ABA Journal

The New Normal

Is the herd finally embracing legal ops and procurement?

By D. Casey Flaherty

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D. Casey Flaherty

D. Casey Flaherty

We are at the front end of something that will change the way the game is played. Or not. It’s early, and inertia has a stellar win/loss record. As mentioned last post, 2015 marked the first time a majority (56 percent) of law departments used metrics. That was quite a leap from 34 percent in 2014. Yet, the negative pregnant is that as recently as 2014, 66 percent of law departments weren’t even using simple metrics. We have come a long way. We have a long way to go. Positive momentum, however, is an instance where a herd mentality becomes an asset.

In situations of uncertainty, we copy those perceived as being successful. Doing what has already proven to work is a rational operating principle. The result is that enterprises start to resemble each other. Most law firms look much like other law firms. The same is true of law departments, which not only look like each other, but, for a long time, looked a lot like law firms. Mimetic isomorphism (PDF) can be a powerful force preserving the status quo. But, in instances of punctuated equilibrium, it can also act as a catalyst for the diffusion of change. Few enterprises are willing to be first, but even fewer dare to be last.

The number and strength of communication channels are among the rate-limiting factors of innovation. The internet has made communication easier. But it is almost too easy. There is so much information available, curation becomes critical. How do we select whom and what to copy? Peer groups play critical roles as collectors, arbiters, and disseminators of best practices. While pockets of legal operations and procurement specialists have existed for decades, formal organizations require critical mass.

Last year was a watershed. Professor Silvia Hodges Silverstein’s Buying Legal Council held its first conference for legal procurement professionals. The Association of Corporate Counsel created the ACC Legal Operations Section. And a long-standing, invite-only informal group, the Corporate Legal Operations Consortium incorporated and opened up its membership so it could play a more active role in the legal ecosystem. It is no coincidence that in the same year that CLOC formalized and the ACC established its Legal Ops Section, the ACC Chief Legal Officer survey’s headline finding was that “ACC Chief Legal Officers Survey Finds Drastic Growth in Legal Operations Staffing.” Mimetic isomorphism moves swiftly.

These organizations advocate on behalf of their members. As relatively new stakeholders, the value of legal operations and procurement will not be self-evident until it is. These organizations also accelerate the dissemination of best practices. But they can do more than facilitate sharing among direct peers. These organizations can lay the groundwork for truly collective action.

Being on the vendor side now, I was struck by the invitation to the upcoming CLOC Institute. Having grown accustomed to standard sponsorship requests, I was surprised by their message of inclusion. Their stated goal was to take “ecosystem collaboration to the next level” with the ecosystem being defined as “legal operations professionals, outside counsel, legal associations, technology providers, professional service providers, law schools and more.” CLOC appears to want to have a real conversation that brings together all the key players. This ecosystem ethos is not nearly as common as it should be.

For too long, corporate counsel have thrown work over the wall and complained about how much it costs when the law firms throw it back.

Corporate counsel are dissatisfied. Law firms are confused. One thing they can agree on is that vendors are not giving them the tools they need. Some of this is inevitable. But most of it is avoidable. What we have here is a failure to communicate.

The professed goal of CLOC Institute is to get everyone in the same room in order to get them on the same page. It is, for example, easy to advocate for metrics in the abstract. But which metrics? What should be measured? How? What do the numbers mean, and how are they benchmarked? Different law departments have different opinions. The same is true of their law firms. Reaching a consensus—not on every metric but some core ones—will make life easier for both law departments and law firms. This is especially true if the vendors are also in the room so they can embed the metrics in their offerings and create mechanisms for sharing those metrics between inside and outside counsel.

Last post, I cited cybersecurity as analogous area where behavioral changes need to be driven by data-driven dialogue between clients and their external counsel. Despite the prospect of public embarrassment, it wasn’t until clients actually started testing the cybersecurity of their law firms that the abstract knowledge that cybersecurity was important began to be translated into concrete action. But there is a dark side to the analogy. Clients have not yet reached a consensus on core cybersecurity standards. As a result, clients run their own audits that, despite substantial overlap, all have to be handled individually by their law firms. The lack of recognized standards is a substantial drain on resources for both clients and firms. The same dynamic is evident in metrics, billing guidelines, task codes, and other well-intentioned instruments, many of which would be well served by more uniformity and congruity.

Collective conversations are critical. Too much of the evolution of the inside/outside counsel relationship has relied on regulation instead of collaboration, fiat instead of dialogue. Collaboration can be strategic and rigorous. Dialogue can be deliberate and structured. There is, however, no versus. While we can disagree about means (who does what work what way at what price), there should be unanimity about ends: stellar counsel and advocacy to aid the ultimate client in achieving superior business outcomes.

D. Casey Flaherty is the founder of the legal tech consultancy Procertas, provider of the Legal Tech Assessment. He was a 2013 ABA Legal Rebel. He also serves on the board of advisors of NextLaw Labs.

Editor’s note: The New Normal is an ongoing discussion between Paul Lippe, the CEO of Legal OnRamp, Patrick Lamb, founding member of Valorem Law Group and their guests. New Normal contributors spend a lot of time thinking, writing and speaking about the changes occurring in the delivery of legal services. You’re invited to join their discussion.

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