With efficiency and innovation at the top of every client conversation, technology and process is becoming a major differentiator in terms of how much work a client is prepared to give a law firm. However, speaking at Gleneagles Legal Leaders Forum 2017, leaders from Barclays and Juniper Networks made it clear that firms are often not getting their basic invoicing right, and that there is a critical disconnect between client relationship partners and those in the firm that can action meaningful change.
Stephanie Hamon, head of commercial management, managing director at Barclays
Stephanie Hamon’s role was created in 2015 in order to help Barclays 800-strong legal team understand and rationalise its external spend. The legal function inevitably spends hundreds of millions of pounds a year but rather than the bank just looking to reducing headcount to cut costs, Hamon is tasked with making sure the right work is being sent to the right providers at the right price and looking at whether certain roles need to be consolidated or brought in-house.
At Gleneagles Legal Leaders Forum 2017, Hamon discussed Barclays’ commercial optimisation programme in 2016, which has seen the bank invest in technology and rely more heavily on data analytics to assess the value it gets from its law firms. Three quarters of Barclays legal spend is on external advice, of which around 70-75% is on ‘traditional’ law firm providers. But the bank also works with eDiscovery players, LPOs, contract lawyers and barristers and going forward can be expected to send more volume work in that direction.
Hamon said: “It is great to be able to say we’re going to look at law firms differently but how do you measure it? How do you represent it? So, one of the big things we had to do last year is a lot of work around analytics and data. And in order to that we had to invest in technology.”
Barclays, which cut its panel in June 2016 from 400 to 140, has created a Gartner-style value chart that shows by a series of different coloured dots where each law firm sits in comparison to its peers. The chart is used by Barclays lawyers to inform their decision on who they should – and shouldn’t – give most work to. Factors include willingness to commit to fee arrangements with the bank (one firm point blank refused) and general service levels, including timely and accurate invoicing.
Barclays last year began rolling out Mitratech’s TeamConnect matter management and eBilling platform and its internal lawyers are notably also now using timesheets to help accurately allocate its own lawyer costs.
The bank has moved heavily into legal project management including creating standard templates for legal projects where the work is divided between providers and Hamon says: “That’s allowing us to say, ‘You know what? In that project, not everything should go to a law firm, because there will be other providers that are better placed to do that piece of work because it’s a volume play or because you can be quite location agnostic. So maybe you could use a different provider but also engage in service delivery efficiency with the law firm.’” As referenced above, Hamon is reviewing the eDiscovery panel and volume work that has traditionally gone to law firms can increasingly be expected to move to dedicated eDiscovery providers.
Meanwhile, Barclays has ring fenced part of its relationship account to invest in innovative ideas put forward by law firms and worked on in partnership with the bank. Hamon said: “We said to all our law firms, if you have any ideas, if you want to pilot something, if you need a guinea pig, Barclays is happy to help. If you need funding to customise one of your tools, to actually test it with the client, we’re happy to fund it from the relationship account. Come to us and then we’ll work together to try and develop some of those tools.”
While this represents an opportunity to develop closer ties with Barclays Hamon adds: “But here we are, giving firms an opportunity to test, real time, with the client, before putting too much investment into trying to get the perfect solution only to find it’s not fit for purpose. And we’ve had only three suggestions of small stuff. They’re all very good ideas. But I thought we’d be inundated.”
Barclays has created a panel of firms that it will work together with on innovative projects and is increasingly looking to push the envelope. But with the bank’s assessment of value now dependent on so much more than good legal advice, Hamon points out: “If you can’t give me your bill on time, you are going to be far less credible talking about innovation because you can’t get some of the basics right.”
She concluded: “This is the direction of travel. This is coming. This is happening. This is what clients want, and the law firms or suppliers that get it are going to come out on top. Otherwise they’re going to have big problems, and it’s all around not looking at innovation or technology in isolation. It’s really how you make this part of your bigger business model. Where do you want to be in five, ten years from now? What is your brand strategy? And getting to terms with the fact that, while I’d love to say that everything I do is amazing and valued, it’s not. So just come to terms with that and come to the table and engage with the client.”
Hans Albers, chief of staff, head of worldwide legal operations at Juniper Networks
Hans Albers has been an in-house lawyer for 25 years of which 17 have been in the IT industry. He’s been chief of staff, head of worldwide legal operations at Juniper Networks for just over six months; a role that has been created to help drive efficiencies in the company’s internal and external legal spend though better processes and technology.
A high-tech Silicon Valley company, Juniper Networks’ $5bn annual business is IP networking and it is the market disruptor, with Cisco the incumbent market leader. A global organisation, Juniper has offices in 46 countries and 10,000 people. Its legal team spans ten countries, the majority of which are in Silicon Valley and with a large group in Amsterdam, where Albers is based.
Albers told Gleneagles: “Managing this organisation is quite a task and we are a team that is committed to provide real competitive advantage to the business.” In a trend being replicated across many in-house teams, the legal operations role was created to cover strategic planning, strategic initiatives, IT tools and systems and how the legal department best services the business.
Albers said: “Our general counsel came in about a year ago and said, ‘you know we have a $60/65m budget annually for legal and we need to manage that as a proper business.’” Traditionally more work simply equalled hiring more lawyers, but Albers and his team, who have been given targets to reduce outside counsel spend, said: “It’s becoming an untenable model to continue that way, so we’re looking at how we can do it differently, using external resources as well, or automation and technology.”
Juniper Networks, which uses Thomson Reuters Legal Tracker eBilling tool, is looking to hire a legal services company to review invoices and more strictly apply terms – if an invoice is more than 60 days late it will be rejected outright, with an anticipated saving of 8-10% as a result. Albers said: “We found law firms are very good at making deals around billing rates but to actually apply them in daily practice is another matter.”
It has emerged that one partner is being paid £1,500 an hour and Albers said: “What we’re trying to analyse leads to some interesting discussions in the department and when I shared with this all of our functional leaders they said, ‘No this can’t be right, I’m not paying that much.’ Well, the data comes straight from the invoices. So, I didn’t make it up.”
Much like Barclays, internal lawyers are not immune from review and Juniper Networks is currently analysing the work its lawyers undertake in order to further automate or outsource mundane or repeat tasks, elevating lawyers up the food chain. The company already automates 50% of its NDAs (it is targeting 70-80%) with ThinkSmart Automation Platform and now 65% of its commercial procurement agreements are signed electronically with DocuSign, dramatically reducing ‘lost’ documents that are sent to customers and not returned. It has moved all of its real estate work off a billable hour and onto a fixed fee per transaction model, globally.
Albers said: “That’s going to be making a massive saving.” How is this relevant to CIOs? Albers said: “If I look at a law firm, I want to know how they run their business, how they apply technology. Because a law firm that doesn’t apply technology in the right way is inherently inefficient and they will not be able to provide a cost-efficient service to us.”
Juniper Networks aims to save about 5% next year by moving to lower cost firms including regional firms, enforcing its billing guidelines and analysing where greater efficiencies lie. Albers adds: “The challenge to the law firm and specifically to the IT departments here, is to make sure you can run your firms as efficiently as possible. Because then you are able to offer more of these alternative models in a cost-effective way. I’m starting to now measure what we do against certain matrix. I think law firms need to the same, because you can’t just continue. The world is going to get disrupted. If I talk to some of the other law departments out there, the world is definitely changing, and changing rapidly.”
This article first appeared in the March Legal IT Insider – you can sign up for your free monthly copy here: http://www.legaltechnology.com//latest-newsletter/