LEGAL
This past year, I addressed lawyers and law firms with a message about their interaction with clients. After that, I had the opportunity to address the leaders of corporate law departments with a message about their interaction with lawyers and law firms.
My message for corporate counsel: Take an active role in how your outside law firms are approaching innovation. The pace of change has been too slow. It is in your interest to help speed it up.
The needs of the corporate clients constitute the most fundamental driver of change in the legal profession. Almost all analysis of why a paradigm shift is underway begins with clients’ need to “do more with less.”
So far, this has translated into price pressures on law firms, which plays out predominantly in discussions of hourly rates and demands for discounts. There has been some progress on alternative fee arrangements, which has the effect of shifting the risk of inefficiency to the law firms and, therefore, creating incentive for innovation. That is good, but we need to go deeper.
The core issues that need to be addressed to make real progress are the business and service delivery models of the law firms – how firms assemble and deploy resources. That is where the important opportunities for improvement can be found. And on that front the progress has been much slower than one would have expected, given corporate clients’ clear need for “more for less” and the possibilities for innovation available to law firms.
There are many reasons that law firms are not changing their models faster. It begins with their continued ability to generate high levels of profits, and includes the degree of difficulty in making the necessary change.
In my opinion, you, the corporate counsel, need to be a more active part of the solution. Go beyond negotiating discounts and fee caps to addressing what really matters: the way the law firms go about doing the work; the tools and methods they employ; the costs they incur. I am not suggesting you go into law firm management. I am recommending that you focus on the core issues and let your firms know you expect them to do more to consider innovations they can make.
Obviously some of these discussions go on already. Across the industry, however, there are not enough. I am encouraging corporate counsel to do more.
I have four suggestions. One is about outlook. The other three are concrete actions.
Outlook
Corporate counsel should regard innovation in the delivery of legal service as a shared undertaking. As you do in other ways, regard your law firms as your partners.
Obviously it is in your interest to have your law firms deliver the service you need, but at a more reasonable fee. You want to keep using the firms you know and trust. They deliver huge value to you. They appear, however, to need some more pushing and collaboration from you on innovation. So, you need to engage.
Actions
Here are three actions you can take that will likely have significant impact:
The third action is the hardest of the three, because it requires work and inconvenience on your part. It is also the most valuable. It will put you in touch with the real prospects for innovation; it will impact your lawyers directly; and you will learn valuable lessons which can stimulate further progress.
This article was originally published on the Legal Executive Institute. Subscribe to receive weekly updates.
Ralph Baxter is a senior advisor to Thomson Reuters Legal and chairman of the Advisory Board of the Thomson Reuters Legal Executive Institute. He advises, writes, and speaks about the delivery of legal service. After leading a prominent global law firm for nearly a quarter century, he has turned his attention to a diverse set of activities, across the spectrum of the evolving legal profession.
He advises law firms, legal technology start-ups, and corporate law departments on their strategies and execution. He is an active writer and speaker, including participation in law firm partner meetings, about the emerging models of improved delivery of legal service.
Mr. Baxter also is a senior advisor and member of the Advisory Board of the Stanford Law School Center on the Legal Profession; a fellow at CodeX, The Stanford Center for Legal Informatics; a member of the Advisory Board of the Harvard Law School Center on the Legal Profession; a member of the Advisory Board of the Center for the Study of the Legal Profession at the Georgetown Law School; a member of the board of directors of Intapp; a member of the Advisory Board of Ravel Law; and a member of the Legal Advisory Board of LegalZoom.
From 1990 to 2013, Mr. Baxter served as Chairman and CEO of Orrick, leading Orrick’s progress from a domestic firm with California origins to become one of the world’s leading global firms. He launched numerous transformative initiatives during his tenure, including the creation of Orrick’s Global Operations Center in Wheeling, West Virginia, and changes in the firm’s talent and pricing models.
Mr. Baxter received his BA from Stanford University; his MA in Education from the Catholic University of America; and his JD from the University of Virginia. Mr. Baxter’s recent writings and interviews can be accessed on his website www.ralphbaxter.com and he can be followed on Twitter @ralphbaxter.
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