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In-house Access Insight & Commentary for In-House Counsel Worldwide

A Value-based Client-firm Relationship: Part XVI

Posted in Value & Innovation

Post 16 

Our Successes, Lessons Learned and Parting Thoughts

Week 16. Each week via the In-House ACCess blog, follow the promise and pitfalls of forming a new value-based client-firm relationship. ACC Value Challenge steering committee member Ken Grady, General Counsel and Secretary of Wolverine World Wide, offered to profile his selection and start-up process of launching a trademark portfolio management engagement with law firm Seyfarth Shaw. Ken’s co-blogger is Lisa Damon, a member of Seyfarth’s Executive Committee and leader of the firm’s efforts to incorporate Lean Six Sigma into its business. The voice, views and stories expressed by the authors below are their own and not ACC’s. To catch up on the story so far, click here.

The client side

From Ken:

There are some obvious questions when you complete a process, and structuring Wolverine’s relationship with Seyfarth is one of those points when you ask what lessons you learned.  First, the obvious question – would we do this again?  From Wolverine’s standpoint the answer clearly is yes.  We learned a lot about how we do things, what we do well, and where we need to improve.  To me, critical self-analysis always is useful.

Second, what did we not do well?  It took too long.  That one falls mostly on me.  Small legal department’s do not have a lot of flex time, and general counsel of small legal departments often (at least in my experience) get pulled in a lot of directions with little real control over their schedule.  That explains why at times it took me a long time to go the next step, but it isn’t an excuse.  The whole process should have taken three months or less.

Third, while we had pulled together information and done a fair amount of analysis, we should have done more to organize the material and our thoughts.  The more you really understand what you want, how you want to measure success, and how you can realistically work with your law firm, the smoother and faster the process will go.

Fourth, what did we learn through the process?  One thing we learned is that many law firms, though they profess their willingness to do value arrangements, still have not grasped what that means.  To one firm, it meant discounting their hourly rates.  To another firm, it meant reducing the amount they spent on things like photocopying and telephone calls.  To many firms, it meant that we just wanted lower costs.  While it may seem like everyone is talking about the demise of the billable hour and value fee structures, we found that many firms had missed the conversation.

Finally, I learned how far we (the legal profession) still need to go to catch up to our peers in other professions.  We haven’t scratched the surface on quality control.  We still spend too much time thinking our value lies in what we produce (the paper) not in what we counsel.  We are still, even the most progressive among us, highly resistant to change.  Perhaps most dangerously, we risk making ourselves less relevant.  No, I’m not predicting the imminent demise of lawyers (I think Richard Susskind may have that one covered).  I do believe, however, that if lawyers don’t keep up with the pace of change in the business world, then CEOs, CFOs and others in the C-suite will look for alternative ways to get the guidance and advice they need and will relegate lawyers to the technician category.  Of course this won’t happen across the board, but it could significantly restructure what we consider legal services and who provides them.

Overall, it has been a great experience to work with the Seyfarth team, to push ourselves internally to try new things, and to push our thinking on the structure of in-house counsel / outside counsel relationships in the modern business world.  I look forward to reading now about how others are pulling us away from the billable hour and into creative value fee relationships.

The firm view

From Lisa:

We too have enjoyed and believe we have benefited tremendously from this experience working with Ken and his team.  First and foremost, we go back to one of Ken’s prior points, about the establishment of the relationship — including a significant amount of trust among Ken and us — before the establishment (or even the discussion) of the compensation arrangement.

We spent a lot of time getting to know Ken and his team over about an eight-month period, starting with our first email exchanges, through our first webinar meeting, more email exchanges and telephone calls, an all-day in-person meeting at Wolverine’s headquarters, telephone conversations about various issues along the way, a few small legal "test" projects, and various interviews among Ken’s team and Seyfarth team members.  Ken also arranged for various meetings between limited groups of team members, in order to encourage relationship building, connection and trust — our paralegals met the paralegals at Wolverine, our associates had separate meetings with Ken’s team, etc., all without participation or oversight by our partners.  Ken is a strong believer in empowering team members at every level of the organization (this is classic Lean) and encouraged us to let go of our natural desire, at these early points in the relationship building, to micromanage every interaction with Wolverine.

As a result, by the time Wolverine notified us that it had decided to work with Seyfarth in connection with trademark matters, every member of our team was already very familiar with every member of Ken’s team, and we all on this side felt a growing allegiance to Wolverine and its legal department.

Finally, by the time we began discussing the fee arrangement, we knew Ken thoroughly and he knew us, and each side had a comfort level that the other side was going into the fee discussions with the best interests of both sides at heart.  This allowed for a very candid and comfortable sharing of information about historical trademark costs, projected costs, projected efforts needed to manage the trademark portfolio, the definition of the scope of services to be included, and all of the other details that are critical to reaching a fair fee arrangement, but are often sticky or challenging to discuss openly in fee discussions.  It is our strong view that, had Ken not established the trusting relationship with us on the front end, it would have been much more difficult to have open dialogue that finally led us to what we think is a fair, metrics-oriented, compensation arrangement. Having participated in numerous "objective," formalized RFP processes in the past, which seem to be the rage these days, we know from experience how difficult it can be to begin with the discussion of compensation absent the relationship.  Accordingly, we come away from this process with great respect for the importance of relationship and trust in the process, and encourage everyone who is interested in establishing value relationships to be mindful of this key consideration.

Would we do this again?  By all means.  This has definitely been one of the more rewarding processes to undertake for us as professionals.  In addition to the development of a valuable personal relationship with the Wolverine team, we have participated in the building of the future, both for our firm specifically and in connection with the wider and broader task of demonstrating that we as law firms are not irrevocably and forever anchored to traditional billable hour relationships with our clients.  We have a long way to go in exploring the new world, as Ken points out in his post, but with this process we’ve taken some great steps forward.

What else?  We want to take the opportunity to thank Ken and Wolverine for joining us on this journey and to thank the ACC for providing us with this forum to describe our process.  We sincerely hope that this exercise has been helpful to our peers and colleagues both in-house and in outside firms and will motivate all of us to get to work and get creative in re-aligning the way corporate America and outside law firms work together.