A Paradigm Shift in Law Department Efficiency—Introducing the Law Department
Consortium
June 2006
I am writing this article while on a plane
after an exhilarating 3 days in rainy San Francisco attending one of the more
exciting ventures that I have ever had the opportunity to participate in. Allow
me the opportunity to enlighten you as to the forthcoming new Law Department
Consortium, LLC.
by Michael
R. Boutot
International
Litigation Management Association
I have been in the claims, risk management, and litigation management arena
now for nearly 25 years. Every once in a while, something comes a long that
is truly revolutionary and is a paradigm shift to doing business. Such is the
case of the Law Department Consortium.
Let me provide you with a piece of history. I have been speaking across the
country professionally now for about 10 years. The audiences have ranged from
claims personnel, risk management personnel, attorneys, paralegals, court reporters,
and a host of other related personnel. In 2002 I had the opportunity to speak
at a meeting of the Law Partnering Forum held on the shores of New Jersey (trust
me, that is not a song). It was during that
meeting that I met Peter Jenkins for the first time, as well as many other key
general counsel from some of the top companies in the country. It is ironic
that my session that day was "A Paradigm Shift in Litigation Management" and
today I write about "A Paradigm Shift in Law Department Efficiency." Who would
have thought that 4 years later I would find myself in the midst of what has
spawned as a result of that session in New Jersey in 2002.
Well, let me get to the crux of the matter and attempt to define what this
Law Department Consortium is all about and why I believe it will be the new
way of running corporate law departments in the not too distant future. However,
to make it a little easier to write, let me from this point forward refer to
this concept and group as "The Consortium." The Consortium acts as a trusted
neutral in forging an exclusive, invitation-only, proprietary legal services
marketplace where the primary focus of buyers and sellers of legal services
is on value, efficiency, and results—rather than time spent on work and price—and
where thought-leading in-house counsel, outside counsel, and suppliers collaborate
to find new solutions for achieving their respective goals.
As I have monitored and assisted in varying issues of litigation and litigation
management through the years, now more than ever corporate in-house counsel
are under mounting pressure to manage legal costs effectively and contribute
meaningfully to the company's bottom line. Law firms and suppliers are likewise
under mounting pressures to strengthen and expand their client base, increase
revenues, and maximize profits. These inherent conflicting economic and business
interests can undermine strong working relationships between corporate clients,
law firms, and legal suppliers and inhibit each of the parties from achieving
their respective goals.
The Consortium's mission is to act as a "trusted neutral" to forge an exclusive,
invitation-only proprietary legal services marketplace where:
- like-minded, thought-leading in-house counsel, outside counsel, and
suppliers convene for the purpose of identifying and aligning their divergent
economic and business interests, building strong partnering relationships,
and collaborating to construct practical win-win solutions for obtaining
the outcomes they want;
- law department buyers seek to purchase the highest value legal services
and products at reasonable prices for the task at hand; and best-in-class
law firms and suppliers work to deliver higher value at reasonable costs
through greater efficiency and responsive, appropriate service; and
- all participants benefit from a Consortium roadmap, step-by-step implementation
plan, technology, and other resources needed to efficiently and effectively
achieve their respective goals.
The Consortium helps participating law department leaders:
- leverage their buying power to meet
the challenge of too much work, too little time, and limited human capital
in providing timely, high-quality, business-savvy practical advice and solutions
to their corporate clients
- demonstrate their business unit's value to the company and contribute meaningfully to the corporate bottom line
by minimizing legal risk and maximizing return on the department's legal
spend
- access, engage in candid dialogue,
and build trusted, long-term, collaborative and profitable working relationships
with select "best-in-class" partnering-savvy
outside counsel and suppliers who:
- understand the necessity of swift action and respond promptly and
keep their clients informed,
- understand the nuances of their clients' businesses and industries,
and
- are committed to solving business and legal problems proactively
and efficiently, and helping their clients achieve their law department
and business goals
- improve efficiency by adopting industry
"best practices" and
- following the Consortium roadmap and step-by-step implementation
plan to improve operational efficiencies and work more effectively with
outside counsel and suppliers to utilize proven technology customized
to facilitate effective collaboration, preserve information, reuse work
product, streamline billing/invoice processing and measure performance.
The Consortium helps participating law firms and suppliers:
- grow their client base, increase long-term
top-line revenue and maximize bottom-line profits
- access in one place top-tier corporate
client decision-makers interested in meeting, engaging in candid
dialogue, and building trusted, long-term, collaborative and profitable
working relationships with select best-in-class partnering-savvy outside
counsel and suppliers who:
- understand the nuances of their clients' businesses and industries
and
- are committed to solving business and legal problems proactively
and efficiently
- build stronger, more loyal and more profitable
client relationships by:
- better understanding the interests and needs of law department leaders
and the challenges they face
- promoting clients' effective use of proven technology
- learning how to be a truly effective partner in helping law department
leaders provide timely, high-quality, business-savvy practical advice
to their corporate clients; improve departmental efficiencies and better
manage and gain more predictability and value for their legal spend
- elevate, strengthen and differentiate their
businesses by participating in an exclusive, invitation-only proprietary
legal services marketplace where divergent interests of the stakeholders
are aligned or, at least, explicitly identified.
Let me give you just one example of how this works in the "real world." As
part of my relationship with the Law Department Consortium I met Ralph Palumbo,
one of the founding members of the Summit Law Group based out of Seattle, Washington.
Palumbo states, "When Summit Law Group was founded almost 10 years ago, we resolved
to change the way we organized our firm, the way we managed our firm, and the
way we compensated our lawyers and staff—all for the purpose of achieving significantly
higher value legal products for our customers."
Sounds interesting, but one might say, "That's what everyone says." But as
the saying goes, "actions speak louder than words." So what has Summit done?
Well, for one, they have effectively established one of the more unique methods
to fee billing. In a time when many are trying to consider alternatives to hourly
fee billing, resistance continues to grow. Palumbo and Summit decided there
was an alternative. Palumbo writes in an article recently published:
- The hourly billing system does not reward efficient legal service. When
lawyers are paid by the number of hours worked, conscious or unconscious
self-interest can and does affect a lawyer's judgment as to what legal services
are required. We believe that a pricing system in which the incentives for
the lawyer are contrary to the interests of the customer is inherently flawed.
Summit has fundamentally changed the pricing of its legal product. In every
case, we work closely with our customers to define the legal product that
is appropriate to the customer's need. We always try to come up with a pricing
arrangement that provides incentives to us if we can achieve a fast, innovative
and lower cost means to accomplish the customer's desired result.
So, what does this mean practically speaking? It means that Summit Law ends
every single detailed invoice with the following three lines:
| Proposed Fee: |
$10,000 (whatever the exact amount is) |
|
|
|
|
|
|
The client/customer then completes the invoice by indicating a value adjustment.
That value adjustment may be an increase, however, it may also be a decrease.
Ralph and the Summit team are so confident that they are up-to-speed with client
relations, that they are willing to take this risk. In fact, it reminds me of
a sign I just saw at the O'Hare Airport in Chicago that was promoting a consulting
company that said, "Know Risk … Know Reward." What a concept! What a paradigm
shift. (To learn more about Summit Law, visit www.SummitLaw.com.)
Take a few moments to look at the Law Department Consortium. Whether you
are with a law department for a corporation of any size, an outside law firm,
a legal service provider to law departments and law firms, or even a consultant,
I believe you too will see the value of the next evolution of partnering in
the legal community. For more information, visit www.LawDepartmentConsortium.com.
The views, content, and opinions expressed herein are solely
those of Michael Boutot and are not those, nor intended to be those of the Board
of Directors and/or the membership of the International Litigation Management
Association (ILMA), or The Hobart West Group and/or their subsidiaries.
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