Graeme Johnston / 18 July 2023
In my article a couple of days ago, I mentioned a 2022 survey of US law firms and corporates by the Blickstein group. I think the contents are sufficiently interesting to warrant a further article.
I won’t go through the whole thing, but will simply highlight the things that leapt out at me, and what I take from them.
The survey respondents fall into three groups
- Law firm legal project managers – LPM
- Law firm pricing professionals – Pricing
- Corporate law department operations – Corporate Legal Ops
Top of mind concerns
The survey starts by asking each group about their top three challenges.
For LPM, the top challenges are about the lawyers in their own firms:
- Figuring out what the lawyers are doing
- Varieties of lawyer ‘resistance’
- Demonstrating value of LPM internally
- Funding staff and tech
- Partner compensation models misaligned with good decision-making
- Whether to have a centralised LPM function or organise it within the legal functions
The least important issue in most LPM minds (only 3% ranked it in their top three) was:
- Meeting client demands for value while still meeting firm profitability targets
(That said, 15% thought that meeting such client demands would rise into their ‘top three’ over the next three years)
For Pricing, challenges at top of mind were more outward-facing. Their top two were:
- Client pushback on rates and/or increasingly complex outside counsel guidelines
- Meeting client demands for value while still meeting firm profitability targets
However, the third concern of pricing teams was internal:
- Mistakes caused by lack of collaboration and integration across pricing, LPM and billing functions
For Corporate Legal Ops, the top priorities are all about controlling the legal department’s overall spend. These evidently weigh more heavily in people’s minds than value-delivery metrics such as timelines and contracts handled.
The editorial on the survey makes various points about this but, for me, it suggests that the LPM teams focused on quite different things from those of interest to Pricing and Corporate Legal Ops. The survey editorial suggests that they may be chasing improvements clients don’t care about. That may be a problem given that the lawyers are also evidently not that engaged either.
Some pricing teams’ concerns about mistakes arising from lack of join-up internally between LPM, pricing and billing also suggests some brewing problems in the relevant firms.
Differences of emphasis
When asked how they chose external lawyers, Corporate Legal Ops put price high (at 4.0 out of 5 points in importance).
This was not quite as high as various quality factors (4.8, 4.5, 4.2 and 4.0 out of 5). But it’s significantly higher than precise mode of delivery factors such as whether alternative fee arrangements or innovative service models are offered.
The next section of the survey asks the different groups what they think about law firms’ adoption of technology and other innovations to service clients more cost-effectively or otherwise better.
In law firms, a substantial majority agreed that their firm had done so. In corporates, a substantial majority disagreed. Probably unsurprising, but it’s interesting that the gulf has widened compared with the previous year.
The survey editorial suggests that law firms are acting rationally by expressing less interest in technology. My guess would be that it simply signifies that most clients are more interested in what they get – quality, price, timeliness, convenience, for example – than in how the firm achieves it. Tech may contribute to that behind the scenes, of course, but a client may not see or care so much about that. If you’re a law firm client, do you? If you’re not, would you?
Scariest threats
Towards the end of the survey, another interesting revelation is that
- Most people in Corporate Legal Ops want to in-source more work.
- Almost half of the people in law firms felt that the single greatest short term threat to their firm, other than losing work to competitors, was that their own corporate clients would insource the work. This was seen as the chief threat by 44%. The next biggest threat was defecting partners taking clients with them (34%). Automation (10%) and losing clients to alternative providers such as the Big 4 (3%) ranked much lower. That said, these two threats rose to similar levels as in-sourcing and alternative providers when law firm respondents were asked to look five years ahead.
Despite this, the survey editorial is sceptical of corporates’ ability to insource, given that corporate clients under pressure tend to restrict headcount.
I can understand that scepticism, given the years of talk not matched by action, and the reality of corporate headcount phrases operating (shall we say) not so rationally. But we’ll see what gives this time round the block.
What action does this suggest?
As David Ogilvy famously pointed out, people responding to surveys don’t think what they feel, don’t say what they think and don’t do what they say. Always worth remembering. Also, the people responding to this survey represent only certain perspectives in their organisations. And there has for years been a gulf between what law firm people and corporate legal say they think in surveys – and a further gulf between that and what they seem to feel when speaking about it privately. And that’s even without getting on to what they actually do. It’s a strange world.
Still, there is some food for thought in this survey. The big question, in my mind, is whether the evidently increasing forces of economic and technological change will translate words into more serious action this time.
If so, it sounds to me as if this might a good time to join up the approach to lawyering, tech, process improvement, project management and pricing so as to make them more effective at delivering greater value.
So far as tech and process are concerned, I would say that the key is to find approaches which are
- Valuable and fulfilling for the individuals working on legal matters – without which, they are unlikely to be used – at least for complex work by people who have options.
- Accessible to a wide variety of individuals, without each niche having its own special toolset: the joining-up problem is real.
- Able to help with that key challenge – in the words of the survey of:
- “Meeting client demands for value while still meeting firm profitability targets”
This isn’t trivial, but ought to be achievable if done with a great team, a realistic approach to change management and some great software. Dare I suggest that Juralio can help with the last of these.*
* We can also offer some thoughts on the second – change management – if you like. The first – great team – is down to you.
Image credit: Wolgang Zimmermann on Unsplash
