Managing Legal
My post two days ago cited an American Bar Association ABA Journal article published just this week about what lawyers want to sell to business: Billable hours. It described the latest and most advanced software for, “ensuring that you capture — and charge for — all of your billable time.”
In the legal industry, using software to “capture — and charge for — all of your billable time” amounts to a tech “innovation”.
Apparently.
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But there was another development this week.
Announcement of a “moonshot” designed to reduce by 50% the $10.5 million legal spend of a Fortune 500 corporation.
This ambitious effort is a collaboration among (1) a business client in the Fortune 500, (2) a law firm, and (3) something called a “law company”:
- The client: Univar — A global chemical and global ingredients distributor and provider of related services with net sales of $8 billion in FY 2017 and reported to have $10.5 million in total legal budget.
- The law firm: ElevateNext, newly formed for this collaboration from among lawyers of Valorem Law Group, LLP, a litigation boutique formed in 2008 and known for consistently rejecting the billable hour and conducting rigorous project management of legal matters.
- The law company: Elevate Services, a law-related business that deploys technology, process design, and project management expertise to support the work of licensed lawyers — by proprietary software, services such as tech-assisted contract review, due diligence, and electronic discovery, and consulting to law firms and in-house departments.
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As this publication has explained before (see post here), the work of lawyers — lawyers’ legal analysis and representation in court and before government agencies — is invaluable to business.
But as a profession attorneys are fundamentally dysfunctional in the way that they deliver legal services to their client companies. The legal industry:
- Works to a business model based on billable hours (see post here) — encouraging overstaffing through “leverage” of employee-lawyers (here) — and thereby incentivizing placement of inexperienced lawyers in the composition of teams (here).
- Avoids widespread adoption of accuracy-enhancing (here) or labor-saving (here) technology.
- Assigns “bodies” to tasks (here) rather than design repeatable business processes or use other sophisticated management techniques.
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Each of the three participants in this collaboration is well suited to correct much of what’s currently wrong in the legal industry’s delivery of legal services to businesses.
First, the client.
Univar’s General Counsel, Jeffery Carr, is a pioneer in transforming his company’s law function to pay lawyers for value rather than sheer hours worked, to focus on prevention of legal problems rather than only reaction after-the-fact, and to create coherent, client-led direction to outside counsel rather than abdicate client needs to inconsistent demands upon the business client imposed by multiple law firms outside it.
As general counsel of FMC Technologies he took the total legal budget (outside counsel fees plus in-house spending) from $14.3 million annually in 2003 down to $9.5 million in 2013 — while the company’s revenues grew 4X (see post here).
Second, the law firm.
Valorem Law Group, LLP — founded by Nicole Auerbach and Patrick Lamb of the new firm ElevateNext — was founded in 2008 and has been one of a tiny handful of law firms which simply do not bill by the hour. Like the iconic Bartlit Beck firm (see post here), Valorem strictly avoids billing for its work based on time expended, and has instead become known for agreeing upfront with clients on the actual value of its legal services — with appropriate incentives based on actual outcomes.
Third, the law company.
Elevate Services has been a global company that provides consulting, technology, and services such as contract management, due diligence review, and e-discovery to clients. It performs tasks in the delivery of legal services that require technology, process design, and other work flow management expertise. Prior to founding and leading Elevate Services, Liam Brown founded and led Integreon, Inc. from 2001 to 2011 — another pioneering company in the same field.
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In Part II of this three-part series I address the distinctive backgrounds in legal innovation of the law firm and law company driving this collaboration.
In Part III I describe why I believe that the client in this collaboration is unusually well qualified to drive its success in cutting total legal budget by 50%.