Guest post: Buying Legal – getting to grips with data
The 3rd annual Europe Conference of the Buying Legal Council took place on 9th May 2017 in London, hosted this year by Eversheds Sutherland. A formidable array of experts was lined up and enthusiastic supporters from legal procurement, consulting and law firms attended for a day of Legal Market Intelligence.
In a complex marketplace with many players (old and new) such as the legal market, gaining a deep understanding of “what’s out there” is more important than ever. How can you best gather and analyse information relevant to the legal market better than attending an event like this?
Legal Market Intelligence includes a range of information on the legal industry, gathered and analysed to enable confident and objective decision-making. It comprises law firm and (ancillary) legal services supplier information as well as legal category management best practices and legal market benchmarking information.
There was a healthy mix of presenters throughout the day, from law firms, legal service providers and GCs including Trevor Faure (Global General Counsel Academy), Michael Tal (BusyLamp), Richard Stock (Catalyst Consulting), Caroline O’Grady (Coote O’Grady) and Bjarne Philip Tellmann (GC at Pearson). The sessions were interactive and diverse, allowing for a variety of interactions through presentations, panel discussions, table debates and workshops.
A networking breakfast and opening remarks from Silvia Hodges Silverstein (Executive Director at Buying Legal Council and Lecturer at Columbia Law School, was followed by a presentation by Bjarne Philip Tellman.
He kicked off the day discussing how GCs are being affected by a ‘professional convergence revolution’. This was an interesting review of how they “are being asked to take on many difficult new roles, in addition to that of legal adviser because of the increased demand for ‘T-shaped’ executives, who combine deep cognitive, analytical, or technical skills with broad multidisciplinary and social ones. Given their deep legal expertise and role as connectors, GCs are natural-born T-shaped professionals. Role overload is therefore a risk.”
He went on to say that “these challenges are offset by opportunities caused through unbundling and technological disruption. Technological advances are creating disruptive opportunities. Examples include communication and productivity tools, transparency technologies, self-help tools and AI based technologies and to take advantage of them, today’s GC must think like a mini-CEO, managing non-substantive aspects more professionally than ever before. This means that GCs must become miniature chief executives who can communicate, inspire and build outstanding legal teams, identify and anticipate risks, formulate and execute strategy, implement procurement and technology pipelines, control costs, ensure efficacy and nurture culture and talent.”
I don’t think many Procurement professionals would argue against any of those required qualities in their stakeholders. Technology and its impact to the sector maintained a consistent, if not dominant presence throughout each of the sessions, with some notable opportunities in areas such as data assessment and decision making.
Kevin O’Sullivan from Baker & McKenzie stated (with Kevin Shine) that “buying teams want to have controls on fees, scope and visibility on progress; LPMs (Legal Project Managers) manage these factors by default to ensure that appropriate reporting and protocols are in place to enable positive communication and certainty on efficient delivery.”
Clearly the use of technology (and by this I mean project and program management tools and reporting platforms) will surely support the closer management of matters. This may need some development – given the nature of legal matters being slightly “different” to a normal project, however the fundamentals are much the same. We are really just talking about management of schedule, risk, and cost in a more rigorous and measured manner than firms.
John de Forte advises law firms on how to achieve the best scores from the tender evaluation. His session entitled Improving Your RFP gave a bidder’s eye view of some of the challenges and dilemmas faced by external providers in responding to proposal questionnaires. Common weaknesses in RFPs include ambiguous, overlapping questions, or which aren’t explicit about what is required of the responder (for example with regard to word count). All these encourage bidders to be repetitive and to write at greater length than is necessary – thus making the evaluator’s task more time-consuming.
It goes without saying that Procurement and Legal have a real opportunity to leverage technology for the good here. Much better use of often underutilised and sometimes unused features in e-tendering tools would go a long way to helping all sides on tender evaluation. The word count limits level the playing field, so it should be much easier for the evaluator to reach an objective decision with an e-tender than a conventional tender. The uniform layout means you do not have to worry about format or form and no one has any advantages because of their flair for design.
On the subject of pricing data, Ed Wilson from Elevate Services said they were comforted by the amount of hands raised when asked ‘who regularly uses their eBilling data for spend analytics and benchmarking?’ We see this as representative of the market: in-house teams are keener than ever to get to grips with their legal data, and are willing to undergo the painful journey of cleansing their data sources in order to better understand and identify opportunities for better cost management.
“This interest is reflected by the growing number of technology platforms which look to maximise data capture and analytics capabilities (especially at the invoice/eBilling end). One day – perhaps it is already here – GCs and their legal ops functions won’t have to major in excel skills in order to pull up simple, actionable reports on legal spend,” Ed said.
Still on the subject of billing, Michael Tal said “We’re seeing a rise in adoption of technology solutions like e-billing tools that allow clients to collect and use the data from their legal bills. However, legacy solutions are heavily reliant on pre-coded entries and structured data. It not only makes e-billing a relatively cumbersome process, it’s also error prone… However, there is a lot of potential in unstructured data (i.e. the narratives) contained in legal bills. In addition there is a lot of unstructured data in the form of emails, contracts etc. in client repositories such as matter management tools. Using AI to extract such data, classify and combine it with invoice data, will empower clients to gain much deeper insights into their spend. It allows a much more granular analysis of matters, fees and supplier performance.”
Something that interested a number of delegates was the application of AI to help achieve more meaningful benchmarking reports. Michael explained “[In-house teams] are currently only using invoice data, which is not really helpful, if you don’t enrich it with matter data. The reason they do that is that while we have invoicing standards like LEDES that make invoices comparable, using matter data for benchmarking purposes has been impossible in the past, as there is no standard way to capture matters. The usage of AI to auto classify matter data will dramatically change that. You don’t have to rely on clients pre-structuring their matter data in a certain way. You just need access to their repository and their invoices in order to generate meaningful and comparable legal analytics.”
Richard Stock from Catalyst Consulting and a regular presenter for Buying Legal Council presented “Four KPIs to Increase Value from Law Firms”. He prefaced his remarks by stating that corporate and institutional buyers of legal services continue to pay 15%-20% more than they should for legal services even for the most complex work and after the most competitive discounts, which was a bold statement indeed. Richard outlined ‘7 Leading practices’ for working with external counsel, including the need for a multi-year, detailed demand forecast of legal services through to having fees tied to a balanced use of performance metrics. Stock also proposed ‘4 KPIs’ to secure greater value from law firms: Results, Innovation, Service and Total Legal Spend. He provided detail on how to evaluate performance and tie it to fees.
Back to data again, and Caroline O’Grady (Coote O’Grady) said: “Consistent and accurate performance data is key to a robust law firm performance management programme. While to succeed in driving savings, efficiencies and mutually rewarding partnerships requires more than data – subjective opinion on performance, commerciality of legal advice given – many of the key performance indicators can be derived from a careful and intelligent data collection and review process. Less is more, and you need to understand ultimately what good performance looks like to your organisation, but organisations need to get much smarter – too many collect data and do nothing with it. It’s time to invest in analysing and using this data (and not just eBilling data) to drive best- in-market legal buying.”
Finally, Clifton Harrison from Eversheds Sutherland thinks that “If anything, the data from all the presentations demonstrated that successful outcomes for clients stem from strategic, commercial decisions which have operational considerations and impact fully assessed. For this to be achieved, General Counsel, senior legal buyers, procurement professionals, law firms and consulting suppliers all need to collaborate far more effectively to better serve their clients.”
Legal Procurement requires everyone to step up. Forward thinking GCs with well-prepared Procurement colleagues can, and do make a huge impact on spend. It does take time, and talking is always easier than delivering. Procurement has hard financial targets and these can drive certain priorities. Many in-house teams often try to insulate themselves from costs and many would find it opportune to sharpen their commercial awareness.
In summary then, it seems that strides are now being taken to harvest and gain insights from the data that Procurement and its stakeholders is collecting and storing. From the best in-class project management tools and design of e-RFP’s to support better capture of capabilities and therefore better evaluation; to reviewing matter data in a structured manner assisted by coding and AI; through to performance management of firms and suppliers using intelligent data collection (and processing).
Many may argue that it is all happening too slowly, or should already be in place, notwithstanding examples of great work being done. Now that GCs are starting to evolve (perhaps into mini CEOs as christened by Bjarne Philip Tellmann) the business of legal will develop too.
This is still an immature and complex category. Procurement looks for good quality data to help shape category management and decision planning –and you need a lot of data to make help shape these decisions. Machine learning and AI are already in a position to help us, however the data requirement (according to a number of leading academics) is that machine learning needs “ten times as many examples as there are degrees of freedom in the model” to teach a machine.
Based on this category and the unpredictability of outcomes, this adds up to one large dataset. Start collecting now….
Nick Williams brings 25 years of business experience in both sales and procurement roles in Information Technology and Legal & Professional Services categories. As Legal Services Director for Proxima Group he leads the category and on advises client projects across a range of industries and geographies. Previously Nick was Global Sourcing Business Partner for Legal Services at Barclays Bank and instrumental in the creation of Legal Commercial Management. Nick consistently engages with the external market to stimulate and encourage change through innovation, technology and disruption of embedded ways of working. @njmw69