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
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.
£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
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.
£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.
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.