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LegalFebruary 26, 2020

The evolution of how outside counsel is selected and managed

At Legal Week 2020, I had the privilege of moderating a panel with four legal operations superstars from leading organizations. On the panel were Mark Smolik (GC of DHL Americas), Preston McGowan (Chief Transformation Officer at Goldberg Segalla), Kevin Iredell (Chief Marketing Officer at Lowenstein Sandler) and Chris Ende (Chief Value Officer at Goulston and Storrs).

The central question examined by the panel was whether selection and management of outside counsel should be more relationship-based or more based on “hard” legal ops criteria, where success is defined more by hitting objective performance metrics rather than the strength of personal relationships.

The panelists agreed that “pure” relationship-based management is no longer enough. Relationships will always have a place, but there are stakeholders in client organizations (think CFOs) that are not party to those personal relationships. Those stakeholders want to see objective data that proves that what they are getting is not nepotism but good quality at a good price. Law firms that think they can ignore the legal ops movement and get by on the strength of personal relationships will lose those relationships. By the same token, GCs and other top corporate law department folks who do not want to undergo the temporary pain of fixing broken or nonexistent processes will be replaced by people who are on board with legal ops and open to change.

Analytics set firms apart

The above points were underscored by the example one of our panelists gave of an RFP for an important piece of litigation. The company’s tried and true law firms responded with more or less boilerplate responses about how experienced they were, their sterling reputations, etc. However, there was one firm that, rather than bragging about how awesome it was, proved it. Their RFP response was a detailed analysis of the present litigation together with a nationwide analysis of all similar litigation against the company, the judges and plaintiff’s attorneys involved, the status of those cases, and a recommendation of how to proceed with the present case based on that information. When the GC read the response, he instantly knew this was the firm he was going to use.

In the new legal ops-based world, that is the kind of demonstrated operational competence that is going to win work. The panelists, some of the most distinguished names in legal operations from both the law firm and corporate sides, underscored this idea repeatedly by making remarks like the following:

  • I am going to hire you because you’ve proven to me using data that you are the best organization to solve my problem, not because you bought me Super Bowl tickets.
  • Do not think you are going to get work from my organization because of your legal expertise. Legal expertise is table stakes. I want to hear about things like how you manage to budget, how you use technology, and how you realize diversity.
  • Even though I value the personal relationship between us as inside and outside counsel, the reality of today’s marketplace is in five years I may be working somewhere else and so might you. So part of my job is to build a relationship between our two companies so they can continue benefiting each other without a hiccup if either or both of us move on.

Augmenting, not replacing, relationships

From the above, one might conclude, as some legal procurement professionals prematurely did a couple of years ago, that “relationships are dead.” But our panelists made it clear that that way of thinking was dead on arrival. Trust matters, just like it always has. History matters. Liking another human being matters. Legal ops hasn’t changed any of that and isn’t really trying to.

In fact, our panelists described the concept of legal ops “vs.” relationship-based management as a false dichotomy. Legal ops discipline, rather than taking away from relationships, is transforming them by putting them into a structure where third parties can see that they are actual businesslike relationships and not just cronyism. Just as law firms who don’t get legal ops will lose client relationships, legal ops folks who take a hardcore “procurement”-type approach will lose law firm relationships when those law firms come to feel they are not being treated as trusted advisors but as commodities. They will take their talents elsewhere.

In conclusion, it’s not relationships VS. structure. It's relationships AND structure. Human warmth AND process/technology. That is what modern law practice looks like.

Nathan Cemenska
Director of Legal Operations and Industry Insights

Nathan Cemenska, JD/MBA, is the Director of Legal Operations and Industry Insights at Wolters Kluwer's ELM Solutions.

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