How do law firms create a value culture that becomes a key differentiator in the race to win over new clients? That cement and expand their existing client relationships?
“They are now table stakes to be invited to and kept in the conversation,” according to David Cambria, Global Director of Operations for Law, Compliance and Government Relations at Archer Daniels Midland Company. Cambria said he believes the recalibration is due, in part, because in-house legal departments are undergoing their own value culture assessment. “The legal department is continuously striving to improve how it can redefine value to its internal business clients in a meaningful way.”
So what value factors amount to more than table stakes? The short answer is — it depends. “Value is always defined by the client and it’s defined at two levels — at the relationship and at the matter-specific level,” explains Stuart Dodds, Director of Global Pricing and Legal Project Management at Baker & McKenzie LLP. “It includes a very broad checklist and each client checks different boxes.” But there are factors that are consistently checked-off.
At the relationship and matter-specific level, alignment is always on top. What does alignment mean? On the relationship side, alignment means “understanding how our business works, how our legal department works and working side-by-side to provide legal advice founded on business objectives” says Rosanna Marrero Neagle, Vice President of Legal Affairs for Nestlé-Dreyers/Nespresso USA. On the matter-specific side, “alignment means understanding where a matter sits — its legal complexity, its business risk/reward and working together to get to an agreed upon win.”
Two other factors at the top of the value checklist are communication and collaboration. “Communication and collaboration go hand-in-hand,” said Dennis Garcia, Assistant General Counsel at Microsoft. “The best communication is always a back and forth. It’s what allows for collaboration. It may sound simple but it’s not. Both take commitment.”
Christina Martini, Chair of the Chicago Intellectual Property Practice Group at DLA Piper, agrees. “Communication is essential to a successful partnership between in-house and outside counsel. For those of us in private practice, we need to ask more of the right questions and then listen. That’s how to get on the same page. True collaboration is the result of laying this foundation.”
Also on top of the checklist is operational excellence. Operational excellence is a value differentiator at both the relationship and matter levels.
An evolving definition of operational excellence is the successful intersection of flexible staffing models, knowledge management, project management and process improvement. The value of operational excellence is significant. It’s where the rubber meets the road. At the matter-specific level its greatest impact is on the budget. It can significantly increase a law firm’s ability to create realistic budgets that account for adjustments based on changes in the scope of a matter. It further allows for timely budget reports (the best in class report in real time). As Archer Daniels’ Cambria noted, it allows for “no surprises.”
A number of sophisticated law firms have long understood that creating a “value culture” is not a drip-method approach to client acquisition, retention and expansion. It’s a strategy. A noteworthy example is Paul Hastings.
More than a decade ago, Paul Hastings launched its Key Client Program. The program elements mirror the value factors outlined above and then some. The goal was and continues to be “wedded to the client”, explains Gail Kelly, the firm’s Director of Client Development. A cornerstone of the program is its “client listening” series led by the firm’s Chairman. Each session brings together a small group of general counsel to discuss a range of topics — from their stay-awake issues to running-the-company challenges. The sessions are broadcast to all of Paul Hastings’ offices. “It’s an incredible front-seat opportunity for our partners to listen to our clients,” observes Purvi Sanghvi, the firm’s Director of Strategic Pricing.
Another value element of the program is what can be described as an “exchange program” (secondment in legal parlance) where a partner at the firm works at the client’s office for a minimum of six months. Likewise, an attorney from the legal department works at Paul Hastings’ offices for a minimum of six months.
Perhaps one of the greatest benefit of this type of secondment approach is that it provides a unique opportunity to “walk a mile” in each other’s shoes.
The focus of a value culture is profound. The end game is to be on the same page and make it a financial and psychological win-win every time. It requires a sincere and sustained effort to take an inside-outside view of the relationship — client-by-client. It requires trust so that each side can name things as they see them, challenge them and negotiate with new and better assumptions. This is all really hard. Why? Cambria explained it most succinctly — it requires “vulnerability”.