When Barclays announced its new panel arrangements in June one thing that leaped out was how little hung on a law firm’s ability to give excellent legal advice.

Quite the opposite of it not being important, legal excellence is treated by the multinational financial institution as a given. Lawyers no longer get a sticky star for knowing the law, sorry.

Instead, as part of the panel negotiations, Barclays sat down with tendering firms and gave them an opportunity to articulate their version of collaboration and innovation. Stéphanie Hamon, managing director of Barclays newly-created commercial management team, which was set up to review and run the panel, ran the process alongside Chris Grant, a director and head of law firm management at Barclays.

Speaking to Legal IT Insider about how law firms’ efforts to innovate and collaborate measure up, Hamon says: “The thing that impressed us was the law firms that came to us with ideas to improve their productivity rather than waiting for us to go to them.

“One firm was really resistant to fixed fees in the litigation work they do for us. They came to us with a fixed fee proposal for their entire investigation work. We are willing to engage on both sides knowing that there will be some trial and error. The fact is that they were approaching it knowing we wouldn’t get it right first time.”

A further panel firm has moved completely away from hourly rates and is using its own profitability tool. Hamon said: “On paper it looks amazing. We are waiting to see what it’s like in practice.”

Other examples of innovation that impressed the Barclays team include law firms that are making strides in legal project management. Hamon said: “We’ve seen how firms around LPM are ahead of the curve and looking at unbundling and eDiscovery. They said that they will never do eDiscovery as effectively as an external provider but will offer a package: what we want is the collaboration between us and the law firm.”

The new panel specifically requires law firms to innovate in the way they provide their legal services. Albeit that firms are often still uncomfortable discussing innovation and that the panel is only two months old, they have been stepping up to the plate.

Many of the best ideas are not technical; when Barclays required a secondment in a niche area and

the two law firm specialists it approached were unable to help, the firms got together to co-ordinate between themselves a secondment share.

While undoubtedly proactive, these ideas are not entirely spontaneous – Barclays has put in place a number of metrics to measure and in effect reward law firm productivity and innovation. It has created a value chart that shows in the clearest, visual relief where a law firm sits on the chart in comparison to its peers. The chart will be shown to law firms (with the other firms anonymised) and it will form the basis of a discussion with the bank over their performance.

The tool is being shared among Barclays’ in-house lawyers, who will factor it in to their decisions over who to instruct on a given matter.

Barclays will in October launch an internal survey tool, which measures law firms against a list of expectations and award them scores that will filter in to their value chart. Hamon said: “Firms can move up and down the value chart and we will be tracking and monitoring where our work is sent. It’s in their interest to be an ‘a’ or ‘b’ rated firm rather than ‘c’ or ‘d’ – we wouldn’t expect to give the bulk of our work to a ‘d’-rated firm.”

Barclays also maintains a ring fenced relationship account that keeps track of all the value-add services that law firms must provide over the year, such as secondments. These services are compulsory – if the law firm doesn’t provide the earmarked service, it must repay the bank the monetary equivalent owed.

It is from this account that Barclays will ‘pay’ firms to develop solutions that will benefit the bank. While this could be a piece of software Hamon says: “It’s much more of a two-way conversation and it won’t be limited to software development.

Grant adds: “It would be good if law firms were to be more open to sharing the technology they have since, as an in-house function, we don’t have the same kind of funding as the law firms. “We want to change firms’ mindsets when it comes to relationship management so they act less like lawyers and think about what they can bring to the table that benefits us as a bank.”

When it comes to the crunch, Hamon says that firms could have all the technology in the world but what they often lack is the ability to have a proper dialogue with the Barclays team. “Some firms have been hitting their heads against a brick wall and we could have helped them,” says Hamon. “Some have great expertise or tools we didn’t know about and haven’t brought to the table. How do we know if you don’t talk to us? Firms are letting themselves down by not engaging properly with us. Maybe they are thinking about the next deal when they should be thinking more holistically.”

Among the noise of technological innovation, it’s important to tick off the basics.

This article first appeared in the September Legal IT Insider