Is data putting a strain on relationships with outside counsel?

Since the publication of the GC Open Letter, announcing a real-time exercise to test industry assumptions to better understand how to improve the legal market, there’s been a lot of chatter around the management approaches that create the best relationship between law firms and their in-house clients.

One of the most intriguing hypotheses being tested focuses on data – more specifically, how data can forge strong, high-value relationships between law firms and their clients. However, before any insights are published by the GC Thought Leader Experiment, we wanted to take a look at how legal data impacts the relationship between in-house legal teams and their outside counsel.

The Rise of Data Usage by Corporate Counsel and Legal Ops

Over the past few years, as general counsel and in-house legal operations teams have come under more pressure to effectively reduce spend, legal technology like e-Billing and legal spend management solutions have become a favorable way for corporate legal teams to obtain data about their law firms such as timekeeper rates, spend history, standard rates, diversity, and feedback performance.

Being able to leverage these valuable data points has started to shift power from outside third parties back into the hands of in-house legal departments. Yet, somewhere along the way, vendors and law firms started being viewed as disposable; corporate legal departments can easily engage other vendors when data reveals opportunities for better rates elsewhere.

How to Have “The Talk” with Your Law Firms

Initiating these types of conversations with your outside counsel isn’t always easy, so we wanted to share a few tips to facilitate the conversation, focusing on positive changes rather than dictating how your law firms work and charge you.

• Ask if outside counsel understands the expectations of your in-house counsel
• Ask what outside counsel needs to meet the expectations
• Ask how in-house counsel could better communicate the expectations
• Give feedback on performance and suggest or ask for solutions to any issues

Look at data as a way to help initiate even the toughest conversations with your law firms. Instead of turning low ratings into toxic interactions about the value law firms provide your in-house legal team, the numbers should be used to frame a productive conversation to figure out which in-house expectations aren’t being met and why.

Building Transparency for Stronger Relationships, Not Just Reduced Costs

Brian Chevlin, GC at Pernod Ricard and contributor to the GC Thought Leader Experiment, shares, “We need to examine old assumptions and paradigms that may not hold true anymore.  My experience is that law firms are open to this type of dialogue, where it’s an opportunity to improve relationships, rather than for clients to beat up firms.” Numbers and data shouldn’t be viewed as a point of contention, but as a way to initiate conversations about value and align goals with outside vendors.

William (Bill) Henderson, law professor at Indiana University and Researcher / Chief Strategy Officer at Lawyer Metrics further builds on this idea, sharing his belief that it all starts with terminology. “Vendor is the wrong word; a vendor you beat up on.” Instead, in-house legal needs to shift their thinking to view vendors as long term partners in which transparency can be created for stronger relationships.

Long-Term Benefits for Corporate Legal Departments

The relationship between in-house counsel and outside counsel is just like any other relationship in your life, and it should be treated as so. Partake in open, clear, and frequent communication and prevent solvable problems from becoming blockers that cause resentment and result in negative interactions in the future.

Don’t have a way to extract reliable legal data related to your law firms? Learn more about SimpleLegal, a modern legal operations software for in-house legal teams. Along with providing advanced legal reporting and actionable data to users in just a few clicks, SimpleLegal helps to automate manual legal ops processes for increased efficiency and overall cost savings.