Goals, Metrics, Results: A higher value client conversation

On Wednesday April 13, 2016, our Vice President Lizzy Duffy led a panel of leading voices from in-house to learn how value is defined by clients, how they are measuring it and how law firms should be responding.

This was not your typical GC panel – first of all, not all of our panellists were GCs.

This was intentional on our part as it reflects the evolution of the legal department we have witnessed over the last decade.

Our speakers represent the legal department of today where the GC is a business leader, decision making authority is spread among the legal team and specialist non-legal roles are driving the quest for value.

Lizzy was joined by Matt Fawcett (Senior VP, General Counsel and Secretary, NetApp), Paul Drummond (Senior legal counsel, AT&T) and Vince Cordo (Global Sourcing Officer, Shell) to discuss their perspective and experience in defining, quantifying and driving value in their legal departments and businesses, and what this means for law firms.

The theme was value – a term that is so important in today’s relationships and yet often ill-defined. Our discussion took on the definition and the measurement of value from each of our panellists and – in line with the topic of metrics and data – data from our annual Sharplegal survey of GCs was also shared to highlight key trends in the wider market.  
  

Part one: the role of value

Our research shows that the purpose of the legal department has and continues to evolve. This is clear when analyzing the formal objectives set for legal departments today which segments clients into three main groups, each one building on the preceding:

  1. Those focused on delivering effective legal services to the internal client – this core purpose remains intact but today clients have to do this faster and in a more resource-constrained environment
  2. Those working to deliver effective legal services at better value – working to budgets, driving efficiencies and in some cases reducing cost
  3. A smaller but growing group whose objectives align with business objectives and aim to protect the longer term value of the business.

As organizations have responded to market forces surrounding them, they have looked to their legal departments to take a more influential and proactive role, acting as a business advisor while at the same time safeguarding the organization.

Historically, most legal departments took a reactive role, offering services to facilitate business activities and handling any disputes that occurred along the way. While this remains the core purpose of the legal function, now, legal departments are often called upon earlier in the process and they have to find ways to deliver effective, business savvy legal support, quickly, at the same time as minimizing costs. They also have to continually consider the legal and broader business risks to the organization, ensuring compliance within ever-increasing complex legislation.

We asked the panel about their objectives and where they sit on the spectrum and all agreed they had objectives set to each of the categories.

In Vince’s first year with Shell he is leading the convergence process which includes reverse auctions but he says rates are just the baseline of negotiation. He wants ‘appropriate’ fee arrangements, not ‘alternative’ and positions his own role as to give facts to lawyers to allow them to make the decisions. These facts consist of many metrics, not just financial and value means having stability with one firm.

@LindsayGriffith

It's not about cutting 10% off, but working with, not against your law firms, says @vcordo #LMA16

@SaraVanDusen

#lma16 you call them alternative fee arrangements, we call them "appropriate" fee arrangements - Vince Cordo, Shell

Since Matt’s first week at NetApp he has championed efficiency and alignment with business goals. The three objectives he sets for his team are to: bust silos, enable speed and ensure everyone understands they are in sales. Matt talked about his higher calling to keeping the share price high and this means that law firms who are NetApp customers are naturally a smarter choice. Matt’s legal budget in 2017 will be lower than it was in 2011. 

@LindsayGriffith

"Value" does not mean the best lunches, or being invited for the best trips, says @NetApp's Fawcett #LMA16

@CherylBame

I have a higher calling daily: shareholder value. What can I add back into the business. @mkfawcett @NetApp #LMA16

Paul views value from a slightly different perspective having currently fewer formalized metrics at play and shared a quote from Justice Stewart “Value is like pornography. You know it when you see it.” While this raised a few laughs, the point is an important one – clients are no longer satisfied with a loose approach to measuring value and it is a more complex asset that is even more difficult to quantify.

@amberb01

AT&T tries to handle as much litigation as possible inhouse but relies on outside counsel to be "eyes & ears." Speaks to advisor role #LMA16

‎@ThunderActive

At #LMA16 GC Panel: great laugh but also true from Paul Drummond, AT&T "Value is like pornography. You just know it when you see it." Lol

How to measure value?

While the formal objectives of the legal function have evolved, the metrics used to measure its success have yet to catch up in most cases.  In fact, 25% of organizations we surveyed through its Sharplegal annual study still have no metrics in place at all and most are measuring only legal spend.   

Our panel explained how law firms that focus on the broader goals of legal departments, rather than just on cost will be helping their clients protect and maximize long-term shareholder value. As a result, they create an opportunity to stand out from other law firms.

The panel shared the current metrics they have in place for measuring value:

@amberb01

Value to Shell includes financial benchmarks, KPIs related to hiring & performance, and overarching priorities like diversity, safety #LMA16

@Esemmes

@Att legal buyer - #lawfirms must be able to anticipate legal issues offensively and defensively to really add #value #lma16

@ReneeKaribi

Responsiveness, special expertise, knowing client, forward-looking risk mitigation are what AT&T legal values. #lma16 #lawdepts

 

Client feedback - law firms lagging far behind

Disappointingly for the industry, not one of our speakers has been invited for feedback although all  would welcome and value it. As Paul put it, client feedback sends the right message. Law firms have a lot of work to do, starting with a more formalized and systematic approach to capturing feedback from clients. There is also an important role for law firms to play in developing and sharing best practice with clients on metrics they should use to measure performance across maters and teams.

‎@KBWhit

NetApp GC says he has never been invited to give feedback to his outside counsel. Acritas reports only 1 in 10 clients have been. #LMA16

@amberb01

Acritas: Clients want to benefit from knowledge/experience of firms, including best practices they have learned from other clients #LMA16

Vince and Matt agreed this is something that is amiss. Matt has yet to have an engagement where he sat down with his law firm and identified the success indices – the firm that does this is set to impress.  

@ReneeKaribi

Law firms need to help clients develop metrics. Both sides have oppty for growth. #lma16 #gcpanel

@amberb01

NetApp: It would be refreshing to have a firm ask to sit down and collectively determine what success looks like/what metrics are key #LMA16

@JRFitzgarrald

Blur the lines between "client" and "consultant"! YES! We are all in this collaboratively together. #LMA16

PART TWO: Levers of a ‘Perfect 10’ client experience

Higher client satisfaction is achieved through a combination of, fairly obvious and yet not commonly achieved, factors:

  • Meeting expectations
  • Quality of legal advice
  • Communicating effectively
  • Delivering work efficiently

Of course, all clients have different needs and expectations but it is impossible to know for sure whether your attorneys are achieving all or even some of these unless a formal process is in place to evaluate success.

Client feedback is key to successful relationships:

@Esemmes

@NetApp GC Quality of results can be measured. You just need to define it. And #lawfirms need to do #clientfeedback. #lma16

@Esemmes

#GCs want to be surveyed but they want their staff lawyers to also be asked for feedback as well. 360 degree evaluations. #lma16

@StefanieMarrone

Insight from GC panel: Clients have never been more open and accessible to reevaluating the client law firm relationship #LMA16

@JessDAries

Client feedback surveys are a real actionable thing legal marketers could do to improve client relationships. #LMA16 #gcpanel

We hire firms, not lawyers

For many years we have heard that clients’ hiring practices are increasingly heading toward hiring the firm not the individual and our panel each confirmed this:

@lalaland999

GC from @netapp says he does buy a firm, not lawyer. Values and culture matters #lma16 So true. The experience matters

@kwewe

"I'm making an investment in the whole firm when I make a hiring decision," says @NetApp GC #lma16

@JRFitzgarrald

Clients see contributions from all professionals at a law firm--not just the superstar Partner. #LMA16

@Esemmes

@shell legal buyer - Don't put all your eggs in one basket of one superstar #lawyer. We need a team that is strong. #lma16

@LindsayGriffith

Act like you're engaged in a team sport - that's a good analogy. Utilize everyone on the client's team too #LMA16

@ReneeKaribi

At&t: Law firms, treat clients as part of your team in game of conquering legal issues. It is a team sport! #gcpanel #lma16

@yeagerjenn

GCpanel: Clients want to partner with law firms and don't want one attorney hoarding the work, relationship and credit #LMA16

The opportunity

With so much emphasis today on clients choosing from their refined list of preferred providers, what opportunity really exists for firms not on the list – do they stand a chance? Matt Fawcett believes so:

@amberb01

NetApps: We are open to switching firms, especially if you can help us do more with less. But you have to push. We won't pull you in #LMA16

@kwewe

"Yes" on secondments says @Shell GSO at #lma16 GC panel. It will get you invited to other tenders.

@FlipCatLLC

Matt Fawcett @NetApp - pitch 2my team, they do more of hiring. (Validation for Mktg to PRE-search pitch targets for firms.)

@FlipCatLLC

GC Panel: frame pitch (& your thinking) not as 1-way, but as collaboration: what cld prospect do for firm? & quantify that. #LMA16 #LMAfcc

@amberb01

NetApp: Understand the client's competitive landscape & find ways to help them improve their position in the market #LMA16

@LindsayGriffith

"What is something we can do to create competitive advantage in the market?" Understand their competitive landscape #LMA16

Matt recently reviewed the list of 20 top billing firms and didn’t recognize 10 of them. Was this a surprise? It was certainly exciting, it demonstrates that his team are getting the best from outside counsel.

PART THREE: Diversity – everyone’s benefit

As the conversation moved toward the future, Lizzy shared some key findings from our recent research on the impact of diversity on the client experience. The results demonstrate that a team perceived to be diverse from the client’s point of view (this can mean age, gender, ethnicity, experience, practice, seniority) are delivering a better performance overall. We wanted to hear from our panel of white males what importance diversity plays to their business.

Diverse teams perform better: Fact

@ReneeKaribi

No-brainer that more diversity on matters translates to better outcomes. #lma16 #gcpanel

@ManganMarketer

Diversity is something AT&T works to achieve inside and out, with the service providers we hire. It is a good way to do business. #LMA16

@JessDAries

GC: Diversity is hugely important in selecting a firm. We track the data down to the micro level for all our vendors. #LMA16 #gcpanel 

 

Website by PeacockCarter Ltd