It’s incontrovertible that sophisticated corporate legal departments have changed —albeit at differing speeds—the criteria they use to select outside counsel. These changes have risen under the banner of value. And yet, it’s also incontrovertible that most law firms struggle with what value means. Somewhere along the communication pipeline the definition of value gets lost. It reminds me of the game of telephone where a message gets lost in translation. So where is the disconnect? I frankly don’t know.
But’s here’s what I do know. We all do. Historically, law firms have prospered—some building venerable institutions—by defining value as what they offer clients through a combination of educational pedigree, professional excellence and outstanding results. In bet-the-company matters, this definition of value may continue to win the day. What I also know—as do those in the legal world spearheading and adopting the newer definition of value—is that educational pedigree, professional excellence and outstanding results are but components of value in most legal work. Law firms that limit themselves to the old definition run the risk of losing clients.
These actions suggest to me a new “corporate activism” that will increase.
So what are some of the additional components included in the newer definition of value? Let’s examine the oft-dreaded RFPs issued by corporate legal departments for clues. In the last several years RFPs for legal services have become more focused on the business of law. These RFPs continue to ask the traditional “what” questions on experience and results. It’s the new set of “how” questions that incorporate the additional components.
The “how” questions fall into several buckets, all of which are designed to ensure costs are well managed and predictable:
I caution against thinking that the newer definition of value applies only to work awarded under RFPs. Corporate legal departments are applying this definition to all work provided by law firms. They are actively monitoring how well their outside counsel meets these criteria and are willing to drop those who don’t. These actions suggest to me a new “corporate activism” that will increase in momentum and may finally place the client center stage.
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