In-house counsel tips for forging more collaborative law firm relationships
Network Rail manages 20,000 miles worth of train tracks in the UK. Since there’s inherent risk in the transportation business, the organization invests roughly $25 million in outside legal counsel every year.
As a quasi-public body, the organization has a “duty of care” with respect to how they spend money, including legal fees. As such, they must always provide an audit trail for where that money is spent.
Traditionally, they relied on their law firms to provide reports. This was a largely manual process and someone at Network Rail had to aggregate and collate the information into a spreadsheet.
As you can imagine, over time, that spreadsheet grew from taking up space on a single piece of paper, to a monolithic beast with multiple tabs. It became so big and cumbersome, that the organization stopped looking at it.
A new legal spend management tool
Apperio has been working with the organization for a number of years now. We plugged several data feeds into our platform from the practice management systems of all their law firms. Apperio now pulls together all the necessary data instantly, in one place, with a consistent format as part of our legal spend management platform.
This eliminated the heavy lifting of manual reports but more importantly allowed Network Rail to immediately perform a detailed analysis of spending. This included the types of legal work they were doing, how frequently this work was being carried out, and who within the business was instructing the firms.
As the analysis took form, they began to see opportunities to tighten up their legal processes. They also could better match their firms to the work – to have the right types of law firms doing the right category of work.
For those law firms on the panel, this might seem a bit foreboding. However, Network Rail brought all their law firms into the process – and worked collaboratively with them to develop key performance indicators (KPIs).
In other words, the panel of law firms had input in the shaping of the very measures by which they would be evaluated. Perhaps more importantly, they learned first hand what their client cared about the most.
Tips for forging collaborative relationships
In-house counsel has increasingly pressed law firms for greater transparency, but that must work both ways. Clients too need to be transparent with both their desired legal goals and how they plan to measure legal outcomes. The approach taken by Network Rail (see this case study) is instructive because it illustrates how to forge more collaborative law firm relationships.
Below are several other tips we’ve gleaned from our interaction with Network Rail and observing how they work with law firms.
1. Set clear expectations and share the responsibility.
Clients and law firms must agree on expectations at the very beginning of an engagement. This includes everything from a standardized set of billing guidelines to how a law firm’s performance will be evaluated. Managing expectations is a shared responsibility across both clients and law firms.
2. Inform law firms of commercial goals.
Most clients invest some time into the relationships with law firms, but Network Rail took it a step further. They invited all their firms to a sit-down meeting at the start of the financial year. However, rather than talk legal shop – the agenda is purely focused on the business objectives for the coming year.
In their view, the role of an in-house lawyer is to help the business safely achieve its commercial objectives. External lawyers are designed to help the in-house lawyers, who in turn help the business to achieve those goals. By talking purely about commercial drivers of the business they give the relationship partners in their law firms a chance to be commercial themselves.
3. Get the right level of experience working on your matters.
Having the right level and role in a law firm doing the right work is one of the biggest levers clients have to control the cost, quality, and duration of matters. Outside legal teams tend to grow if you don’t monitor the team composition regularly. For example, you’ll notice the names of people you’ve never spoken with will start showing up in the time entries and narratives being recorded against your matters.
However, to have a meaningful conversation with your law firm about this, you’ve got to analyze historical data. You are looking for the ideal team composition across different matters. Once you understand this baseline, you can come to an agreement with your firm – based on data – and not a gut feeling.
4. Talk openly about money from the outset.
Lawyers on both sides of the table don’t like to talk about money, but it’s crucial to get past that and talk about it in the very beginning. When a relationship between a client and a law firm declines – there’s a good chance money is a central theme.
In-house counsel should push for a budget on every single matter. A budget is an important part of the expectation setting. Talking through rates, budgets and personnel with law firms is the key to setting expectations and strengthening those relationships with law firms.
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This post was adapted from a webinar we co-produced with the Association of Corporate Counsel. An ungated recording is freely available to watch here: Upping your game: five principles to drive efficiency and effectiveness.
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