Deal governance for legal services

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first I'll introduce Casey Sullivan he's Bloomberg's senior editorial director for its big law business property and then our two speakers today are Lori Robinson hadn't Hayden forgive me senior VP of us and the assistant GC of the CBS Corporation as well as Michael Kaplan coo of goodwin procter so Casey I'll turn it over to you thank you so let's just jump right into this we have 20 minutes we'll be covering valuing legal services so we'll be covering anything from pricing discounting how in-house attorneys are overseeing different legal matters the first question is you know clearly there's a greater need among in-house counsel for predictability since the recession that's changed how law firms operate both of you have you seen your role change in the law firm client relationship and light of all of that oh you want me to start okay so that's a good question i bring a I think I bring a pretty unique perspective on that because before joining goodwin procter as their global chief operating officer i was on the client side as the chief operating officer of the legal department of goldman sachs for a number of years and then also marsh mclennan so coming to Goodwin I used to be I used to be the one that managed all of outside counsel spin and was the one that really you know was hard on the law firms and now here I am working for a law firm go figure so but at the end of the day I think bringing the client perspective to a law firm today is very important it's it's critical because besides the predictability of fees that clients are very interested in and being an ex-client I understand how that that plays into the whole budgeting concept but alternate arrangements and the ability to manage pricing and partner with clients so you're investing in their risk is really important so as the chief operating officer I have a pricing team and I also work very closely with our business development team and as we partner with our clients across multiple industries and multiple business units such as whether it's a litigation matter or it's a specific transaction middle market funds and funds in real estate capital market we work very closely on working with clients that say okay besides our billable hour and besides a discount let's talk about this as a project what's the client going to work on what are we going to work on how do we establish leverage if a partner is going to be part of the process what do you want the partner to do if we have an associate paralegal etc how do we build the leverage in the model and build that into the pricing the other thing that we're very focused on a good one which is I think pretty unique to a law firm is we're very open with our clients as we do these types of pricing Arrangements what our realization is and what our profitability is going to be law firms used to really push away from that used to get the heisman if you ask the law firm can you share your profitability with me on this matter and what that does is it gives us the ability for the client to understand that as we build institutional knowledge on recurring matters and we begin to build real partnership and we're investing in the relationship by us sharing realization and profitability there will be times where we're going to take less profit make investments they're going to be time on high-risk certain matters where the clients going to want to pay a bonus so the more open we are the more forthcoming we are about pricing there is predictability but it creates relationships and partnership and what I would add is agreed with everything that you said but when we talk about value in the way that our law firms can add value to our legal matters that they're handling we focus on diversity as well the staffing of our cases with diverse outside counsel that's critical to us at CBS as many of you know there's several benefits of using diverse attorneys on your legal matters number one it gives you an opportunity to have different people on your team so you're getting different perspectives those different perspectives translate into providing a more enhanced legal strategy in addition when you have a case that may be going to try your jury jury pool may likely be diverse so it makes sense that you would have diverse attorneys involved in the case strategy in addition to having people who are at the actual jury trial where the people in the jury pool are looking watching processing and assessing and making a determination based on your case and diversity is the right thing to do Laurie I think you bring up another good point so you know as a law firm diversity is brought up all the time so you know Goodwin it's it's very interesting for us because we're very focused on diversity and inclusion so what we've really spent a lot of time working on with our partners and our staff it's not just necessarily hiring diverse attorneys and that means whether it's people of color it's GLBT it's any specific protected class that falls into a diverse area it's about inclusion as well and I can tell you as next client when we used to have law firms come in and pitch it was very obvious when you're when you were at a client that's a very diverse and inclusive group when a law firm would come in and pitch and you could just tell they would bring people for the pitch which is very you know it's a very you figure it out very quickly because part of what you have to do in your pitching business and business development is you have to show these are the people are going to be doing the work and the inclusive aspect of diversity is the diversity and inclusion is something that is a law firm you have to think about very strategically to your point on staffing matters on doing professional development and training on making sure that are your partners of the firm are our pitching diverse diversity inclusion at the same time their pitching the business so you know our Chairman at goodwin procter he actually leads the diversity and inclusion group it's interesting we I think we're the only am law 50 firm that has a chairman used to be an ex-police officer so it's uh you know he really believes strongly in diversity inclusion it's actually played very well to that everything you've just did and I'll just add one sentence to what you said yeah it might be more than one sentence but at CBS we started a diversity committee for our law department maybe about six years ago and we created something called a new matter form so anytime we engage outside counsel on any new matter they are required to fill out this form in one of the categories that we have relates to diversity well we have this matter just staff with diversity and if so who will likely be on the case but importantly to your point we also track those matter forms we have a committee every month we pull up the statistics to see you know what the utilization looking like in our company impresses upon the lawyers who are handling the legal matters you know ensure that you're looking at the hours so that the people who pitch you know you're looking to make sure that they're actually working on the case it's great like how do you use data when you're looking at different cases you know big data has been something that has been talked about a lot in the media but you know it's kind of difficult to get a sense of you know what's actually working what's not working how how do you use it well how do we not use it is the question you know i think you know data is critical for us as a law firm to evaluate multiple areas of our success you know besides the traditional financial metrics and financial analytics that we're looking at as a law firm which is no revenue and profitability and profits per partner and revenue per lawyer and everything that comes along with your success is a law firm and how you compare with your peers we look at data around you know our clients success you know we what we've learned at a law firm and I could tell you again as the next client is our clients have as much if not more data than we have today and we've seen a real shift in that in the last three years clients have electronic billing clients have matter management clients ask every law firm to you can only build with the attorneys that are in our system with these specific rates or these specific discounts we're going to look at leverage we're going to build analytics on a matter by matter basis so as a law firm when you start to look at not only how you evaluate matters based on specific information such as how long does it take to get through a deposition if we're going to do a summary judgment or motion to dismiss how do we go to a climb and try to price that how do we invest in the clients risk so we'll give you a fifty percent discount but if we get it dismissed we'd like to get one hundred percent of the fees as a bonus well we have data to show why that works and we also have data to show why that investment works from a client perspective on the flip side we use a lot of data ourselves to make sure that we are investing in the right technology that we're moving to a mobile platform that we're becoming very focused on data privacy data security data privacy and data security and cyber security if you haven't been reading the papers lately it's kind of important to a law firm these days we have multiple public companies multiple banks and financial institutions that audit our technology and our systems all the time so we need to have information around our data privacy and data security of our client information to show that it's secure it's intact so we use data to look at our own metrics we look at data look at our client analytics you look at the data look at our matters we look at data look at our people and then we also look at data ensure that what we're building from a technological and innovative perspective is not only you know in front of what other law firms are doing but we're trying to be as proactive and as innovative as we can so we invest a lot of money in that I'd imagine that when you're looking at the numbers you know you can see how you would inform your legal strategy around a particular case in terms of you know what's the client benefit and what's the law firm benefit how do you manage that well hopefully hopefully everything we do is a client benefit right i mean that's that's kind of the business we're in our strategy the case again you know what we've done is we we have business units and we have specific business units for private equities business units for real estate or tech and life sciences or IP or specific litigation on the specialty side and we have is we have key relationship partners and relationships with clients what we've also done as we vary we're very focused something that I've brought through a program management office to Goodwin is we want to bring the business of law and the practice of law together so we want the lawyers to be lawyers we want our operations and our professional staff to manage the business of law so I'll give you an example a lot of the investments we've made in clients we help clients with their outside counsel building guidelines if they're going to invest in an e billing or matter management provider we help them with the RFP because we know all the providers we know who the people are we save them hundreds of thousands of dollars on technology expenses we help them with discovery services we do this all for free it's all about the client being satisfied it's all about the client showing that we're invested in the partnership because we know that we're not going to get a big litigation right away but if we can invest operationally in the business of law and helping the client be successful with specific data points they'll to us they'll think about us where we're working with the business component of our firm in a way that law firms have not done that in the past and our lawyers are working on the practice of law and the way that they've traditionally done that because lawyers don't want to do this part so we're happy to do this but what we find now is most clients they have chief operating officers and technology people and financial people and people that are looking to invest in technology and be innovative so why not come to a law firm to ask for support and helping that we're more than happy to provide because what it does is it again we're investing in risk and it's building the partnership if you look at the traditional sales model of a law firm on average it's twelve touches till you get a matter-antimatter and a lot of lawyers after the second or third touch and a law firm go my god I've had lunch with this this person three times they haven't called me and I give up well that's the wrong approach the approach should be how can I help this client even if i'm not getting legal work so their success and our success are tied to the business of law and practice of law of working together throughout the life of the relationship so when that 12th touch hits and we get the matter hopefully it has to do with some of the work we've done on the operational side where are you spoken about the early case assessment process can you talk about how that helps you in terms of how the predictability engaging on how matter is going to go yes what we utilize that CBS is the early case assessment it's a part of our outside counsel policy and the early case assessment is very beneficial to our company in that we are able to manage the legal spin we have a template that we provide to the outside counsel and we ask them to figure out and tell us who's going to be on our case how many people will be staffed on the case what will the legal strategy that you're going to use to get us from A to Z and then the important piece let's talk about the pricing how much will you be projecting to spend through summary judgment and then after summary judgment if we go to trial how much are you projecting trial will cost and if trial is not successful how much are you anticipating the appeal will be and I think what's great about the early case assessment is it takes the surprise out of it you know already in advance ahead of time what the plan of action will be you know speaking to your point Michael you should know what the trends are with respect to the type of cases that you have if you're in house and you will be able to know that if someone says you know we're projecting it's going to cost twenty thousand dollars to put together an answer in a single plaintiff employment case you know based on your trends that in typical cases that may only cost five thousand dollars so when they lay out to you their plan of action how many depositions they're planning to take you can talk to them about the strategy you can help to talk to them in advance about reducing the cost and working in discounts if needed in flat fees for some of the tasks and I just think it's an effective tool and once you get your early case assessment you don't stop there one of the things that I like to do when I'm working with outside counsel I'd like to circle with them each quarter you know after q1 you know what are we planning for q2 what are you envisioning the task will be what do you envision the legal spin will be and then I can go back to that early case assessment to see where we are and what they projected initially to where they're planning to go and we can make some adjustments if need be and I think just as important with the early case assessment once you know what the strategy is you can also make the determination if alternative dispute resolution is something that you should look at before you start incurring your costs and discovery you Britt that's another good point so as a law firm we love that right you wanna I think everyone who's a client you should hand this whether it's an early case assessment or it's any type of rfp that you're giving out to a law firm for any type of litigation matter for example you should ask for that specific information and here's why first of all the litigation landscape has changed dramatically over the last three years the revenue and a law firm on the litigation side besides some premier law firms that focus on litigation it has changed organizations are hiring more litigators organizations are hiring more junior attorneys to do some of the junior work they don't just call the law firm and say handle the entire litigation what you also get to get a lot of free legal advice you get to see 5 or 6 early case assessment sheets come in from five law firms then they may have three or four different strategies that helps you think about that internally and then finally what it really does for a law firm is it yet it actually sets that it sets the bar in the platform not only about how you're going to strategize on this but it gets you in contact with the client to make sure the clients thinking about this the same way you are so you're not at a disconnect I love the idea about the quarterly meetings one of the things that I think law firms should be more focused on is handling matters as a project the whole project management focus you know whether it's a technology project or a legal matter you have to have communication you have to have integrity you have to have certain start and end dates there's cost involved there's risk and you have to be able to have those conversations because too many times as a law firm and too many times when i was on the client side you get that phone call as a client you know i know we said it was going to cost us x but it's x it's for multiples of x and we never had a conversation about it and it's really important to continue that dialogue and one thing that we're very focused on a good winner I think a lot of law firms are focused on today is ongoing continued dialogue and that template is the start of that process I think that's great so we've spoken a bit about the law firm client relationship but Mike within the law firm itself you know I would imagine that just you know the whole idea of business manager is overseeing practicing lawyers who have high egos and you know is there how you manage that tension in terms of like you know the operations department telling the lawyers what to do wow you set up high he goes I never heard of that before I mean it's that's him talking that's not me all right so I think it's really important for law firms today to understand the value of operations you know so if you look at my job you know if we have over 400 professional staff at goodwin procter and we're a pretty profitable firm the professional staff from IT to finance the business development marketing communications HR pro bono diverging inclusion etc what we've really tried to focus on again back to the business of law and practice of law is everything goes back to the client relationship everything goes back to how can we best work with our clients and relationships for example you know coming from a corporate background and bringing the client perspective the relationships that I have in the industry I may not be the lawyer which by the way selling legal services as a non-lawyer is great because you don't have to do the work you just have to get the right people to the table all right but when you get them to the table my job is to not only manage the relationship but my job is to make sure that our lawyers are providing proactive information around pricing proactive information around operations proactive information about diversity and inclusion proactive information about specific conferences and events and panels where we could partner inviting them to certain activities here's the other thing that clients love to hear okay no client wants to just have an outside counsel at 500 bucks an hour plus that just says yes to everything you want to be able to have outside counsel if there's a differing opinion if there's a differing way of doing things that is proactive enough to say I have a different thought in this let's have a conversation and then you also want to have outside counsel that has a staff that can provide information to clients on things in the industry and things that they're reading what our marketing research team does about that client that could be useful to them because that makes them look good so what yeah what law firms today and the high egos of the partners have to realize is there's real value in having the business people in your law firm add to the client experience and as you continue to do that more not only do you continue to maintain the relationship with the client but you get paid faster you don't fight on the bills as much and that is a it's a little bit of a longer term outcome but it helps tremendously when you've been a really good investor with a client and it's your fiscal year end and you need to check it helps a lot and that's how it's part of how we're successful is a law firm Lori what are some of the most innovative techniques that you've seen in-house law departments using this regard we have an organization corporate counsel women of color and it brings together lawyers from you know fortune 500 companies and when we talk about at the conference ways to get control of outside counsel legal spin I know you don't like that topic the way I just phrased it but you know when we come together we just hear about what different people are doing so for example Halliburton they have a huge alternative dispute resolution program that they launched several years ago and a part of their program i'll just give you a quick snapshot is that they encourage their employees to come through the ADR program i believe that they offer employees if they utilize the Halliburton ADR program they will pay their legal fees up to a certain amount and when they first launched the program they cut their legal spend significantly because the ADR program enabled them to keep a lot of the cases from getting to the point of litigation another company that for example they're presenting this year is google they're going to come and talk to us about the strategy behind cost savings in terms of how do you move your ediscovery you're not going to like this either from the law firms in how we that's happened okay I'm so for those of us who you know we're just listening and learning about what other people they're doing you know I think the consensus is a lot of that legal fees spin can go toward the e-discovery piece I mean even if you can bring some of it in house and you mentioned it earlier utilizing other staff members on the on the legal team to do that type of work you know our bottom line is we want to add value to our business clients and some of these strategies that you know other companies are utilizing we bet we can benchmark and we can share and collaborate and just add value as lawyers you know just on the e-discovery piece you know you bring up a good point about back to the business manager piece you know so a lot of claw and in corporate legal departments today in their outside counsel billing guidelines they say these are your preferred vendors whether its discovery it's court reporting etc so on the law firm side we what we've done is we have our preferred vendors as well that we've negotiated pennies on the dollar for example for document review or e-discovery services or mock trials or court reporting etc so when we work with clients obviously if a client has that will take their specific vendor but a lot of clients don't have that and if you get out of the big public company in the banking and financial institutions and you do a lot of middle market work or private company work like we do clients a lot of times we'll say you know I'm going to give this to you and I'd like all the discovery we're like 10 don't give it to us we have a vendor that has an onshore offshore capability that's going to cost you five cents on the dollar what you would have been paying us and we have found that again and similar to operational support ask your law firms about their vendor negotiated deals because you may even find it's better than what you have and that kind of only that could do two things you can use that vendor and try it out or you could go back to your vendor and say why am I getting a better deal from this vendor you need to match that so it helps tremendously again the real the real message here is partner with your law firms on these types of questions because we want to help any way we can and from an operational vendor perspective that will save you money as well well it looks like we're just out of time but our 20 minutes has expired but thank you very much for thank you for having over get with us thank you