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2.15.21: Council of Luminaries CLIENT-SIDE

The LVN Council of Luminaries is comprised of veteran thought leaders and pioneers in the business of law community. The objective behind assembling this group is to establish a brain trust of recognized, experienced and progressive leaders who can help interpret developments in the market, provide advice on how to successfully approach and navigate challenges, predict future trends and changes to prepare for, and to participate in targeted special projects to benefit the legal industry as a whole.

The below meeting was conducted primarily with the Council Of Luminaries CLIENT-SIDE group.

At today’s meeting, we discussed some of the data points from the recently published Inaugural Legal Pricing and Project Management Survey

Executive buy-in vs. buy-in from line partners and line counsel

Luminary 1 - GCs and law firm exec teams want to be leading edge. They will support initiatives that are leading edge. But the line lawyers sometimes are resistant and reluctant to new ways of doing things. Here, we’ve overcome that by having things in place where if you don’t want to play by rules, you have to get the GC’s approval. And that is not always forthcoming.

Luminary 2 – Do you mean fee arrangements?

Luminary 1 - Yes

Luminary 4 – I agree. If the mandate isn’t from the top down then whether lawyers come to the LPM and pricing team is almost random.

Luminary 2 – On value-based fee arrangements, AGCs often don’t know what to do and they are glad to have me come and do it. I ask for help with scoping. I’ll engage my colleague on law firm side to work with this. But the struggle has been the scoping. I don’t know their portfolio so I can’t just do it on my own

Sometimes we overuse a firm. The value of the matter does not need that level of firm. And the biggest culprit is our general counsel.

Also the diversity piece, in terms of tracking the diversity, the in-house counsel doesn’t always know what to do. It’s not so much lack of support from line counsel as much as lack of understanding. But we may be unique because our executive support is so strong.

Luminary 4 – It must vary greatly from law department to law department. If the goal is just to get spend reduced by 10%, that’s one thing. But if it is a fee arrangement around a portfolio, that could vary widely.

Luminary 2 – I’m a little surprised that the LPPMs are getting as much executive support as they are. I keep hearing that “our firm doesn’t really want to do that.”

Luminary 1 – also surprised that 75% of LPPMs say they get support. When we push, we find that the pricing committees, etc., push back.

Luminary 4 – Because adoption varies.

Luminary 1 – And because these firms are really managed as fiefdoms.

Luminary 4 – Maybe they feel they don’t need that much.

Luminary 2 – My personal belief is that Am Law 100-200 and down are more interested in this than the Am Law 100.

What is an AFA, anyway?

Luminary 2 – Are blended rates an AFA?

Luminary 1 – No.

Luminary 4 – Yes. Only a discount wouldn’t be an AFA.

Luminary 3 – That’s a great question. Does it change the way the matter is staffed, or the work is done, or the risk is allocated? If not and it’s just math, I’d say no.

Luminary 4 - We had a major litigation. The blended rate was something proposed, agreed to, it did change the way the matter was staffed. Anything that gets people thinking is good.

Luminary 3 – If it changes the way the matter is staffed or managed, then I say it is.

Luminary 2 – So much easier from an administrative side. Makes budgeting easier. But it does change behavior. We get a better value on the partner blended rate than the associate. So will the firm staff with lower-level people?

Do partners or associates provide better value?

Luminary 2 – Again, we don’t have so many litigation matters, but for us we are using partners more than associates. And we want people with the right expertise. I think there is more value there. I’d be in the blue 40%

Luminary 4 – Across a certain task, you can know if you’re using the data for right person at the right time.

Luminary 2 – Think about captive ALSPs. We are going through a portfolio analysis – one firm has a captive ALSP. It’s corporate work. We will use partners where necessary, then skip associates and use Captive ALSPs for the everyday work. We want to be selective about processes we own and supervise.

Engagement between LPPMs and LDOs Is on the rise

Luminary 1 – Even when I’m involved in conversations between LPPM, they are in conversations with line lawyers before I get involved. They agree, “This sounds reasonable – now go to legal ops to get it done.” Maybe the question should say “finalizing” legal terms? But it doesn’t bother me much when this happens. It helps get the scope fleshed out. That way when it comes to me, it’s just about price.

The 5% number who engage primarily with GCs are probably very high level and confidential or very small companies.

Luminary 2 – It’s the evolution of the process – scoping can start with line lawyers. What’s interesting to me is 15% that engage with procurement professionals.

Luminary 1 – Our procurement focuses on ancillary services.

Luminary 3 – When you look at what Buying Legal Council is saying, that number is not so high.

Luminary 1 – But they are not running AFAs. They may be running preferred panels.

Luminary 4 – I haven’t seen it either.

Luminary 5 – There’s a big disconnect between the general and the specific. We get the general from procurement – but we negotiate individual rates. But the procurement team doesn’t know what they are buying. But I care about the price list, and return of data, and more It’s often a hybrid. Some I don’t care about, but if we’re talking about legal providers, I’m directly engaging.

Are we talking past each other?

Luminary 1 - When firms reach out to me, I ask them to help us see around the corner. Don’t just pitch. Tell us about clients that we service that are similar to you. What problems should we expect to face in the future? Not many firms do that very well. The firms that do differentiate from those that don’t.

Luminary 2 – That’s one interpretation. But I think it’s more about the business. I had a different spin. I think they have a hard time understanding. Do they understand that we need a 5% productivity gain? Maybe they understand on the risk side. But not from a law department objectives side – what they need to present to leadership. I’d answer in the disagree category on this one.

But if that’s the way the law firms think about it – I’m surprised.

Luminary 1 – Our counterparts at law firms, the LPPM folks, they are trying to understand what problems clients face. They are inhibited by their partners and leadership who say, “Things are going well. Let’s not rock the boat.” So, I would agree they are making a strong effort. But those efforts are precluded by some roadblocks put up by law firm structure

Luminary 4 – Is “strong effort” an ad hoc conversation, or something more formal?

Luminary 3 – And is client feedback enough. Even if they’ve heard something – are they trying to do anything about it?

Luminary 2 – The biggest barrier is the law firm economic model, it’s PPP -profits per partner. But ours is also PPP – productivity per professional. And I’m not sure they really understand that.

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