Download Reconnecting Cost with Value July 17, 2009 ACC Northeast

“A Good Crisis is a Terrible
Thing to Waste…”
The ACC Value Challenge
Reconnecting Cost with Value
July 17, 2009
ACC Northeast Chapter
Susan Hackett, ACC
Do clients and firms really
mean it this time?
• Decades of escalating legal costs without
improved efficiencies: The Tipping Point
• Changing economic pressures on both sides
– now emphasized by the downturn
• Not a matter of blame; both sides need to
change & take responsibility for driving value
Client practices focusing on value…
• Cigna’s “Nailing the Basics”: Budgeting practices
– Only real-case budgets rewarded
– Training programs support skill development
– Metrics and comparatives drive evaluations
– Client reports on performance and accountability
• DuPont’s paralegal program: using in-house talent
– Outside firms cannot bill for tasks paralegals can do
– Strong paralegal training and self-management
– Measuring use through e-billing/year-end evals
Client practices focusing on value…
• GE’s Preferred panel firm training
– Focus on portfolios of work – in this case, M&A
– Training/skill building at GE’s exec learning center
– Regular collaboration meetings
– Knowledge management – continuous improvement
• SoCal Edison’s balanced scorecards
– Measuring department performance to targets:
• Results achieved, progress against goals, performance
against budget, people related goals
– Reporting quarterly to clients to show dept. value
Client practices focusing on value…
• FMC Technologies ACES system
– Combining a mixture of alternative and success fee
billing practices for outside firms with
– Rigorous performance evaluations: both inside and
outside counsel.
– “Unpredictable” nature of law ≠ inability to
budget/set targets
– All counsel compensated based on results/driving
the focus on outcomes
– All lawyers valued for their business judgment first
Some large law departments and
their focus on value may take a
lead or get more attention …
• … But adopting value practices is just as important (and
maybe more so) for smaller law departments
• Many of larger department techniques are scalable for
smaller department use.
• Many smaller law departments have value lessons and
practices they can teach their larger brethren, too.
(And the same goes for firms.)
Firm practices focusing on value…
• Drinker Biddle: tackling the entry associate crisis
- no deferments, but mandatory training
- cutting back on starting salaries and hours
- educators drawn from excess capacity
• Abbott Simses: early case assessment services
- firm specializes in settling out matters early
- decision tree analysis/process
- incentive fees for working a case less
Firm practices focusing on value…
• Seyfarth Shaw: lean six sigma in a law firm
- regular caseloads are reverse-engineered
- process management: process times are down,
as are client costs
- intelligent staffing options employed
• Valorem: value billing, defined by client
- budgets are set as are expectations
- final bill has a client “value adjustment” line item
“Yes, you can!”
• There’s nothing in any of these practices that you don’t
know and recognize: most are just plain common sense
combined with a decision to drive value in process.
• What is it that you need to move from intellectual
agreement with the theory to practical applications you
can begin to implement?
• Change management can be both radical and
incremental – it can be planned and collaborative
• The real risk (for both firms & departments) is not acting:
everyone wins
Unique Opportunities…
… For firms that are early adapters – demonstrating their
savvy in managing their own business. (Helping clients
who don’t have the time/capacity to re-invent the firm for them.)
… For firms with a clearly defined value proposition and a
willingness to open the kimono to clients – trust, risk
sharing, transparency, collaboration.
… For the mid-tier and value-firms, as well as boutiques:
reasonable rates, lower fixed costs, greater flexibility, nimbleness
… For clients that previously did not have the leverage of
the Fortune 50 in driving innovative terms with firms
… For in-house counsel to drive better internal mgmt.
In the end,
it’s all about value.