The reality of collaboration

So I was recently asked to write a paper about ways in which law firms and corporate law departments could collaborate more. My thesis is going to be: Are you sure that’s what you want? Are you certain you know what you’re asking for?

Most of what’s been written on collaboration in the legal industry simply deploys the word as if we all agree on its meaning, and in any event, usually addresses internal collaboration within law firms, or supply-side collaboration between firms and other service providers. Examples of true collaboration between a legal buyer and legal seller are rare, and I think there’s a reason for that.

When clients yearn wistfully for greater collaboration with their outside counsel, they usually identify their goal as building a partnership with the law firm. But “partnership” implies a deep, long-term relationship between client and firm, one that reaches beyond merely tactical matters to address and fulfill fundamental client needs. The word “partner” suggests (as it does when used within a law firm) a high degree of trust and commitment, a sense of shared goals and mutual dependence. Implicit in this desire for partnership is an assumption that the standard firm-client relationship is coldly transactional, and that a collaborative relationship could deliver more value.

Note: Dysfunctional partnerships are seldom hilariously wacky.

But value for whom? If collaboration really is about partnership, then that enhanced value must be experienced by both participants. So our first question is whether the parties to the collaboration share the same understanding of “value.” Because if your partner in collaboration is not generating any value for itself, then you’re not really collaborating — you’re just shaking down your supplier (or your customer, as the case may be) for a better deal. 

From the client perspective, enhanced value in legal services might include the following factors and be measured by the following metrics:

  • Lower outside legal spend → saves money
  • More predictable outside legal spend → improves budgeting
  • Preventative risk identification and management → less litigation
  • More productive internal legal operations → increases efficiency
  • Fewer points of contact with a law firm → increases ease and consistency of service
  • Greater diversity within law firm personnel → fulfills corporate values
  • Greater alignment of value of task with value of provider → saves money
  • Free CLE provided by the law firm → enhances in-house skills

There are certainly other examples, up to and including the grand prize: a demonstrable contribution by the legal function to the company’s profitability, market share, or brand strength. These are all ways in which a corporate law department would consider its value to have been enhanced by a deeper relationship with a law firm.

Now, here’s a list of factors with which a potential law firm collaborator would likely define and measure enhanced value:

  • More money from clients → more profits for partners

I’m not trying to be cynical here. But I’ve dealt with a lot of law firms in my time, and the overriding value in the typical law firm really can be expressed in that one line. And the problem is that very few of the ways in which corporate law departments define “value” include giving law firms more money.

So we have a built-in disconnect. When a client comes to a law firm and talks about collaboration and partnership, what the law firm invariably thinks is, “This is a great opportunity for us to grow our business with this client.” Then, when the client starts pulling out some of these examples, there’s a startled silence as the firm thinks, “Oh. That’s what they mean by collaboration.” And the whole endeavour is kneecapped from the start.

The problem is that law firms aren’t normal businesses, and they’re not motivated by the kinds of things that drive normal businesses. Greater client collaboration might very well give the firm steady work in the coming years and first choice of high-end files and a more competitive position within the client’s industry, and so forth. But unless the whole effort increases individual partners’ profits this year, or at worst next, the firm will be cool to the idea. And if the collaborative effort actually reduces partners’ profits this year or next year, then the firm is not going to get on board this train.

To date, there’s really been only one type of collaborative initiative that has seemed to satisfy both client and firm objectives, and that’s convergence: The client narrows its panel of outside law firms, either increasing the amount of work the surviving firms obtain or, at worst, preserving the same amount of work in what otherwise would be a loss of the client and a revenue bloodbath for the firm.

But as research increasingly shows, convergence has not delivered the value that clients had hoped to achieve.

  • AdvanceLaw and its GC Thought Leaders Experiment has found that “clients with panels do not see meaningful differences in outside counsel performance for their matters (on quality, cost-efficiency, responsiveness, solutions focus, and the like) as compared to clients without panels.”
  • Casey Flaherty has written that he’s “long believed most convergence initiatives waste considerable time for limited benefit … convergence remains an excellent opportunity to leverage volume to reduce unit cost. Unfortunately, that is about as far as most corporate law departments take it.”
  • Dennis Kennedy recently argued that “convergence can, perhaps paradoxically, act as an innovation destroyer if not properly tended…. It’s hard work that requires constant attention. It’s easy to see how these programs can actually destroy innovation.”

Now, what AdvanceLaw (in a companion article), Casey, and Dennis all make clear is that convergence can deliver real benefits to the client and firm alike — but it requires careful planning, clear goals, frequent contact, and consistent follow-up, especially on the client’s part. These efforts all exact costs, from the client and the firm alike. So in many cases, it will be only very large law departments, and/or those with especially dedicated leadership, that can assume and manage those costs.

For an example of how to do convergence right — and of the effort required to achieve that goal — check out Microsoft’s Trusted Advisor Forum:

Microsoft asked its top external legal service providers to share two innovation stories at a Trusted Advisor Forum at its Redmond campus. In brief:

  • Tell us one way have you have gotten better in the last year
  • Tell us one way you will get better in the next year

The initiative flows directly from General Counsel Dev Stahlkopf. A few weeks after her elevation in April 2018, Stahlkopf set expectations with outside counsel during a relationship-partner lunch at Microsoft’s Corporate, External, and Legal Affairs Global Summit. One of her concluding slides read, “Our Ask of You: Partner with us to continuously improve and innovate.”

Yes, I’m channeling the ’70s today.

Read this essential analysis of the Forum by Jae Um at the Legal Evolution blog and you’ll appreciate the extensive thought, sophisticated strategy, and significant effort that Microsoft undertook to organize and execute this event. “Microsoft is doing something unusual here: sustained and intentional action underpinned by very rigorous thinking,” Jae concludes. “And the entire team at Microsoft is brave enough to do this with as much transparency and candour as practically possible.” But she also notes that many firms invited to the Forum struggled to meet Microsoft’s two requests (which is okay), while some firms simply declined the invitation to participate altogether (which is not).

And that’s the thing about collaboration: You have to show up to the relationship every day, and you have to work really hard at it, with goodwill and positivity, to get it right. Like a friendship or a marriage, each side has to take seriously not just the commitment to enter a special relationship, but also the hard work required to sustain and grow it.

That’s the reality of collaboration between clients and law firms — but neither clients nor firms might fully appreciate the costs of that reality. More on that issue in the companion post to this one, “The price of collaboration.”



3 Comments

  1. Peter D. Lederer

    As you know, Jordan, my working life as a lawyer dates way, way back into the last century. But it was BigLaw practice, and the billable hour issues had already raised their ugly heads. And yet I — together with many of my partners — learned to value highly the Trusted Advisor relationship (before we even knew the term!).

    Why? Because we cherished the value of being trusted, relied upon, involved in critical business decisions…in short, not simply being the purveyors of a service or the guns for hire. Yes, we also valued the increased predictability of work flow and — very highly — the ability to show our young lawyers the huge attraction of such relationships. But this was secondary.

    On the client side the value was also easily discernible: dedication, loyalty, undiluted attention, and, over time, a deep understanding of the business. The last, which today has often gone missing, was perhaps the greatest value of all.

    You refer to Microsoft’s fantastic undertaking. I suspect it is no accident that there was an interesting terminology usage to be seen there: from Strategic Partner Panel to Trusted Advisor Forum. For some years John Flood, of Griffith Law in Australia and UCL in the UK, and I have collaborated on exploring how best to reintroduce the Trusted Advisor concept. We believe it holds great value for client and law firm alike, that the skills can be taught, and that the necessary investment is modest compared to the payoff. And the skills involved will be human skills long after many others will have been taken over by AI.

  2. Michael Green

    That’s a pretty bleak view of law firms, Jordan! Not saying that it’s wrong. I guess “Go your own way” is the theme song.

  3. Jordan has performed a valuable service by highlighting the topic of collaboration. While we will suggest a few, relatively minor disagreements with his post, first we’d like to express our agreement with several of his points. First, we support his point that “[i]f collaboration really is about partnership, then that enhanced value must be experienced by both participants.” As one of us stated previously, “[i]nside counsel and outside counsel must have a great deal of empathy for the position of the other and for the other’s needs in the relationship.” (The “Art” that is part of “Partnering” by Foltz and Lauer, Corporate Counsel’s Quarterly, January 2001, p. 70.) In another context, “partnering” has been viewed as including the following alliterative components: “communication, collaboration, consensus and circulation.” (See Partnering: The “New Client-Firm Relationship” by Fitzsimons and Lauer, Corporate Legal Times (July 1997, p. 29.)
    Examples of successful “convergence” or “partnering” programs by corporate law departments (examples include DuPont Legal and Prudential Insurance) include the “careful planning, clear goals, frequent contact, and consistent follow-up, particularly on the client’s part” that Jordan cites as critical to the corporate client realizing real benefits from the program. We both can attest to the essentiality of those traits for success to arrive at the client’s bottom line.
    Now, as we noted, we have a couple of quibbles. First, Jordan states unequivocally that “law firms aren’t normal businesses, and they’re not motivated by the kinds of things that drive normal businesses.” (He also noted earlier in his post that “more money from clients → more profits for partners” and that “the overriding value in the typical law firm can be expressed in that one line.”) Without attempting to define fulsomely what a “normal” business is, we note that in the same paragraph he opines that “unless the whole effort increases individual partners’ profits this year, or at worst next year, the firm will be cool to the idea.” Isn’t bottom line profit the motivator for a “normal” business? Admittedly, individual attorneys often take inspiration from non-monetary goals as well (professionally, their ethical obligations suggest that they must to some degree), law firms are businesses and act accordingly more and m ore, as evidenced by the increasing number of firms that have nonlawyers as executive directors, managers, and in other professional positions.
    His statement about partners realizing from the collaboration effort greater profit in this or, at worst, next year represents to us the nub of the issue. Law firms typically hold a short-term perspective on their relationships with their clients (though they usually express interest in a long-term one). We recognize their need to remain solvent and to achieve ongoing existence by means measured monetarily. Accordingly, we believe that the burden lies on the shoulders of the corporate client (and, of course, its in-house lawyers and other personnel) to reorient the company’s outside counsel toward a longer-term view. That’s why, for example, the DuPont Legal Model includes among other initiatives deliberate efforts by the DuPont Legal Department to highlight and publicize to the public and the legal profession (including, of course, other corporate law departments) the success of members of its Primary Law Firm network in its representation. That law department recognizes its responsibility to ensure that the firms that contribute to its success deserve financial reward of their own.
    Jordan also spotlights several factors important to corporate clients and their associated metrics. We refer to characteristics such as those he lists as “value-related qualities” or VRQs, since they increase or decrease the value of the legal service (as measured by the client, of course). We explored the concept and utility of VRQs at length in The Value-Able Law Firm, which the American Bar Association published last year. Among other benefits, VRQs can serve very useful (perhaps even central) purposes in efforts to increase the positive effects of collaboration, partnering, convergence and the client-firm relationship generally, as we plan to explore in a separate piece.


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