Tag Archives: legal procurement

6 Top Tips For Starting A Law Firm Performance Management Process

Law firm performance is not managed very effectively in most organisations as shown here. Stacey Coote offers 6 top tips for starting a law firm performance management process.

I have seen millions of pounds in benefits delivered from good law firm supplier relationship management (SRM) processes despite the fact that they are not always managed very effectively. Below I have provided 2 case studies on why you should initiate an SRM process for law firms and 6 Top Tips on how to initiate a law firm SRM process:

Case Study 1

Background

Programme instigated at the end of the panel process saw the law firms and client meet once a month to go over feedback from the business and the law firm provided 360 performance feedback.

Results

£5M+ in benefits from:

– Two law firms recommended new market offerings, which resulted in £4M in revenue generation.

– A law firm highlighted that a number of business units (BU) were sending the same documents multiple times (leading to increased review costs) so a new policy was written to eradicate this behaviour.

Case Study 2 

Background

SRM programme instigated which saw law firms provide detailed performance management information (MI) and meetings were held quarterly with the client to discuss the same.

Results

£2M in benefits from:

– Law firms had numerous associates and partners attending weekly calls, delivering no value to client or law firm. Outside Council Guidelines changed so firms only attended calls / parts of calls they needed to and only associates / partners required attended the calls.

– Evidence found of firms consistently settling claims too early (to benefit from the low fixed fees agreed). Work moved to other panel firms who performed more in the client interests (NOTE: this was driven from good MI).

Below are my six top tips for starting a law firm performance management process:

Step 1 – Stakeholder Engagement

To be honest this might be the hardest step in the process. I was literally shouted at by a GC when I first tried to initiate an SRM process for her law firms – so it’s not an easy nut to crack!

However, the best bet (as I learnt from that experience – and other equally bad experiences!) is to meet with key stakeholders (e.g. key decision makers) and agree the key objectives (step 2) of an SRM programme.

NOTE 1: It’s likely an easier sell if you don’t refer to it as an SRM process – the typical response I have received to this terminology being ‘we are not monitoring a paper clip supplier here you know!’

NOTE 2: If you have a small amount of legal spend and only a few stakeholders it will likely be possible to engage all stakeholders. However, my approach above is based on companies where hundreds of individuals engage law firms daily for the organisation.

Step 2 – Agree Objectives

Once you have stakeholder engagement you then need to agree the objectives of the SRM process e.g. innovation, savings, better case management, better litigation outcomes, identifying key lawyers you work with and want to work with more and ones you think are poor and want removed from the account etc.

Whatever the objective is it needs to be agreed up-front with all stakeholders so that everyone participates actively to ensure the process delivers benefits.

Step 3 – Agree Ownership

You need to agree who will own what e.g. will Procurement work with the firms to improve performance or Legal Operations or the Legal COO etc.

I have seen organisations where procurement were not interested in running performance management processes so it was all managed by the Legal COO office. Equally I have seen procurement teams run the whole process.

Overall, I feel a team approach is the best approach and this is where the most benefits are delivered in my experience.

Step 4 – Agree Approach

It is then important to agree upon the approach and some areas to think about include:

  • What business units will be in scope
  • What support will the business units need to provide to ensure success
  • What firms will be in scope
  • What incentives will there be for the firms to participate (if any)

Step 5 – Agree Frequency

You also need to agree the frequency of the SRM process. For example – you might want to have monthly management information but a file audit is completed just once a year.

In my experience, less is more. Trying to do things too often means you lose momentum and you get poor engagement as people have too much to do already. Remember SRM is generally a bolt on to someone’s day to day job. Ideally you would have a team managing performance full time but it is unlikely you will have this luxury.

Step 6 – Agree what happens to results

Finally, once you have the results you need to decide what happens i.e. do you share with everyone, with the firms and key decision makers only, do you meet firms to go through results etc. and what actions are required plus associated timelines for remediation.

360 Feedback

One final point – I have found 360 feedback from firms the most valuable element so please don’t forget this component. It might tell you things you don’t want to hear and two quotes that spring to mind include:

‘You have us join calls we are not needed on, which is costing you money unnecessarily’

‘You are not paying us on time so we have to increase our rates to take account of being a free credit service provider for you’

However, sometimes firms have amazing ideas that can generate extra revenue (Case Study 1) so please do get their feedback on how you can be more effective as an organisation!

I wish you good luck in implementing an SRM programme!

Stacey Coote is a Legal Procurement Expert and a Partner at Coote O’Grady, a specialist Legal Procurement Consultancy.

6 Top Tips for Collecting Legal Spend Data from Law Firms

Do you have the data you need to understand your spend on legal services? It’s not about the volume of data, it’s about the quality of the reporting.

legal spend

Very few organisations have the granularity of legal spend data they need – they often think they are capturing this information or can get it from their internal systems.

However, when it comes to trying to use this data for a panel review or any kind of spend management project, most organisations very quickly realise their data in inconsistent, limited and simply does not offer the level of detail they require.

Organisations, therefore, often turn to their law firms to provide management information to allow a better understanding of spend levels, cost averages and, to a degree, law firm performance.

Here are our top tips for efficiently collecting this data.

1. Clarity on your reporting requirements

Start at the end. What reports do you want to see created from the raw data? Be ruthless in listing the real drivers for your project. From this, make a list of the key data fields you will need to create these reports.

2. Stick to the above!

It is very tempting to add more and more data fields to your list as your project continues. Very few organisations can actually handle the amount of data they capture, and by handle we mean put to a practical use within your organisation.

3. Be honest and practical

Few organisations have unlimited resources. You need to stick to a core list of reporting requirements. Too often this kind of project is started and balloons into something all-encompassing, becoming impossible to complete.

4. Complete the project

This, again, seems simple but often this kind of project is abandoned or the vast amount of data captured is out of date by the time the analysis is undertaken.

5. Ensure law firm consistency

Ensure you have empowered someone to manage the law firms and insist the law firms comply with this new format. Law firms are known to tweak data fields to suit their internal system.

If the firms provide different data sets it means you can’t accurately compare performance.

6. Some analysis is better than nothing

This really underpins all the above. Have a core list of reports and collect the least amount of data to ensure you can create these reports.

Don’t fall into the trap of thinking you will fix all problems in one data capture. Data is quickly out of date and you do not want to waste everyone’s time.

What to Report On

If you’re not sure where to start, here are some reports you can create using your spend data.

  • Spend by firm – an obvious metric as you need to know the overall spend by firm.
  • Spend or hours by timekeeper – this metric allows you to accurately perform ‘make versus buy’ decisions. For example, whether hiring more lawyers internally would be more cost effective than using external firms. You would also need to consider liability risks associated with this approach.
  • Spend by matter type – you need to understand this to understand the types of legal work being performed (is it M&A work, employment work, etc.).
  • Spend type (fees or expenses) – it is important to understand how much of the spend is on lawyers versus other expenses, and what those expenses are.
  • Number of matters – this allows you to look at overall volume relative to spend. Is spend increasing because matters have increased XX per cent or has the matter mix changed? For example, M&A matters are more expensive, raising overall cost.
  • Spend by matter – this metric allows you to review the big spending matters to see if there is anything you can do to reduce costs.
  • Timekeeper level – this metric allows you to look at the level of lawyer performing the work so you can analyse the efficiency of the lawyer.

Caroline O’Grady is a legal services procurement expert and a parner at Coote O’Grady, a specialist Legal Procurement Consultancy.

6 Top Tips for Running a Successful Law Firm Panel Process

Running a panel tender for law firm services can be challenging and time-consuming. So what can procurement do to ensure they tick the right boxes?

panel tender law services

A panel tender process can be long and arduous for all parties involved. A recent survey said 42 per cent of law firm respondents spend over 15 hours on each tender, with 19 per cent spending over 20 hours.

Firms complete multiple tenders each month. When you think that most respondents are partner or director level, this adds significant additional cost to a law firm’s operations. This will, in turn, factor into increased costs for the client.

Any tender must be targeted and specific, and aim to get to the right result as quickly and efficiently as possible.

We have set out our top tips to ensure a successful panel process below:

  1. Agree a clear strategy

Whether it is procurement, in-house legal, or claims managers, who ever uses the legal services and, ultimately, whoever is involved in selecting the panel composition, need to agree the strategy for any panel review.

You should consider questions such as:

  • Are you looking to reduce firm numbers?
  • If yes, how will you manage conflicts?
  • Is the aim to reduce costs?
  • If yes, how do you plan to manage increases to ensure firms remain incentivised to provide the best possible advice (and lawyers)
  • If no, how do you plan to manage increases and ensure you are not overpaying?
  • Do you want to look at innovation and technology?
  • Are you focusing on AFA’s or hourly rates?
  • How long will you look to hold rates firm for?
  • How will you manage individual lawyer annual increases? (For example, as a lawyer goes from being 1 year post qualified to 2 years post qualified)
  • Managing exceptions to the panel – how will you do it? (For example, if you need to use a specific partner from another firm due to expertise)?
  • How will you manage historic matters and pricing – especially if a firm is removed from panel?
  • How will you factor in and measure historic performance?

You need to make sure you document this, ensuring everyone is clear on and signed-up to the approach.

  1. Full understanding of legal spend

This may sound straight forward but for most organisations it is not. Many organisations resort to asking their own panel firms to provide spend figures to allow for more accurate analysis of historic spend patterns.

Many organisations find that when they come to undertake a detailed analysis of spend, there are limitations on their data. For example, data might not detail fee earner level, or how many hours a firm works on any individual case.

Real data and real analysis allows for side-by-side comparison of law firms, with the ultimate goal being to obtain data that allows for some means of understanding both cost and performance.

  1. Stakeholder Engagement

Too often procurement teams drive panel review processes without real input from those who use the legal services. On the other side, in too many organisations GCs and in-house counsel run tender processes without valuable input from legal procurement specialists.

You are left in a position where many tender processes do not deliver on the strategy set at the outset as old alliances between in-house counsel and law firms remain, or procurement drive too hard for reduction of cost. Some organisations have a more cohesive and collaborative relationship between legal and procurement but these are in the minority.

A real attempt must be made to bring together a “core team” to run the legal tender process, who are bought into the overall strategy and work together to run the process.

  1. Sticking to the strategy

Often great strategies are set but ultimately decisions are taken on hourly rate reductions or past experience with a firm.

While neither of these reasons of themselves are incorrect, if your strategy was to reduce your panel, you need to look beyond relationships, and take tough decisions.

Too often, final panels can be decided upon, only for an unsuccessful firm’s senior partner to get on the telephone to a key decision maker asking that they be reappointed – and they are then reappointed. It is very common and hugely undermines the value of the whole process.

  1. Concise RFP

If all you are interested in is rates, do not draw up lengthy RFP documents. It is still quite shocking to read some RFPs. They require weeks of a law firm’s time and require a whole host of analysts to review the responses. And this doesn’t even consider senior management time to accurately digest responses and take decisions based upon them.

Be honest when setting your strategy. Experience dictates that while you genuinely believe the questions you ask will form the basis of the panel decision, there are only a few core drivers. These include: rate; geographic spread; expertise; and departmental spread (particularly if looking to consolidate your number of firms).

This sounds simple, and many companies believe they are adhering to this. Yet, time and again the examples we see are unnecessarily detailed and burdensome to both sides.

  1. Performance management

The linchpin for much of this is performance management. In our experience, most companies either overlook this entirely or invest very little resource into it. While they will invest a significant amount of internal time and money on a tender process, they then fail to monitor performance, or measure any element of it, during the tenure of the panel.

The next tender rolls around and they undertake the process armed with only rates and anecdotal information on a firm’s performance. Organisations need to focus on understanding what value a firm brings them. Are they getting the best service for the best price, whatever that may be? This involves investment of resources into understanding what value is for you and how to go about measuring it.

Stacey Coote is a Legal Procurement Expert and a Partner at Coote O’Grady, a specialist Legal Procurement Consultancy.