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The New Value Checklist: Alignment

by Rose Ors

 

#2 of Four-Part Series | Originally published in the Legal Executive Institute Blog

· Client relations,Client Value

In an earlier blog post, I explored how law firms can deliver “value” as re-defined by the sophisticated buyers of legal services. For that post I spoke with a number of legal industry insiders — law firms and in-house legal professionals — on what constitutes “value” in the eyes of this growing chorus.

The New Value Model

These conversations led to three big-picture insights:

  • The traditional value model of industry experience, record of success and client service is now a threshold criterion in the selection and retention of law firms.
  • The new value model is client-specific on two fronts — at the relationship level and at the matter-specific level.
  • The new value model includes a checklist that, although unique from client to client, includes four common factors that apply at both the relationship level and the matter-specific level: (i) Alignment; (ii) Communication; (iii) Collaboration; and (iv) Operational Excellence.

Today, I want to focus on the first factor on the checklist — alignment.

Spotlight on Alignment

It’s instructive to begin by spotlighting how difficult it is to achieve alignment. No one has more simply framed the difficulty than Harvard’s Business School marketing legend, Theodore Levitt when, in illustrating marketing myopia, explained that, “People don’t want to buy a quarter-inch drill. They want a quarter-inch hole.” In addition to its visual power, Levitt’s lesson is that in the context of a seller/buyer relationship it’s the seller who must step into the buyer’s shoes. That is where alignment begins.

The near total absence of alignment between the seller of legal services and the buyer of legal services has a long history even in the halls of corporate America. In the early 1990s, DuPont’s legal department rolled out its “convergence” model that redefined the place DuPont would take as the buyer of legal services by moving it directly to center stage (Levitt’s consumer-first precept).

The near total absence of alignment between the seller of legal services and the buyer of legal services has a long history even in the halls of corporate America.

The brilliance of DuPont’s model is that while it made its business interests the quarter-inch hole, it concomitantly incentivized its outside legal providers to do business differently by offering them a classic partnering arrangement. DuPont’s partnering solution presented a win-win approach that still stands today as a “best in class” alignment of business interest model.

ADM’s Approach to Alignment

The Archer Daniel Midland (ADM) legal department and its outside legal counsel are aligned around a singular goal “to continuously improve how we add measurable and meaningful value to our internal business clients,” explains David Cambria, ADM’s Global Director of Operations for Law, Compliance and Government Relations.

But it was a different picture in 2013.

It was clear that the root of the problem was a lack of alignment at the company level between the legal department and the business units. Achieving alignment required a multi-layered approach that included evaluating its roster of 700 outside law firms— the outside-next step.

Cambria joined ADM in December 2013 at the request of ADM’s new general counsel, D. Cameron Findlay. The two men had known each other for more than 10 years, five of those years working side-by-side at Aon where Findlay was General Counsel and Cambria was Global Director of Operations in the Legal Department. Six months into his new role at ADM, Findlay wanted Cambria to help him get to the root cause and develop a solution to a pressing problem: a global portfolio of outside law firms totaling a staggering 700 firms worldwide.

It was clear that the root of the problem was a lack of alignment at the company level between the legal department and the business units. Achieving alignment required a multi-layered approach that included evaluating its roster of 700 outside law firms.

 

Cambria began the process by asking a simple question, “How did we get to where we currently find ourselves?” The “we” was ADM. Cambria’s inside-first thinking is as simple as the question, “We have to own our own behavior.”

What he found was a de-centralized operating model where both the business units and the legal department hired outside counsel, oftentimes without any coordinated effort. The company’s pricing negotiations focused exclusively on discounts. Outside law firms’ performance reviews were episodic and, when done, not measured against any consistent standards.

It was clear that the root of the problem was a lack of alignment at the company level between the legal department and the business units. Achieving alignment required a multi-layered approach that included evaluating its roster of 700 outside law firms — the outside-next step. Cambria describes the evaluation process as “holistic” explaining “we looked to identify not the law firms, but the lawyers in those firms whose history with ADM aligned with our goal to establish an outside counsel partnering approach.” Once those lawyers where identified, Cambria and Findlay took to the road to meet the partners and to ask them, “Who else in your firm is like you?” The outcome is a cadre of about 20 outside law firms — the ADM Law Firm Alliance (aptly nicknamed ALFA).

The inside/outside approach to alignment has been a home run for ADM. The law department’s role is an active leader and partner in preserving and creating value for the company.

“We constantly ask ourselves, ‘What are we doing to preserve or create value?’” Cambria says. He then paused and added, “That focus drives everything.

We hope you found the article helpful.

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