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February’s session of the Legalops Café was “The One About Outside Counsel”.
Special thanks to our guest speaker, Helen Lowe who is Head of Operations, General Counsel’s Office at easyJet, for kickstarting the discussion by sharing her own experiences and insights.
In this post, we’ll be rounding up some of the key takeaways from the session.
The Legalops Café is a growing community hosted by Tabled for legal operations professionals and inhouse counsel looking to network and share insights.
To receive updates and invitations to future LegalOps Cafe sessions please sign up here.
February’s session of the Legalops Café was “The One About Outside Counsel”.
Special thanks to our guest speaker, Helen Lowe who is Head of Operations, General Counsel’s Office at easyJet, for kickstarting the discussion by sharing her own experiences and insights.
In this post, we’ll be rounding up some of the key takeaways from the session.
The rationale for using outside counsel will of course vary depending on the team, the work they do and the business they work in. At easyJet, the work they send out to external law firms primarily falls within two buckets: 1) large, complex work which requires specialist knowledge they don’t have in-house; and 2) smaller/repeatable higher-volume work – with the aim of freeing up the in-house legal to focus on higher-value/more strategic work.
In a busy in-house environment, time is in short supply and rigorous outside counsel management can be a demanding process. However, there are a number of red flags to look out for which – if seen in your organisation – should probably prompt a closer look.
Helen shared some examples from her own experience, including:
– Costs estimates constantly overrunning
– Advice that is ridiculously long-winded or otherwise fails to take into account the business / environment you’re operating
– Evidence of strained relationships between business users and the lawyers
– Incongruous pricing: “Are they pricing for a gold-plated service when what you asked for was a ‘quick and dirty’ assessment of the risk?”
As with many issues that arise in business and in life, these red flags will often be rooted in – or at least exacerbated by – some breakdown in communication.
Most would probably agree with Helen that the best results typically come when the in-house legal team has had an opportunity to sit down with the business and get a clear and detailed scope from them, which in turns helps them to produce a water-tight scope for outside counsel.
Most would likely also agree that, in the real world, it won’t always be possible to do this to the fullest extent.
With that in mind, Helen shared some practical advice on how to keep communications flowing.
First, don’t underestimate the value and importance of communication that is ‘little and frequent’. Away from the set pieces such as the initial scope, quick but consistent updates and exchanges can help to keep everyone aligned.
At easyJet, they have codified this into a set of ‘Golden Rules’ which set out some expectations around how (and when) outside counsel should communicate with them, as well as some commitments from easyJet in kind.
So, for outside law firms, the Golden Rules cover topics such as style/format/channels for written communications, expectations around how/when they respond to the business; business-specific context they are expected to know and keep in mind; how to provide fee estimates, how/when to communicate about any expected overruns etc.
On their side, easyJet commit to proactively keeping outside counsel in the know about things such as strategy changes and regularly sharing org charts so that external lawyers always know who they should be contacting.
Second, look for opportunities to communicate “one to many” rather than “one to one” where possible.
For example, easyJet’s legal team runs an annual legal community day for law firms on their panel and preferred supplier lists. This provides an opportunity to brief them on easyJet’s latest news, as well as the most pressing issues and challenges which should be borne in mind when advising them.
This depends on the nature of your business and the type of advice you usually seek.
In Helen’s view, the rationale for creating a formal panel is to drive three primary benefits:
1) Creating competitive tension to drive more favourable rates;
2) Securing ‘value-add’ benefits from your panel firms; and
3) Having access to a group of firms that know your team and business well.
However, properly creating and managing a panel to ensure you can deliver that value all takes significant time and effort. It’s therefore important to think carefully about the way you use outside law firms and the type of work you are outsourcing before deciding that a formal panel is the way to go.
If all your work is being outsourced into one place and it’s one type, the better option may be just to create a direct contractual volume-based relationship.
Indeed, this was reflected in a poll we ran to find out what percentage of the attendees’ businesses had a formal panel. The results were that 70% did and 30% did not. Of those that didn’t, more than one cited a lack of diversity in the work they outsource as a key reason behind the decision not to create one.
Consider what value-add benefits you can secure from firms in return for being on your formal panel and enjoying a larger share of your legal spend. This might include tangible things such as meeting rooms, training sessions and know-how materials.
On the commercial side, you might look to secure volume discounts and value rebates. In Helen’s experience, it takes fairly close attention to ensure you are actually realising the benefits that should flow from such agreements. At easyJet, they have allocated responsibility for tracking and analysing this to the finance team who are better placed to do the number-crunching.
Secondments were also discussed although – in Helen’s experience – it has become increasingly difficult to secure these. She also stressed the importance of ensuring that – if you are going ahead with a secondment – expectations are properly managed on both sides.
Having a secondee might otherwise be interpreted by the rest of the business as simply having instant and unrestricted access to a ‘free’ law firm lawyer from whom they can extract a lot more work – as opposed to a more rounded mutual learning and relationship-building exercise.
Where secondments are not on offer, many law firms will still happily commit to running in-house ‘surgeries’ for your team and/or send people to work from your offices on a semi-regular basis just to help foster alignment and connection.
There is a famous saying in the IT world: “Nobody ever got fired for buying IBM”. The legal industry is not immune from this thinking.
In organisations where the budget can support it, ‘Magic Circle’ law firms will often be the preferred (or even only allowable) option, driven largely by a perception that ‘you get what you pay for’. As several attendees on the call noted, this isn’t always borne out in reality!
The consensus was that this probably isn’t something that will change quickly.
Helen’s advice was to take a patient approach to this, looking for opportunities to present the Board or other relevant stakeholders with side-by-side comparisons of work performed by elite firms and others who have done the same/similar work, to the same (or better) quality at less eye-watering rates.
While easyJet don’t currently use an ALSPs, this is something they are always thinking about.
With ALSPs typically handling different types of work – and handing that work in a different way to your panel firms – Helen sees ALSP relationships as sitting outside the panel arrangements. As such, establishing a fruitful working relationship with an ALSP will likely demand a significant investment of time and effort, on top of what is being done to manage your panel. A lot of this will be internal preparatory work to ensure that your own workflows (think processes, templates, playbooks etc) are first optimised for collaboration with an ALSP.
As for the ‘Big 4’, their primary USP is likely to be the depth and breadth of firepower they can bring to the table in the biggest and most complex scenarios and offer a valid challenge to the magic and silver circle on such matters. Since these situations do not crop up as a matter of course, the relationship will again typically sit outside the core panel.
For Helen, there is a trade-off between the level of detail and volume you seek to get into when tracking and evaluating law firm performance and ensuring the process is sufficiently quick and simple that it actually gets done.
At easyJet, this looks like sending a straightforward questionnaire to the team asking for feedback on any law firm that has billed £5k or more for a piece of work. Feedback is also sought from the business stakeholders involved in the project.
The results are regularly circulated amongst the legal team, showing what has been spent, what their value account looks like and an assessment of how firms have performed against a handful of benchmarks which came out of easyJet’s involvement in an O Shaped pilot programme on law firm ratings, namely: building relationships; creating value; and demonstrating adaptability.
Tabled is a legal work management and collaboration platform that brings together in-house legal teams, their internal clients/stakeholders and outside counsel.
This connected approach means in-house legal teams can manage all their work from one digital workspace which is optimised to suit their needs, for maximum efficiency and visibility.
Key benefits include:
· A streamlined process to request, track and review quotes from outside counsel;
· Quickly and easily assign matters directly to outside counsel;
· Manage and collaborate with multiple law firms from one central workspace owned and managed by the in-house legal team;
· User-friendly dashboards to monitor the status of matters being handled by outside counsel; and
· On-demand access to repositories of resources such as know-how, templates and advice shared by your law firms.
Further reading: Panel Management – the prize is in the process
To learn more about how Tabled can help, please get in touch or sign up for a demo using the form below.