In-house ACCess : In-house ACCess: Association of Corporate Counsel : ACC : The In-house Counsel Bar Association

The ACC Value Index (AVI) is a tool meant to inform in-house counsel decisions as part of a larger process of selecting and retaining a law firm. The AVI is a searchable database for in-house counsel to share subjective evaluations of the firms they engage.  It is key to note that this is a process that already takes place naturally among in-house counsel who often seek their colleagues opinions on firms that offer good value.  The Value Index builds upon this tradition by encouraging in-house counsel to contact or “ping” other evaluators to discuss the firm’s work in greater detail.

As we begin the process of rolling out law firm access to certain information in the Value Index this week, I want to take a moment to outline the who/what/when/where/how and why underlying this process.

Who – Access is being offered to law firms evaluated in the ACC Value Index since its October 2009 launch.

What – Each evaluated law firm will be able to access aggregated results pertaining to that firm.  This includes average scores for that firm by criterion, office location and matter type.  The firms will also receive overall Value Index averages for benchmarking purposes. Here’s an example of what a law firm would see:

When -- Starting today, February 3, 2010, through the foreseeable future.

Where – Access to the information will be available to law firms through an online portal on ACC’s Web site using the protocols below. 

How – Here are the key steps for law firms to gain access to the AVI information:
1.    Firm management decides who in the firm will manage the AVI access to the firm’s results.
2.    The firm representative who will serve as the “administrator” on behalf of the firm goes to the AVI Law Firm Access Portal at: http://www.acc.com/valuechallenge/valueindex/lawfirms to obtain administrator access.
3.    The administrator can then view the firm’s AVI results anytime and share them within the firm.

Why – As I wrote on this blog last October during the ACC Value Index launch, coinciding with the overarching goal of the ACC Value Challenge – information gleaned from the AVI will help to foster a greater dialog between clients and their outside counsel.

The AVI is only one part of the ACC Value Challenge, which encompasses a larger effort to reconnect value to the cost of legal services.  Other aspects include a) “Meet. Talk. Act.” which encourages clients and law firms to engage in discussions about value and their relationship; b) a law firm economic model; and c) specific resources with examples of value practices and ideas on ‘how to’ implement practices focused on value.  Resources, success stories and updates are continually added to the ACC Value Challenge community pages and we encourage law firms to get involved and help to provide additional information/resources.
 

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ACC filed an amicus with the US Supreme Court on January 27, 2010 in the Textron case. This is the third brief we've filed in this matter as it's cut a tortuous path through the appeals and circuit courts; the press release we issued recounts it all for those inclined to read it.

The case is about whether the attorney work product doctrine extends to the protections of an in-house lawyers' internal analysis and notes regarding a proposed tax position the company was considering and that the IRS eventually challenged. This case, and I've done many of them for ACC, makes me so hoppin' mad that I decided I needed to share my pain with all of you. (You're welcome.)

Let's remember that attorney-client privilege protects the client's right to confidentiality of  communications with their lawyers. It protects the conversation, the request for advice, and the delivery of the advice by the lawyer. Work product doctrine is an offshoot of privilege, but not the same thing: it protects the attorney's mental impressions and analysis, and is limited to protecting that which the attorney works on that was prepared in anticipation of litigation.

Way back in the dark ages when the US Supreme Court defined the concept of work product protections in Hickman, the concept of "in anticipation of litigation" was perhaps narrower. Most companies didn't have in-house legal staffs and not much work was done in the field of preventive law or compliance practice by firms or departments, in part because there wasn't so much regulation to comply with, and in part because companies didn't need to call a lawyer until someone sued them. But courts from the Supremes on down have broadened the parameters of work product protection as the complexity of corporate legal practice has expanded: recognizing the important role that lawyers play in helping their clients navigate regulation and a litigious world, and knowing that companies should make decisions on a daily basis with litigation and risk avoidance in mind, courts in every circuit have issued opinions recognizing that lawyers not only do, but should be working 24/7 in anticipation of litigation, even if the case has not yet or hopefully may never be filed.

In today's world, pretty much everything an in-house counsel does is in preparation for real or potential litigation.

So for the First Circuit opinion to suggest that an in-house lawyer analyzing the risk and best practices his client must consider when adopting this or that tax position isn't acting in anticipation of litigation but rather is just some kind of business-not-legal number-cruncher is just silly. It ignores reality. And the public policy implications for lawyers and clients (as well as the stakeholders who rely on the company's legal health) are dire. Read the brief if you don't understand why. And for those of you who already get it: time to get mad.

Can anyone out there honestly believe that this case would have been so decided or would have made it to the US Supreme Court as an ongoing debate if the lawyer providing that analysis was an outside counsel and not the in-house lawyer? Do you think that the IRS would have subpoenaed the XYZ AmLaw 50 New York firm partner to produce his files containing his legal and risk analysis of the tax position being considered by his client at Textron? Of course not. The IRS issued document requests for the company, and the in-house lawyers files were examined as part of that process: that which could be produced was, and that which was lawyer-client privileged or attorney work product protected was not. The court's decision to discount any protection for the in-house lawyer's work product shows that they are laboring under the misguided belief that in-house lawyers somehow aren't really lawyers, but some kind of non-objective, non-professional, quasi-business functionaries who don't quite qualify for the same status and protection we would afford to outside counsel at firms.

While I recognize that many in-house counsel are extremely business savvy and have provided increased value to their clients by approaching their legal practice with an institutional and deep knowledge of the company and business which is their client, and that indeed, some in-house lawyers carry responsibilities in their job that aren't legal, that’s not what’s relevant here when discussing these attorneys' legal work papers and analysis. The fact that they deeply understand their client doesn't mean that in-house counsel are not lawyers or that their work product isn't just as clearly worth protecting as the work product of lawyers in outside firms. Most outside counsel I know spend a lot of time and energy trying to assure everyone who will listen that they are business savvy and able to help their clients fulfill business needs as an "institutional" member of the client company team. This is simply a surreal conversation to be having if you're an in-house lawyer in the 21st century.

Many of you have (been unfortunate enough to have) heard me deliver my "privilege is under attack" speech or have read my previous diatribes; maybe you've followed and recognized ACC's highly focused and very successful efforts at pushing back abuses by prosecutors and regulators of corporate rights to assert the privilege when under investigation; perhaps you recently joined us in demanding protections for the risk analysis that lawyers provide to their finance folks in setting litigation reserves, which is under attack by the FASB folks looking to revise FAS 5: all of those efforts, crucial as they are, pale next to the implications of this case. This is an attack on the most fundamental premises of a lawyer's value and work product: the ability of a lawyer to analyze the facts and the law to develop the guidance that clients need to do the right thing. And if this doesn't get fixed, your work product is about to become Exhibit A in your adversary's brief. Get on board, corporate legal community, and get involved! Your rights as a lawyer, your client's rights to confidential counsel, and the very underpinnings of value in your client relationships are at stake.

Contact me at hackett@acc.com

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As we enter 2010, many law departments and law firms are still reeling from the tumultuous paradigm shifts of 2009, and working to bring order to the budget and staffing chaos of the last several months.  If 2009 was the year we all scrambled just to get it done for less and with fewer hands on deck, 2010 will either be the year that we all go back to doing things the way we did before, or we decide we’re going to implement practical changes in the way we work together that that will improve the management of our relationships and the predictability of our costs going forward.  

While it’s easy to sink back into familiar habits, I don’t know anyone on the client side who is eager to tell their management they’d like to re-institute higher fees typical of the “Golden Age of Law Firm Profitability,” forego new opportunities that were successful in lowering or better managing costs for a number of departments and firms, and return to the unpredictable budget and soaring costs we all abhorred.  As you gird yourself for the work of re-inventing and then cementing new ways to work going forward, here are 5 ideas for relationship managers in both firms and departments to consider.

1. Assess the State of Your Union and Meet.Talk.Act:  Outside the heat of any particular retention or matter and with your best firms (you shouldn’t try this with everyone before you try it with 3 or so strong relationships and get better at the process):  sit down and Meet.Talk.Act.   Talk openly and without reproach about how your relationship can improve in terms of budgeting practices; metrics, goals or targets you’d like to set and targets to process efficiencies you’d like to examine; knowledge management systems you might adopt; performance feedback mechanisms you could adopt to drive continuous improvement and team engagement; new ideas for staffing and fee structures; in short, better ways to institutionalize the relationship to create sustainable profitability for the firm and seamless value-based service at a predictable cost for the client.   

While there will likely be unique ideas or concerns to address with separate clients, matters or firms, the point is to begin a process that’s not just based on evaluating the relationship one experience at a time, but looks instead at universal “truths” affecting the entire relationship and every matter.  And I strongly encourage you to make lists of things you’ll attack immediately and things to work on over time: it’s often too hard to do it all at once, so adopt a realistic and ongoing process to make sure you get it right and folks see how they can succeed; there’ little merit in doing it stupider faster.  

Just choose some things to do now and get started before the window of acceptable experimentation closes.

2. For both new and existing matter types, do the hard work up front:  Do your “relationship” work in defining scope, expectations, staffing and fee structures and such before the legal work begins:  don’t begin work without an mutual understanding of what is and what is not acceptable and “valued” in a matter.   It’s too easy for busy people to look at the pile-up on their desk and simply “throw it over the wall” to whomever is going to work on it, without making sure that everyone agrees to and understands the client’s fee expectations and ultimate goals and expectations.  (And since the client itself usually doesn’t know what its specific goals/expectations should be for any matter, that’s something you’re going to need to help define, too.)  

Scoping work early on is necessary to avoid the problem of spending large amounts of unproductive and even relationship-damaging time managing the bill after the work begins.  While you can always amend your budgets or work plans as the project unfolds, be as specific and detailed as possible at the start, and then save your time and money by unleashing the team members to do their work within the defined parameters – it’s now their responsibility to do so or to propose needed amendments.  

For folks at firms, try to define what is not covered by the retention’s terms and safety valves for unanticipated (but not unimaginable) exigencies since the goal of up-front scoping is to get in-house counsel out of micromanaging and you best positioned to succeed in delivering what you’ve promised.  

Both firms and departments may wish to invest in creating standardized decision trees, process maps, or project management plans for different kinds of work that their clients repeatedly experience, and then reap the benefits of simply adapting or customizing these “form” documents to the specific needs of every new matter that lands in front of you.   You will now clearly see which work is operational and which is the “norm” that falls within understood processes and parameters (that’s not to say all such cases are not important, just not unusual), and you will be able to focus on cases that truly are different or present new strategic challenges.  

Final note:  Make sure you talk about more than fees and timing when setting up your scopes: discuss staffing options, what kind of expertise is needed, what knowledge can be recycled from other work, what new processes might improve the workflow, where non-lawyers can help, etc., since the savings from good advance planning in those areas may be greater than that realized in any other cost-related discussion.

3. Change management is all about the people, not just the process: The most important role you play as a relationship manager is understanding that you can manage processes, but you don’t “manage” people:  you lead them.  EVERY member of the team – inside the department and inside the firm – must understand what the relationship managers agreed the work is worth, how it should be done, and how it is that the value of the product the team produces will be judged since you can’t lead them and they can’t follow you unless the direction is shared.  Change is the hardest part of the process as we look to move toward more efficient or alternative models from those we know.  

Remember: people don’t like to change (especially lawyers) … it’s hard work to change (and easier to do the same things, even failed things, over and over) … there’s always risk in new or untried methods … it may be unclear if those who change will be rewarded, and there’s usually evidence that those who simply keep their head down are “safer.”  So make the path clear and unambiguous; communicate about what you’re doing with everyone who touches the work, and make change requirements applicable to everyone; enforce the consequences of non-compliance evenly (or apply the rewards of success visibly).  To succeed in changing practices, an agreement between two relationship managers to go a new route will not suffice; it must be the first step in a conversation that each team leader takes to every member of their staff and then leads them to succeed in implementing.

4. Define goals and set measurable targets and timelines:  Related to this, set targets and goals for matters and people involved in the process (both in the firm and department). Then, measure performance and tie compensation/fees and evaluation to performance-to-goals.  If goals and targets are institutionalized, if they include both long-term and short-term measurements and steps, and if they are discussed in advance and frequently reviewed, then the evaluation of performance-to-goals is not as personal or mysterious (but rather, is simply institutional), it’s more approachable and manageable, and will not be as easily excused by a never-ending list of special circumstances to explain away this or that failure or deviation.  

No one likes to do performance evaluations – but making them the norm for everyone and a part of the process of working on every matter actually makes them easier and better (as well as more “impactful”).  And you shouldn’t be the only one responsible for them; spread the accountability throughout your ranks.  Finally, both inside and outside counsel should be subject to the same evaluation processes, even if their goals and targets are different.  The ACC Value Index is also a tool you can use to see how other clients evaluate the overall performance of their outside firms to compare how your firms stack up or look for firms that have excelled where your may not.

5. Support the development of (and experimentation with) new skill sets and flexible toolkits:  Every firm and department needs a flexible tool kit that allows them to consider a variety of options for how any particular matter or group of matters is accomplished.  Some tools may focus on speed of delivery, some on process and improved efficiency, some on cost effectiveness (both in terms of predictability or lowering costs).  There should be no presumed “default” mode for doing work unless that is a decision for a kind of work that the department has made and wishes to implement going forward.  Once a decision is made that allows the firm and department to select the best method by which to handle a matter (fee structure, alternative staffing, etc.) that creates an alignment and balancing of interests, then clients need to allow firms to profit if they do well (and not ask them to return a windfall when they’ve assumed a risk and “won”), and firms need to get comfortable with the risk that sometimes they’ll swallow the occasional matter that does not return their costs in pursuit of long-term profitability from the relationship.  

You will not find value in any relationship founded on a one-off mentality, or by seeking to own one-sided leverage in every matter.  If your philosophy is “heads I win, tails you lose,” you are not a partner in a relationship, and you will not enjoy the benefits of a long-term commitment.  Indeed, think of your relationship as a marriage, wherein occasional losses or failures are offset by the benefits of an institutionalized, trusted and alignment with people you like to work with who share not only your daily work, but your goals.  In such a marriage, the firm can plan to be profitable, train its younger lawyers and derive a satisfying portfolio of work; the client has the confidence of trusted counsel that returns predictable, cost-effective results and doesn’t need to be micromanaged.  Value relationships require clients to incent and reward firms to profit by making it their business imperative to maximize efficiency, focus on results through great staffing decisions, institute transparent and meaningful knowledge management techniques, and improve internal process management.  This is the essence of client/firm alignment.
 
Bonus Fundamental:  Transparency and accountability are requirements for the personal integrity of relationship managers.   The in-house manager must learn to tell his trusted relationship partner what the matter is worth to the company without games, and the firm relationship manager must be willing to stake her reputation not just on the advice she gives and the results she delivers, but the accountability of the firm to do the best it can for the most reasonable price.  Firms that get really good at process management and staffing decisions (it’s presumed that they’ll practice great law!) will have totally transparent costs that they will happily and openly shared with trusted clients; clients must not “punish” them for that transparency (especially since there are still so many firms that don’t make the commitment to improved efficiency are nonetheless rewarded with less scrutinized business practices and heftier profit margins).   

There are still some lawyers in some firms who do not yet realize that when the bubble burst in 2009, it burst in part because law firm profitability expectations in many big firms were far too often unsustainable, if not ridiculous.  Likewise, corporate counsel must respect that fact that the firm needs the incentive of profiting in return for its improved efficiency and value.  The “new” aligned relationship is not a zero sum game -- all boats will rise when the focus is on delivering great value and results for the end-client.

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What do retired in-house counsel do?  Well one thing is that we read all those news notes on the bottom right-hand corner of the screen on the Bloomberg Channel. One that caught my eye this morning concerned the 2010 forecast for law firms.

ACC Value Challenge or not, it appears that law firms are going to be seeing a more gloomy economic picture this coming year according to the head of Citibank’s Law Firm Group in New York. The title of the article states that law firm revenues in 2010 can fall as much as 10% over last year and the article goes on to state that after laying off junior lawyers and staff last year firms will be looking to reduce even equity partners.

What is even more surprising is that more lawyers were laid off in the third quarter than the second quarter.

So what does this mean for in-house counsel?

First, your bargaining position on price has dramatically improved and is likely to do so through 2010, perhaps beyond.

Second, the big firms with high fixed costs—you know downtown paneled offices, lots of art on the walls and big paper book libraries—should be most willing to accept work at big discounts. Disregard survey claims about price increases—watch the layoffs.  My former employer had high fixed costs and I learned there in bad times you were glad to take unprofitable business because any contribution to fixed costs was welcome.

Third, and ironically, this is not going to be all good news for in-house counsel, since stressed firms will be offering companies a less costly and variable cost alternative to the fixed costs of employed counsel. Apparently, in-house counsel are bringing work inside—that is great, during my career I was “Mr. Do It All In House,” but remember you are still a fixed cost so you are going to have to do it a lot better, not just cheaper. This is not perhaps what we had in mind when we coined the term value billing, but it is today’s reality.

Fourth, all those unemployed private law firm lawyers will be out there looking for work—and you know what oversupply does to salaries. Some of those unemployed law firm lawyers may start their own practice and could be good alternatives to firms who try to raise rates—remember those laid off lawyers were likely the ones who actually did your work.

Looks like those green shoots and rosy (less bad) employment numbers of a few days ago just do not apply to the legal profession.

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I understand that most firms employ the business model of selling rates and hours, and thus the only way to make more money for them is to raise rates or increase hours.  Since many are still struggling to secure the hours (even though the billable "expectations" have not decreased), they'll seek to raise rates for the lawyers who remain working.  Are they really that tone deaf?  Do they really believe that the path to profitability is made smoother by increasing rates in 2010?  Don’t they see the imperative (for their own survival and for longer-term-profit sustainability), as well as the opportunity, to start moving toward another business model of valuing their legal services based on the worth of what they sell and the efficiency with which they provide services?

While my information is anecdotal, everything I have heard from firms I'm talking with as a result of the ACC Value Challenge and from clients who have been whacking back their budgets, is that a firm would have to be foolish to announce any kind of increase right now. Do they believe that with some markets rebounding that they'll be able to return to the "Golden Age of Profitability" that all the consultants use to describe the last 10 years?

Sure, many firms will engage in a "paper" exercise of increasing rates so that when they were asked to provide a discount they will be at least somewhat ahead of the game, but surely, firms don’t believe there will be a rise in the amount of money that clients will pay for work overall?

Here's the scenario: the CLO goes down the hall to the CFO's budget meeting for 2010.  The CFO says to all the leaders present: "It's been a hard year for us, and you've all done a great job in driving down costs to keep this company afloat. I'd like to especially recognize the law department, which after years of uncontrollable cost-overruns and a 75% increase in legal services costs to the company over the last 10 years (a stat he has retrieved from the Conference Board), succeeded in bringing home a 25% decrease in legal costs in 2009.  We knew you could do it!  Congratulations and welcome to the team!  You've done so well, that this year, we're only looking for another 10% reduction in your budget while everyone else will have to cut 15%!"

What will the CLO say?  Is his/her answer is going to be: "Well, actually folks, our firms were so great about discounting their fees last year, that we want to repay them for their investment in us during our hardest moment, and so we're looking for our budget to be back up to what it was in 2008, plus a 5% increase for the firms for 2010!  Those poor guys saw a decrease in their profit per partner last year from 1.8 million per partner to about 1.6 mil after they fired 1/3 of their support staff, de-equitized our best servicing partners, and deferred the starting date for their incoming class of 38 new associates."

If you're the CLO who responds like that, it's you who’ll be looking for a new way to fill your hours this coming year.

Any firm watching attuned to the economic climate and to their clients this last year should have engaged in some kind of cost-cutting or efficiency exercise that did more than cut dead weight or marginalize those who actually do the work, but that fundamentally addressed inefficiencies in the firm's business model.  And that, hard as it will be to take, begins the process of re-setting the compensation expectations of some of their highest paid lawyers.  

Many of the larger firms are simply going to have to tell people at the top that their take-home expectations are simply going to have to change IF THE FIRM IS TO REMAIN PROFITABLE.  Lawyer comp in many firms is not realistic, not supportable, and has to go down because the bubble has burst.  So it's time for them to ante up to the discussion of what it's all about - will they choose the firm's sustainable path to shared profitability, or an attribution system that often puts individual partner comp ahead of the firm's best interests.  Either all boats will rise, or all may sink.

The idea that firms should look to maintain their stature as a top player by raising their prices is based on old thinking.  Value firms will proudly strut their increasing portfolio and profitability by pointing to an increase in client satisfaction with the value of their services, or an improvement in their efficiency, or a reduction of their costs because of an innovative new way they're working in this environment; raising rates to "assure" profitability is a failing strategy.  As this becomes increasingly apparent in the coming months, I hope that more firms will join the ranks of those who've already begun to think about new ways to value their services that don't rely on rate x hours at all.

Get with the program, law firms:  Just because many of you sell an overpriced inventory of hours doesn't mean that that's what clients are going to purchase in the new paradigm, and raising rates is going to make your pitch to sell all those hours even more unattractive.  Furthermore, it will indicate clearly your lack of alignment with the clients you serve.  It will also hand your current clients the permission slip to visit other firms that will provide the services you've always provided, but for less, or better, or for a more predictable cost.

Perhaps the silver lining for firms that haven't figured this out in the short term is that clients are increasingly uninterested in rates at all; they are increasingly focused on the all-in cost of the work. Rates are becoming irrelevant to many clients who say: "I really don't care what your rates are - that's not my problem; this is what I'm willing to pay for the work, since this is what it's worth, and you figure it out from there."

Again, it is time to get off the merry-go-round of "firms-raise-rates-so-clients-will-demand-discounts." This is no way to sustainable profitability or support strong, institutionalized, trusted relationships over the long-term.  

Hopefully, 2010 will be the year NOT of the rate increase, but instead, one where there is significant movement of firms toward other options for valuing the services they provide.  This must happen while there is still an opportunity to experiment with new models and adjust to the new order without as great a penalty - indeed, with a distinct upside for early adapters.  The window of this opportunity will begin to close soon as some folks get it and others don't: those who haven't been moving to accommodate new client expectations will find themselves keeping company with their newly-hiked rate structures on the sidelines.  Seated right next to -- as Mike Dillon so aptly put it – the Mastodons.

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We are pleased with the interest in the ACC Value Index (AVI) since its release last month at the ACC Annual Meeting in Boston. The attention from the media and law firms at this early stage of development reflects the potential value of the AVI to our members. Recent Blog posts and articles, especially those that show “purported ACC law firm rankings,” require clarification:

• The ACC Value Index is in the early data-gathering stage and it will take time to develop a robust database.
•  It is premature and inappropriate at this time to cite "rankings" of law firms given the limited number of evaluations submitted thus far.
• The AVI is a service for ACC members that will enable them to share information and communicate with each other about the selection and retention of law firms.
• ACC will share with each law firm the evaluations it receives about that firm as soon as we finalize the appropriate formats and procedures.

We welcome the continued input, feedback and engagement of the legal community in the ACC Value Challenge.

ACC President Fred Krebs on the ACC Value Index

Friday, November 13, 2009

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Leadership, like beauty, is in the eye of the beholder.  Sure there are plenty of definitions and many a book has been written and speech given on the subject, but when you ask people, what leadership means to them, you’ll get an assortment of responses.  A recent quick poll of lawyers and others in the legal industry via email and Twitter resulted in the following (140 character) thoughts:

Leadership is …

“Providing direction, setting priorities and creating an atmosphere where people want to follow,” Fred Krebs, President of the Association of Corporate Counsel

“Anticipating, listening, deciding, communicating,” Patricia R. Hatler, ACC Board Chair and Executive Vice President, Chief Legal and Governance Officer at Nationwide Mutual Insurance Company

“A vision of the future, persuading key players to share your view, making sure every decision furthers that view,” Patrick Lamb, partner with Chicago litigation firm Valorem Law Group.

“Doing the right thing even when it's unpopular or unconventional. Especially when.”  Jay Shepherd, attorney with the Shepherd Law Group

"Vision, creativity and perseverance. Trend-setting is NOT the same.” Glenn Manishin, partner with the international law firm of Duane Morris LLP

“Assessing priorities to set a vision, then inspiring others to achieve that shared vision through their own creativity and skills,” Timothy Corcoran, Senior Consultant with Altman Weil.

While similar traits are repeated, it’s often the actions that define a true leader and not the words. Like other subjective categories that lack clearly defined parameters, when speaking of great leadership we can cull from a famous phrase in Supreme Court history and say “I’ll know it when I see it.”

The pressure to “lead” has never been so strong and as everyone tries to keep up with the changes taking place, strong leadership will be the catalyst for long-term growth, stability and success.  Lawyers (both in-house and at law firms), too, are faced with these same pressures - to “do more with less” and to make their practices more efficient while still growing the bottom line.  Overcoming the obstacles and being able to lead so that, as Krebs pointed out, “people want to follow,” will be key to their survival.

But what’s a lawyer to do to stand out from the pack? How will the drive toward being a great leader engender buy-in and lead to success?  Have you assessed your own leadership skills lately?  Are you prepared for the challenges ahead? 

Several sessions during ACC’s Annual Meeting in Boston addressed the issue of leadership, and what struck me was the interesting parallel between effective leadership today versus examples from the past.  Ivan Fong, General Counsel for the U.S. Department of Homeland Security, shared his thoughts in relation to modern-day leadership, while Pulitzer Prize winning author, Doris Kearns Goodwin, offered an historical view of leadership as illuminated in her latest book, “Team of Rivals: The Political Genius of Abraham Lincoln.” The common thread with both was their emphasis on the importance of personal relationships – of caring and listening and a commitment to character - that set true leaders apart. 

At the heart of “Team of Rivals,” was Lincoln’s ability to “bring people together” and his success, as Goodwin explained, was “the result of a character that had been forged by experiences that raised him above his more privileged and accomplished rivals.”  Those around him would be hard-pressed to be mad at Lincoln, because inevitably, his power, his charm and his intelligence would bring people around, to be an ally. In some instances, this means taking charge, by letting go.

If you are, or have been, in a leadership role, then chances are you have had to deal with people who might not agree with your decisions.  Great leaders don’t lead by trying to make everyone happy. Instead, they bring them into the process.  As Harvard’s president, Drew Gilpin Faust, aptly pointed out in a recent New York Times interview, “if people feel they were listened to, that their views were taken into account, that they had a chance to show you the world from their point of view, they’re going to be much more likely to go along with a decision.” 

The ability to engender trust, Fong explained, was at the core of being not only a good lawyer, but also an effective leader.  Specifically, “The hallmarks of being a good lawyer – the foundations on which everything is based – are the quality of the legal analysis, integrity, responsiveness, sound judgment and the ability to be a trusted advisor, all of which translate well into the public sector.”

In discussing “leadership imperatives,” Fong emphasized the importance of “beginning with the end in mind” and articulating a clear vision and compelling purpose for the organization.  A team, to be effective, needs to have a common understanding of “Why do we exist?  Where are we going?  And how are we going to get there?”  The shared mission, vision, and strategy, Fong explained, helps to inspire trust and engagement.  Regaling the possibly apocryphal story of a General’s encounter with a janitor in the halls of NASA during the 60’s, Fong explained that when the General asked the janitor what he was doing, the janitor replied, “I’m helping to send a man to the moon.”  A leader’s ability to communicate a compelling purpose – a shared vision – can inspire the entire organization to be right there with you.

Fong, like Lincoln, embraced the notion of “meeting people where they are,” of putting himself in the place of others and listening to those around him. By meeting regularly with his staff, learning about the processes already in place and gleaning insight from his direct reports, he has been able to set an agenda and establish clearly defined goals. “It’s not about working harder, longer hours,” Fong explained, “it’s also about stepping back and looking at how we do what we do and how can we stop doing things that no longer provide value.”

Using the example of a marathon, where the early runners cross the finish line before others even begin, Fong illustrated the importance of going back and putting yourself in the position of someone at the beginning of the race. Communication, another leadership imperative, can’t be emphasized enough in this regard. It’s vital for successful execution; and every organization needs it.

Goodwin, in describing Lincoln, believed one of the best indicators of a good leader was, “being able to motivate during frustration,” and in harmony with this sentiment, Fong noted, "You can tell the health of an organization by the quality of its arguments.”  These traits - overcoming obstacles and being able to lead in the midst of conflict - are vital for today’s leaders. The ability to ride out the economic waves of uncertainty, while maintaining control and respect, will propel the great leaders ahead.

Challenges, as Fong described, are where “what you do know and what you don’t know intersect.”  As a leader, you are tasked with uncovering the known and unknown and then tapping into the wisdom of those around you to help get the job done. Fong recalled his “A-Ha” moment when he realized that, while he couldn’t personally manage and lead all 1700 lawyers in his department, he could lead those lawyers within the top one or two layers, and influence their own leadership abilities.

Whether it’s gleaning insight from Fong or relishing Goodwin’s historical retrospective on Lincoln, much can be gleaned from the great leaders of today and those of the past.  Each of you will have your own style and approach, but ultimately, it will be your ability to connect with those around you - to engender trust and respect - that will be key to your own personal success as a leader. 

As you evaluate your own leadership traits, ask yourself if you are applying successful principles from the past for effective leadership today.  Specifically:

1. Are you fostering an environment of teamwork?

2. Are you addressing those that disagree with you in a way that leads to mutual understanding and buy-in?

3. Are you communicating a plan (your vision) effectively?

4. Are you evaluating processes and identifying opportunities for better alignment and efficiency?

5. Are you putting others’ interests ahead of your own?

6. Are you praising others for their contributions?

7. Are you treating everyone – at all levels – with the same respect?

8. Are you paying attention to suggestions & facilitating implementation?

9. Are you demonstrating trust, honesty and integrity?

10. Are you able to take charge by letting go?

Remember, leadership is in the eye of the beholder, and it will be the feedback and opinions of those around you that really matter. As someone that has had the privilege of getting to know Fong on a personal level, I can attest to his uncanny ability to engender trust and buy-in from those around him. Fong’s remarkable compassion, inherent interest and ability to lead in a collaborative environment are great qualities we can all learn from. And, as I have observed from my own interaction with Fong, when I encountered this great leader, “I knew it when I saw it.”

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Susan E. Jacobsen, President of LUV2XLPR, Inc., has over 15 years of experience assisting in-house counsel, law firm attorneys and corporate executives with strategic communications initiatives.

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The recent launch of the ACC Value Index at ACC's 2009 Annual Meeting generated significant interest and commentary, including both praise and criticism. 

We welcome these comments because they not only further the attention and discussion about value in the delivery of legal services (a primary goal of the ACC Value Challenge), but they will also help us to improve the ACC Value Index (AVI).

            A few additional thoughts on the AVI:

1.           We created the AVI as a member service, so by definition, it is available only to ACC members.  Stated simply, it provides two specific benefits to our members:  a) the compilation of individual ACC member views on the value received from specific law firms; and b) the ability to find other members who have used a firm in order to communicate with them and engage in a dialog about their experience.  The AVI is a specific tool meant to inform decisions as part of a larger process of selecting and retaining a law firm.

2.           Members may post an evaluation anonymously or with identification at their option.  We believe the anonymity option to be important - particularly at the outset of this initiative.  Over time, as the AVI gains acceptance among our members, I anticipate that the percentage of anonymous postings may decline.    Evaluations can be posted with attribution - or anonymously -  as we seek useful and candid information to build acceptance of the evaluation concept generally.

3.           We will make the evaluation summaries available to the law firms. When and how best to do that remains under consideration by our Advisory Committee.  A corollary benefit of the AVI will be the ability to recognize those law firms that provide value in the collective judgment of our members.  Coinciding with the overarching goal of the ACC Value Index – information gleaned from the AVI will help to foster a greater dialog between clients and their outside counsel.

4.           The AVI is a work in progress and we are pleased with the interest and input it has generated to date.  Nevertheless, it will take time to populate the database with sufficient evaluations to reach a meaningful threshold.  The AVI database has been populated with over 1,500 evaluations, reviewing over 400 firms, and we will continue with our member outreach for additional evaluations.

5.           The AVI is only one part of the ACC Value Challenge, which encompasses a larger effort to reconnect value to the cost of legal services.  Other aspects include a) “Meet. Talk. Act.” which encourages clients and law firms to engage in discussions about value and their relationship; b) a law firm economic model; and c) specific resources with examples of value practices and ideas on ‘how to’ implement practices focused on value.  Resources, success stories and updates are continually added to the ACC Value Challenge community pages and we encourage law firms to get involved and help to provide additional information/resources.

6.           One important observation on the evaluations received to date: law firms generally do good legal work, but all too often, do not have costs and matter management under control. Effective cost and project management should be a key objective -- for both clients and firms to effectively work together. By managing legal matters in a business-focused, client-centric way, as opposed to basing solely on “hours worked,” the agreed upon business objectives will drive greater efficiency, and ultimately, value.   Law firms must learn to reduce their costs while improving quality.  Our members’ companies operate under this imperative, and their outside law firms should, as well.

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 Each year, as ACC’s Annual Meeting concludes, I’m always struck by the interesting and substantive new information I discover.  Inevitably, people say things - or I observe or participate in events - that leave me with much to think about.  This was my 18^th annual meeting and it was no different. Throughout our time in Boston, I continually encountered such instances among our 2400⁺ attendees that, I believe, contributed to the success of this gathering of in-house counsel from around the world.  

Leadership, education, collaboration, support, relationships and value, all contributed to a successful conference, which I tried to capture in these Random Observations…

·        As she shared her lifetime of studying and writing about great leaders, Pulitzer Prize winning author, Doris Kearns Goodwin, presented a captivating tale of personal observations and what we could learn from the great leaders she had studied. I, like everyone in the room, hung onto her every word and was drawn into her uncanny ability to “tell a story” and describe the research that went into her book, Team of Rivals: The Political Genius of Abraham Lincoln.  So much of what she discussed about the politicians and historical figures translated seamlessly to the legal community.

“Lincoln’s success was the result of a character that had been forged by life experiences that raised him above his more privileged and accomplished rivals.”

“The best indicators of a good leader – being able to motivate during frustration.”

~ Doris Kearns Goodwin, Pulitzer Prize Author

 ACC’s 2009 Annual Meeting Keynote Speaker

I say without hesitation—read this or any other book she has written!

·        Ivan Fong, former ACC Board Chair, who recently became General Counsel for the Department of Homeland Security, provided a captivating account of his transition to the public sector, with particular emphasis on the qualities of effective leadership.  His candor and honesty were both insightful, as well as refreshing to hear, in light of his high-profile role with the third largest government agency.

“The hallmarks of being a good lawyer – the foundations on which everything is based – are the quality of the legal analysis, responsiveness, sound judgment and the ability to be a trusted advisor, all of which translate well into the public sector.”

"You can tell the health of an organization by the quality of its arguments.”

~ Ivan Fong, General Counsel of U.S. Department of Homeland Security

Chair’s Choice: A View from the Frontlines

·        Earlier this year, we were saddened to learn of the passing of Robert Banks, Sr., an extraordinary in house counsel for Xerox and the leading founder of ACC. He gave us a great gift and he gave us all an organization that permits us to change and improve our profession and ourselves.  

“For his beliefs and advocacy, we all owe Bob an immense debt of gratitude.”

~ Carl D. Liggio

Founder and 1984 ACC Board Chair

Because of his unyielding support of ACC, it is only fitting that we honor Bob with the ACC Robert Banks Memorial Scholarship Fund, starting in 2010. This scholarship will help support those members who are in transition or need additional support to attend future Annual Meetings.

·       During an engaging discussion of CLOs, opinions were exchanged and suggestions were offered, and I was intrigued by the frankness and insight offered.  Much of the discussion related to the changes occurring among in-house counsel and their relationships with their outside lawyers and the billable hour.  Unlike similar discussions of the past, where everyone just cited problems, here, the CLOs offered tangible solutions and discussed what they have begun to implement to help affect change.

“Meet. Talk. Act. – from the ACC Value Challenge – gives us all a good framework to use … we need to get together with our outside counsel, open the dialog and start doing things.”

~ John Page, Vice President, GC & Corp. Secretary, Golden State Foods Corp.

Chief Legal Officer Roundtable Discussion

“What we’re learning is how to use alternative fee arrangements – when do they work and make sense? More and more there will be categories of matters where alternative and flat fee arrangements are more accepted – it’s the law of supply and demand – some are cyclical and some are secular.”

~ Marc Gary, General Counsel, Fidelity Investments

Chief Legal Officer Roundtable Discussion

·        As I made my way though the Exhibit Hall, and observed the interaction among the over 100 exhibitors and the attendees, I understood what many in-house counsel had told me, that they liked the positive, controlled environment.  Members feel this provides them with a “one-stop shop” to speak with legal industry providers and hear about the new resources and services available to them.  The exhibitors, too, were engaged and I was happy to hear a number of positive comments.

“We were very happy with the event. We met a lot of attendees and got to speak to them about their needs and how we can help.”

 ~ Ian Nelson, Vice President of Business Development & Marketing, PLC

ACC Alliance Partner/2009 Annual Meeting Exhibitor

“Everyone has been really engaged and interested …this has been really helpful for our attorneys, to see the number of in-house counsel in attendance and to interact with our clients that are here.”

~ Felice Wagner, Chief Client Service Officer, Sutherland

First Time 2009 Annual Meeting Exhibitor

·       Efficiency, value and cost containment were repeated throughout the conference, both in sessions and during one-on-one conversations, as everyone shared and gleaned insight on streamlining processes without cutting quality. During the session, “The Slow Motion Riot – Revolutionizing Law Department Cost Management,” law department leaders and law firm management discussed the ACC Value Challenge and how the initiative could help to support their efforts.

“Value Day - August 24 - the day the Wall Street Journal covered alternative billing on its front page."

~ Jeffrey Carr, Vice President, GC & Secretary, FMC Technologies, Inc.

The Slow Motion Riot – Revolutionizing Law Department Cost Management

“Value means more than price for legal services – what more do we want from our relationships – CLE, top of mind advice, brainstorming….”

~ Bruce Goldberg, Managing Counsel, Allstate Insurance Company

The Slow Motion Riot – Revolutionizing Law Department Cost Management

“Profit is variable; what is valued is continuing relationships maintained through continuing relationship reviews.”

~ Stuart Pape, Managing Partner, Patton Boggs LLP

The Slow Motion Riot – Revolutionizing Law Department Cost Management

"Once you decide to go down this path, there's only one question you need to ask law firms, Will you do this? Yes or no. If they say no, they are free to work elsewhere. Draconian? Yes. Effective? Absolutely. But it does take some backbone."

~ Jeffrey Carr, Vice President, GC & Secretary, FMC Technologies, Inc.

The Slow Motion Riot – Revolutionizing Law Department Cost Management

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The second day of a two and a half day conference can sometimes wane in attendance and engagement, but Day 2 at ACC’s 2009 Annual Meeting in Boston didn’t show any sign of diminishing interest. Attendees dispersed throughout the exhibit hall for their morning coffee and croissants, while chatting with the 100⁺ exhibitors and sponsors on hand to offer insight about their services and in-house counsel offerings. The majority of this year’s sponsors were returning exhibitors, but there were a number of new organizations, as well. Washington, DC-based law firm, Sutherland Asbill & Brennan LLP, was one of the new firms exhibiting this year, and Felice Wagner, Chief Client Service Officer, said it was a great experience for the eight attorneys that joined her.

“It was illuminating for some of the attorneys to not only see the number of in-house counsel, but also, the number of Sutherland clients that were here. The high-level of the attendees, along with their genuine interest and engagement, has been great,” Wagner noted.

A long-time supporter of ACC, and recipient of the 2009 President’s Award, Ogilvy Renault, too, believed there was a higher level of engagement with those they spoke to. Senior Partner, Andrew Fleming, commented that this year attendees were not just looking for general information, but had specific questions. “We’ve spoken to attendees that had questions about a particular issue, or to others that weren’t happy with their current outside counsel and interested in learning more about Ogilvy.”

Lise Monette, Ogilvy’s Chief Marketing Officer, was happy with the added feature of being able to qualify leads on the lead tracking device, saying that it will be useful for when they get back to the office and coordinate follow up plans for those they spoke to at the conference.

For others, the Annual Meeting provided a platform for unveiling new products and/or services geared toward the in-house counsel market. Fios Inc., a provider of electronic discovery services, and Ajilon Legal, a worldwide expert in legal staffing and litigation management, unveiled a partnership to help corporations and law firms effectively inject cost control and predictability into the complex e-discovery process.

Brad Gragert, senior vice president of sales at Fios, noted that "By combining the core Fios and Ajilon competencies and expertise, legal teams now have a single resource for processing, review and production services. Additionally, our combined services will provide legal professionals with improved cost predictability and budget management for e-discovery projects."

The ACC/Serengeti Managing Outside Counsel Survey was released during the meeting, and the media and attendee interest kept Rob Thomas, Serengeti’s Vice President of Strategic Development, busy. For the first time in three years, the survey found that controlling spending on outside counsel returned as the top priority for in-house counsel, topping compliance concerns. The need to drive efficiency is leading to more value-based policies to reduce overall legal spend, and clients are looking to negotiate more flexible value-based fee and service models.

“In-house counsel want a single online system where they can manage all of their legal work directly with all of their outside counsel worldwide, not a maze of different law firm extranets or internal systems that don’t connect with outside counsel,” says Thomas, the author of the survey report.

Several of attendees that stopped by the Serengeti booth asked Thomas about the survey, wanting to know more about this year’s findings and interpretation of the data. Thomas, too, acknowledged that substantive inquiries dominated the questions he addressed with this year’s attendees.   

Practical Law Company, a leading provider of practical know-how for business lawyers and newest ACC Alliance partner, introduced its new “PLC Law Department” service, which will officially launch in 2010.  Designed to help in-house law departments maximize value, practice more efficiently and control legal spend, the new service has been catered specifically for legal departments to make sure they have the practical resources needed to get the job done.

“The interest in hearing about the new service has been terrific,” explained Ian Nelson, PLC’s Vice President of Business Development and Marketing. “We’ve had great interaction with everyone that has stopped by to learn more about the service and many have had questions about substantive issues and how to use practical resources to be more efficient.”

At a time when it is critical to be as efficient as possible and deliver even greater value to clients, it’s no surprise that attendees were interested in hearing more about ways to streamline internal processes. The topic was repeated many times throughout conference and during the session, “The Slow Motion Riot – Revolutionizing Law Department Cost Management,” law department leaders and law firm management discussed how the ACC Value Challenge can help to support this high priority goal of efficient, effective and professional practice.

For Jeff Carr, Vice President, General Counsel & Secretary of FMC Technologies, Inc., value means “efficiency, effectiveness and customer satisfaction,” something to which he holds his outside firms accountable to. And, the move away from the billable hour (yes, fodder, for a future – more in-depth Blog post) is forcing law firms to sit up, listen and respond to the wave of change that is forcing alternatives to the traditional business model. While law firms grapple with the increased demands, in-house counsel, too, are wrestling with their own internal processes to ensure greater efficiency and value-based legal services.

The over 100 event sponsors and exhibitors that were on hand  - from international law firms, to top litigation support providers and to leaders in knowledge management – were all afforded with the unique opportunity for one-on-one interaction with in-house counsel to educate them about cost efficient solutions.  As ACC President Fred Krebs noted, “I often hear from in-house counsel that they welcome the opportunity to interact with Annual Meeting sponsors as it provides them with a one-stop way to engage with organizations and learn more about value-based solutions.”

As this year’s Annual Meeting approaches its final sessions, the information gleaned from the sessions, interaction with attendees and conversations with supporters will be taken back to legal departments for implementation. For some, it will provide them with a new way of thinking and acting, for others it will reconfirm processes already in place. And, while the tchotchkes and give-aways were fun and drew interest, it will be the tools, resources, educational information and newly formed relationships that will have long-term value.

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In-house counsel and legal industry professional from around the world came together at Boston’s Hynes Convention Center as ACC kicked off its Annual Meeting with a Welcome Reception and networking event in the Exhibit Hall on Sunday evening. Over 100 event sponsors and exhibitors were on hand from international law firms, top litigation support providers and leaders in knowledge management -- all ready to interact with attendees and support the in-house counsel community. Many are returning sponsors, and some are new this year, but one thing is for certain – all are energized and ready to engage with attendees and explain what they can do to help in-house counsel, their clients and legal departments.

With the challenges many have been confronted with, along with the cuts in travel budgets, it’s a great testament to the association and the quality of programs offered that, once again, the Annual Meeting is expected to draw an impressive crowd of more than 1600 in-house counsel and over 2400 total attendees.  ACC President Fred Krebs is extremely satisfied with this year’s turnout, and noted during the Leadership Dinner later in the evening, “We have more attendees here with us this year than last year….and ACC closed out the fiscal year on September 30 with over 25,000 members worldwide.”

As Krebs addressed the packed room at the Leadership Dinner, he thanked Iron Mountain for their sponsorship of the evening’s event and further explained, “This year’s conference will focus on value and how to leverage resources, without comprising quality. ACC has worked with its members, chapters, committees and supporters to put together a program that, over the next three days, will provide attendees with efficiencies, tools and networking opportunities to help in-house counsel lead their departments and their companies through the challenges, as well as identify the opportunities, to thrive into the future.” 

Krebs was joined by outgoing Board Chair, Dan Fitz, and incoming chair, Pat Hatler, to present this year’s award winners with their much deserved recognition for outstanding achievements and support. In between bites of salmon sliders and Hoisin duck rolls, attendees applauded this year’s award winners:

·         Robert I. Townsend, Jr. Member of the Year: John Tanner, Senior Vice President & Division Counsel at McGriff, Seibels & Williams.

·         Committee of the Year: Employment & Labor Committee

·         Committee Member of the Year: Jeffrey R. Stern

·         Committee Sponsors of the Year: Womble Carlyle Sandridge & Rice  and Jackson Lewis

·         Outstanding Chapters: The Austin Chapter (Small, less than 250 members); Colorado Chapter and San Diego Chapter (Medium, 250-750 members); DELVACCA Chapter (Large, 750+ members)

·         Chapter Challenge: The Israel Chapter and the Charlotte Chapter (Small); The St. Louis Chapter (Medium); and the Chicago Chapter (Large)

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In addition, Krebs recognized ACC’s Northeast Chapter and its President, Paul Cushing, for their unyielding support of ACC and for their assistance as host Chapter for this year’s Annual Meeting. Krebs also welcomed a number of organizations that made the trip to Boston – some so far as Australia – including, Veta Richardson, from the Minority Corporate Counsel Association; David Patience and Tony Degovrik from the Australian Corporate Lawyers Association; Rodney Moore and Maurice Foster from the National Bar Association; and Esther Lardent from the Pro Bono Institute. Accolades were capped off with recognition for the 12 past ACC Board Chairs attending this year’s Annual Meeting – a record number. 

As the evening drew to an end, the buzz was still going strong --- the next three days are sure to be filled with engaging encounters, interesting insights and awareness for new ideas and opportunities among the thousands of in-house counsel in Boston this week.

* Susan E. Jacobsen, formerly ACC’s Director of Communications, was retained by ACC to cover this year’s Annual Meeting and will be providing coverage of the sessions and networking events throughout the conference.

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 “Automating broken processes won't make us smarter; it can make us stupider faster.” ~ Steven Levy

Participating in a panel discussion at the International Legal Technology Association (ILTA) conference last month was yet another opportunity for me to engage in a discussion about the ACC Value Challenge.  But, instead of speaking to in-house counsel and law firm partners, this time I addressed technologists.  It was an excellent opportunity to discuss IT’s involvement in the initiative to close the gap between the cost of legal services and the perceived value clients received from those services. 

Tim Corcoran (Altman Weil), John Alber (Bryan Cave) and Constance Hoffman (Bryan Cave) provided a number of practical examples culled from their own experiences, explaining how technologists can play an integral role in strengthening the relationship between law firms and their clients. The questions from those in attendance reinforced the significance of this group’s involvement in the ACC Value Challenge.

Steven Levy, principal of Lexicon Steven Levy & Associates and former senior director of Microsoft’s Legal Information Systems Department, addressed this same topic in a recent Law Technology News article by focusing on trust and productivity. Levy discussed 10 ways IT Departments can work together with their law firms to “deliver more value,” and in doing so, he honed in on how an IT department can not only assist its law firm in strengthening the relationship with its clients, but also help it to be more responsive - and proactive - in this effort.

One of Levy’s suggestions resonated with me: Don’t Automate Broken Processes. Improving processes should not be confused with moving things around to just look different.  This does not work.  I often hear, “Sure things are different, but they aren’t better.”  Technologists need to listen to their lawyers to hear what it is the clients want and how they can help the firm change systems to achieve that goal.  By conducting internal reviews, such as document management system assessments, data can be analyzed to actually improve productivity and not just “shuffle things around.” 

Indeed, it’s a two-way street and the weight of this endeavor should not be dropped on the IT Department’s shoulders.  Lawyers must convey the information correctly and provide their technology team with the necessary information to effectively implement these changes.  The IT Director needs to ask the right questions, repeat the issues and concerns and confirm what he/she believes the intended results should be.

An even better solution would be to bring the IT Director into client meetings. As Hoffman noted during the ILTA panel discussion, she has been involved - on the front lines – working with Bryan Cave clients to identify needs and determining the best practical applications to ensure success.  Her intricate knowledge of the technology involved enables the firm to be better prepared to not only respond to client requests, but to also appreciate how working together can strengthen the relationship between clients and firms.

By involving IT in the process – from the start – law firms are better equipped to manage client expectations.  As Levy so aptly noted, “Unlike Wine, Bad News Does Not Get Better with Age.”  Law firm attorneys cannot afford to be in the dark, nor can they keep their clients in the dark.  When an open dialog between attorneys and technologists exists, there should be no surprises.  No surprises means keeping clients abreast of the progress – and the delays. For those of us who travel frequently, we know the feeling of sitting on a plane, delayed on the tarmac … wondering what’s causing the holdup.  When the pilot explains that air traffic control has delayed our take-off by 20 minutes due to incoming traffic, our expectations are managed and we can relax.  Without the pilot giving us an update, we’re left to fret and to worry (or get agitated!). Being honest, upfront and providing assessments throughout the process ensures a win-win for all involved.

An underlying principle of the ACC Value Challenge is to “promote a dialog among corporate counsel, law firms, law schools and others who are interested in driving an alignment and focus on value.” The success of the initiative encompasses the participation of everyone within the legal services industry.  The ACC Value Challenge is not a “silo” initiative where everything is compartmentalized. It’s an initiative based on collaboration and sharing, and IT’s role cannot be overemphasized. Value is in the eye of the beholder and without effective communication and sharing, this, too, will fall into the bucket of automating broken processes that yes, “will make us stupider faster.”

Frederick J. Krebs

Next Up: The Chief Marketing Officer’s Role in the ACC Value Challenge

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“Your problem is to bridge the gap which exists between where you are now and the goal you intend to reach.” ~ Earl Nightingale

 Accountability, efficiency and value --- three words that are reverberating throughout the legal services industry these days.  In-house counsel are being held accountable by their companies to contain costs and predict expenditures; law firms must demonstrate efficiency and provide metrics to help communicate the value of the services provided. We’re in an era of transparency, one that demands, as Association of Corporate Counsel (ACC) President Fred Krebs, recently noted, “open communication and dialog.”

The recent International Legal Technology Association (ILTA) conference, held August 23-27 at the Gaylord National Resort & Conference Center near Washington, D.C., provided a forum for discussing technology’s role during this period of intense scrutiny.  One of the final sessions of the conference, “The ACC Value Initiative and What It Means to Technologists,” brought together the following panel with vast experience and insight from both sides of the legal aisle:

Fred Krebs, President, Association of Corporate Counsel

John Alber, Partner and Leader of the Technology Group at Bryan Cave, LLP;

Constance Hoffman, Chief Information Officer at Bryan Cave, LLP; 

Timothy B. Corcoran, Senior Consultant, Altman Weil

Alber, a practicing attorney with over 25 years of experience who also served as CEO for a software and database company, opened the discussion with an analogy, “Ten years ago newspapers made most of their money from display ads. That was also the start of monster.com and the dot-com explosion. Well, we’ve seen what can happen over a ten-year period to one segment when a critical mass bands together to affect change; and the legal industry is not immune to succumbing to this type of pressure to change.”

A recent study by Corporate Executive Board, found that over the past ten years costs to U.S. companies went up 20%, but that legal costs went up 75%. Law firms and clients are both under pressure to reduce legal spend, while still performing many of the same functions. Clients are now creating joint and highly-structured initiatives, such as the ACC Value Challenge, aimed at closing the perceived gap between what legal services cost and the value clients receive from those services. Law firms are finally sitting up and paying attention and as they develop ways to demonstrate their value to clients, those working with - and inside - legal technology departments can play a vital role.

“The ACC Value Challenge developed in response to member dissatisfaction,” explained Krebs.  “Rising costs, the disconnect between costs and services delivered in relation to hours billed and lack of communication, have all contributed to the development of this initiative.  ACC is calling for an increase in communication between in-house counsel and law firms to bridge the gap and work toward value driven solutions.”

In painting the picture of what it is clients want, Krebs highlighted the numerous opportunities that exist for technologists to help their firms respond to client needs.  The key areas where they can help, from the client’s perspective, are:

        1.    Better management; lean/efficiency (two-way) 

2.    Certainty /predictability (up-front budgets/scopes that stick)

3.    Focus on outcomes and results, not just on process and analysis (driven by evaluations and metrics)

4.    Costs that equate with value received

5.    Outside counsel and firms whose motivations and business models are aligned with the client’s

“The emphasis on predictability cannot be stressed enough,” explained Krebs. “This is where technologists can make a real impact.”

Coinciding with the ACC Value Challenge is the “Value Index,” an evaluation tool that will allow ACC’s in-house counsel members to rate their law firms and exchange information amongst each other.  Scheduled to be unveiled in October 2009, during ACC’s Annual Meeting in Boston, the goal of the Value Index is to enable in-house counsel to “tap into the wisdom of the crowd,” and gauge first-person feedback on the performance of outside counsel.

Law firms need to communicate with their clients and ask the hard questions, “Are they performing to the level expected? What is [their] perception of the firms they engage and the legal teams working on their matters?” Lawyers need to address these concerns, because soon, their clients might just be sharing their dissatisfaction with their colleagues.  Law firms cannot afford to be in the dark and must identify ways to not only address concerns, but also head off problems before they occur. 

The smart use of technology (making sure systems work efficiently), metrics (analyzing the data and improving processes) and collaboration (internal dialog) all play a significant role in helping firms to be more responsive to their clients’ needs.  Technologists, working closely with the attorneys and other administrative departments, can develop streamlined solutions and processes that can help with efficiency, reducing costs and long-range forecasting. 

Improving processes, however, should not be confused with “moving things around to just look different,” explained Krebs.  Referencing an article by Steve Levy in the August issue of Law Technology News, Krebs noted that, “Automating broken processes won't make us smarter; it can make us stupider faster.”

Having worked in-house with a law firm, as well as with a leading legal service provider and now with Altman Weil, Corcoran draws from his experience, and agreed with Krebs that, “After years of training, change is upon us and our time has come….but it’s not going to be easy.”

Corcoran referenced a recent Altman study, which showed that, in 2009, 40% of the In-House counsel surveyed planned to reduce the use of outside counsel, and almost 30% had reduced their internal staff. 

“We grew up with the belief that property values will always rise, and we see where that got us,” Corcoran said. “The same has been the case for lawyers, believing that demand will continue to rise and clients will continue to pay.  But clients are insisting on change. We’re hearing more about the challenges our clients are grappling with, and our surveys confirm, there is a movement going on. ACC has provided a framework – a voice  – to hear and respond to those challenges.”

While the use of outside counsel is declining, the work still needs to be done.  Corcoran believes this presents firms with a challenge, as well as an opportunity, to do things differently. “Firms need to look at the cost base and figure out a way to deliver their services at the lowest cost and in the most efficient manner.”

 Law firms must acknowledge that this is not “everyone else’s problem” – they must face reality and recognize that they are part of the solution.  Culling from other industries, Corcoran outlined how law firms can be more responsive to the changes taking place:

 ·      Cross-Selling:  For law firms, the concept of cross-selling is seen as a “nice to have,” and one that is inconsistent throughout law firms around the country. For most corporations, however, the idea of looking for opportunities for more business with the same client is “a matter of life or death.” It’s the lowest cost of sales – expending less on an existing client than trying to woo a new one. Having technologists’ insight and input – to better understand client needs (from a technology standpoint) - will help to strengthen the relationship.  Law firms need to make cross-selling a priority.

·      Project Management: Lawyers need to have more than just legal skills – they need to have an aptitude for project management. They would be wise to look to their own clients as models for project management – construction, transportation, manufacturing – all industries that require intense, seasoned managers to ensure projects are on target and within budget. Clients don’t like surprises. Without an experienced project manager to ensure matters are on track, law firms are exposed to unknown risks. Technologists have the knowledge from a project management standpoint and can convey to lawyers similar insights.  Law firms need to recognize the importance of project management skills and tap into technologists’ skills, as well as increase training in this area. 

 ·      Outsourcing:  When some think of outsourcing – they automatically equate that with legal departments using “non-traditional sources for their legal work,” but in actuality, outside law firms are an “outsourced provider.” Companies focus on their products and core competencies; they don’t do legal work. Law firms are one of their solutions. Technology departments and legal resource vendors, provide law firms with the necessary tools and resources to get the job done.  They are an integral part of the success – or failure – of a relationship and should be seen as a necessary partner in the firm/client relationship. In addition, a law firm can find ways to do some tasks a lot more cheaply, so the client does not turn to outside vendors.   

Companies, such as Practical Law Company, a leading provider of practical know-how for business lawyers, can help law firms provide their clients with the resources needed to practice more efficiently and deliver greater value. NOVUS Law, a document management provider, is another example of an external company that can help firms understand how to eliminate redundancy and find ways to do things more quickly, with less people, and improve the quality of the work provided. Off-shoring/outsourcing companies can help firms improve their business processes. Law firms need to embrace this concept and see the value in their technology departments and outsourcing companies to help them to be more efficient.

While technology can enable business process improvements, the answer, Tim noted, “isn't technology, it's the business process that needs fixing.”  Too many IT leaders get hung up on the technology and miss the wider point, which Krebs emphasized earlier: “good technology on top of a bad business process is meaningless. 

Understanding the kinds of technology initiatives clients expect firms to undertake in order to reduce costs and increase value is key.  Hoffman, who has been involved in identifying these needs for Bryan Cave clients, recognizes the practical applications of what can be done to transform relationships – bridge the gap - between clients and firms.

In order to be responsive, firms must have an open dialog with their clients. This dialog, explains Hoffman, “will provide law firms with the insight needed to develop systems and processes that will keep clients informed and abreast of issues that might change the timing, or even, budgets. “

Again, clients do not like surprises.

“By having that in-depth conversation with clients at the onset, explains Hoffman, “firms can put systems, such as detailed databases, in place to track progress on a continual basis. Not only can this help to reduce transactional costs, but it also allows for better reporting and transparency for the client.”

“The efficient use of junior lawyers or contract lawyers, with assistance from technologists, to collect the necessary data,” explained Alber, “enables senior lawyers to adequately analyze the data to evaluate the situation and keep clients informed throughout the process.”

This streamlined process helps eliminate surprises at the end of an engagement. Law firms can better manage expectations and in-house counsel have access to the necessary information to keep their CEOs apprised. 

This is a fundamental concept of the ACC Value Challenge, to bridge the gap of uncertainty, encourage transparency and connect expectations of value to the costs of the services provided.   The momentum for such discussions and frank negotiations is gaining and law firms are responding.  For those firms just now reacting, Corcoran noted, “they will not be first – they will be trying to keep up with the pack.”  Law firms cannot afford to lose their role as trusted advisor, because if they do, it will be years before that relationship is salvaged. 

Technologists’ ability to help streamline processes, improve efficiency and provide measurement tools is a reality in today’s legal environment.  Technology experts need to be part of the process from the start and valued members of the law firm/client team. Paraphrasing Churchill, Krebs noted that in discussions about the death of the billable hour, “never has so little been accomplished by so many for so long” the time for change is now.  Real change has begun as clients and firms implement value based arrangements.

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Susan E. Jacobsen, President of LUV2XLPR, Inc. has over 15 years of experience helping attorneys and corporate executives with public relations, business development, not-for-profit and advocacy communications, and continues to work with clients to developing successful new media and traditional public relations strategies.

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