Outsourcing In-House Lawyers
March 31, 2010 | Filed Under In-House Trends, New Services
A trend or a tactic?
Legal Week reports on a potential deal between Thames Water and UK law firm Berwin Leighton Paisner to transfer a significant portion of the former’s in-house legal department to the firm. (The Lawyer has more here).
BLP has formed a managed services group that is focusing on this option. A BLP partner, John Bennett, sees this as a big deal:
“This is a paradigm shift for the legal sector. The project itself is very exciting and a win-win-win situation. The client gets guaranteed performance standards, reduced legal costs, budget certainty and greater focus on its core business. There are also significant benefits for the general counsel and in-house team, as well as for BLP.”
(BLP is apparently seeking talent for this group here).
Legal industry veterans will experience a bit of deja vu, and recall a full-on outsourcing of Continental Bank’s law department to the Mayer Brown firm about 20 years ago. That deal had some one-off attributes and certainly didn’t start a trend (I think the Continental Bank GC became a partner of Mayer Brown, for example).
In this case, 13 out of 20 attorneys at Thames Water would go to BLP. One of the seven remaining lawyers includes GC Joel Hanson, and the sense is this frees him up (and the others staying) to focus on higher-value, strategic counsel.
The Thames Water/BLP arrangement could go from an outlier to a pacesetter. But you really need to understand the staffing model of the law department (and a roughly how it benchmarks headcount-wise against the competition). Also, the business dynamics of the corporate client may require it to consider this approach across other shared services such as finance, HR and IT. This sort of deal has been done with IT groups for years.
Kudos to Thames Water and BLP for exploring different ways to deliver legal services. It’s a reminder that some of time spent focusing on alternative fee arrangements can be used to pull back a bit so the bigger picture can be taken in.
The Apple iPad: Six Lessons for Lawyers
January 28, 2010 | Filed Under Law 2.0, Technology, New Services
Apple announced yesterday its new tablet Internet device, the iPad, creating a new category between a laptop and a smartphone.
Since I haven’t touched it, and it won’t be on sale for 60 days, here are a few early lessons for lawyers from 30,000 feet:
1. Fast is the new currency. From those who have used the iPad, its first and most enduring impression is quickly it works for the user. Once people see this, they will never want to go back to old and slow.
====>Lawyers will need speed as alternative billing gains traction.
2. You must control your strategic strengths. Apple designs (and wraps tightly into IP) everything that makes products different and better for the user. They may let others manufacture, but only a few trusted vendors to ensure quality (and competition).
====>Outsourcing and convergence are tactics, not strategies.
3. Focus on a few key things and hit them hard. As Apple’s COO Tim Cook said last year “We believe in the simple, not the complex. We believe that we need to own and control the primary technologies behind the products we make, and participate only in markets where we can make a significant contribution.”
====>Does “full service firm” sound distinctive or average?
4. You must present well. Steve Jobs and crew were in great form (full event here; you can get the essence by watching the first 10 mintues and then skipping ahead to the 1:29:00 mark, where there’s about 5 minutes left). One can only imagine how many hours of prep went into 90 minutes of presenting.
====>We are practicing law in a multimedia age.
5. Price matters. Mr. Jobs summed up the iPad: the “Most advanced technology, in a magical and revolutionary device, at an unbelievable price.” He isn’t just driving value from the features, his index also has cost at its core (and an iPad base price of $499).
====>Do you charge less than an iPad?
6. Liberal Arts was worth it. What caught my eye at the end of the presentation was the second-to-last-slide (below), accompanied by these words: “We’ve always tried to be at the intersection of technology and liberal arts. To be able to get the best of both, to make extremely advanced products from a technology point of view, but also have them be intuitive, easy to use, fun to use… It’s the combination of these two things…that let us make great products like the iPad.”
====>Lawyers might just be due for a Renaissance.
Legal Secondments with a Twist
June 2, 2009 | Filed Under Law Firm Trends, New Services
Mayer Brown is providing attorneys to key clients, according to the Chicago Tribune.
Secondments, involving law firms tasking attorneys to key clients for a defined term, are not new.
One part of this one is, however:
Mayer Brown is paying some of its associates to work in-house at corporate clients such as United Airlines parent UAL Corp. and Kraft Foods Inc. But there is a catch: The associates’ pay is reduced to $60,000 plus benefits, from about $160,000, and the jobs last one year with no guarantee of further employment.
It’s clear why some may like it:
UAL was a willing participant, said Paul Lovejoy, its senior vice president and general counsel. Why not? The company gets people with top credentials and good training for free and are under no obligation to provide a permanent position.
[…]
“These are well-qualified people,” Lovejoy said. “If they stay with us, we have the advantage of a nice, long tryout.”
I applaud Mayer Brown for coming up with a creative way of packaging a severance that helps the former associate keep working and helps a client (obviously a long-standing, major client) by delivering clear added value.
Assuming this is a one-way ticket from Mayer, Brown, it seems there are three options:
1. Client likes the former associate, and has a position. Hired.
2. Things don’t work out with former associate, for whatever reason. Gone, but with valuable experience.
3. Client likes former associate, but no positions open. Associate rolls over to another term, or hangs out a virtual shingle with a key anchor client. Associate & Associates, LLP.
Not sure if Mayer, Brown has given any thought to #3, but if it happens, it’s likely with work that they wouldn’t be able to keep long-term anyway with their current cost and pricing structures.
As with other data points in the global service economy, you can hear some of the helium leaking from the associate salary balloon. When the Chi-Trib writer notes that some of the “associates were making as much as $200,000″ and that a “first-year associate at Mayer Brown makes $160,000,” you know that’s not how things work for in-house counsel with limited experience.
Unlike the #1 movie at the cineplex today, the BigLaw starting salary trend is no longer Up.
Do GCs Want Change? A Rejoinder
June 20, 2008 | Filed Under New Services, Managing
My friend Bruce MacEwen swung for the bleachers this week with a herculean post in his Adam Smith, Esq. weblog.
Bruce takes a discussion from Legal OnRamp and puts it out there for all to see (his mention of Paul here refers to Paul Lippe, Legal OnRamp’s CEO). The subject is whether GCs really want change in the legal industry, and Bruce bravely answers “no”:
But I actually have a more subversive suggestion, which falls under “E. Other” in Paul’s schema: I don’t believe GC’s really want things to change, for all their trashmouth game talk. GC’s want their backsides protected by the imprimatur of the Magic Circle, the New York Elite, or the Skadden/Latham brand name. GC’s don’t want “good enough” quality; they want top-drawer quality.
It sure beats your run-of-the-mill “recent developments in trover and replevin” blog post.
I actually agree with Bruce on one level. GCs don’t want things to change. Who does? Change is hard to face and harder still to make work.
Where we part ways is over the conclusion that many GCs use top-tier New York and London firms on major deals and litigation because they don’t want change. It could just be the right tool for the job. And I really disagree about saying this is an exercise in CYA. GCs I know don’t think that way. (Maybe I’m just a hayseed from the Heartland…)
For most GCs, major deals and litigation are a minor part of their budgets, smoothed out over X number of years. In the rest of the spending, I actually see more signs of change, and a desire to change, than ever before.
Any one general counsel can turn a back on change. It may work for awhile, but over the long run, there’s a name for the person who will force the issue. Your CEO? Perhaps. Your CFO? More likely.
Most likely: Your successor.
You really owe it to yourself to pour a glass of cabernet and read through Bruce’s entire post. It’s excellent.
How general counsel can navigate change is a subject that I have been spending a lot of time on recently. I’ve mentioned two projects it in my Wired GC — Select newsletter in the last few months, and I’ll touch on both here shortly.
One thing we can agree on: for the legal market, change makes glaciers look fast. You better stand back at the right moment, however…
Tyco and Eversheds: in Depth (Part II)
May 29, 2008 | Filed Under Law 2.0, New Services
Today, some of my perspectives on the revised Tyco/Eversheds legal services agreement, arising out of a discussion with some of the firms’ principals. Part I is here.
Here we go:
– if firms want to wait until a proposal like this is perfect before doing it, it is never going to happen.
– there clearly is an importance of trust between firm and client before venturing off like this. No agreement, however well conceived and drafted, can foresee all issues that will come up.
– the advantage a first mover like Eversheds gets from this is that after they the sign up Tyco to version 2.0, they are already working on 3.0. Other firms are probably still discussing alternative billing in the abstract. How do you ever catch up?
– if a firm like Eversheds can integrate other smaller and more geographically focused firms on a project basis with technology and consistency, does the law firm of the future need to be in all places at all times? Do mergers or expansions therefore become more targeted and strategic? Note that Eversheds has no offices in North America.
– An arrangement with some of the key attributes of Tyco/Eversheds provides a level of commercial understanding for firm lawyers that is difficult to duplicate otherwise. It also provides these same lawyers with closer client contact that other firms either don’t get or are unwilling to share deep into the service team.
– There is a consistency and quality of service that is an essential part of the DNA of an arrangement like this.
– More firms may have to consider incentives related to preventing disputes if they want to be entrusted with ongoing litigation assignments.
I appreciate the time taken by Stephen Hopkins, Diana Newcombe and Martin Hopkins of Eversheds to talk about the evolving Tyco relationship. I expect more corporate clients to try out some parts of this approach if they want to improve legal services delivery in a way that can be quantified and incentivized.
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