
• working with technology providers on product improvements for specific use cases and needs

<<optional text for tech-aggressive companies>> To help support your firm’s investment into us and the use of technology, we will approve ongoing technology spend and budget of 5% of your monthly invoices, up to $25k per year.

5. We require diverse teams and experience

Abundant research confirms that the best and most successful teams are diverse. Therefore, we expect that you, as a trusted partner, also execute on this as one of your core principles. This means:

• taking steps to establish a diverse leadership team and a pipeline of diverse future leaders
• tracking and reporting to us diversity metrics and initiatives across your organisation
• actively training diverse talent and ensuring they gain the experience necessary to support our matters
• letting us know how we can help recognise and support inclusivity across the teams you place on our matters

If you are in the process of refreshing your guidelines and want to learn additional best practices from our expert team, please visit our law department consulting page or submit a request for one of our law department experts to contact you.