In an era marked by rapid technological advancements and an evolving legal landscape, the art of managing outside counsel is undergoing a transformational shift.
Gone are the days when overseeing external legal partnerships was a straightforward task of cost analysis and performance monitoring. Legal operations leaders are now called upon to navigate a complex maze of strategic decision-making, technological integration, and relationship management.
This article aims to shed light on the multifaceted role of outside counsel management, exploring lesser-known insights and emerging trends reshaping this critical aspect of legal operations.
From embracing generative AI to updating billing practices and fostering a culture of collaboration and innovation, we will delve into the strategies that are setting the stage for a new era in legal partnership management.
Strategic Partnering Rather Than Mere Hiring
In modern legal operations, there is a paradigm shift from perceiving outside counsel as mere service providers to acknowledging them as strategic partners.
This perspective revolutionizes how legal departments engage with their external attorneys.
It’s not just about hiring legal expertise anymore; it’s about forging alliances that align with the broader objectives and values of the organization. A key element in nurturing these alliances is the implementation of formal outside counsel programs. These programs evaluate:
- The utilization of law firms to ensure alignment with the expertise and resource needs of the legal department.
- The areas of duplication of firm utilization across practice groups to find opportunities to ensure they are appropriately obtaining the value of services for their spend across the department.
- Spend (e.g., legal fees, expenses, timekeeper utilization) associated with these outside counsel relationships to determine service delivery effectiveness of the firm across matters and practice groups.
These evaluations position the legal department to strategically engage firms while promoting more profound, more meaningful relationships.
This is supported via a governance model inclusive of policies for law firm engagement, conflict waivers, etc., and outside counsel guidelines that establish the parameters of the relationship (e.g., matter management, communications, information security) inclusive of billing guidelines to create spend transparency and predictability.
The Technology Factor and a Shift Towards Value-Based Pricing
Leveraging technology to manage outside counsel enables legal departments to manage the relationship substantively and financially.
Legal departments often implement eBilling tools to centralize and automate legal billing processes but implement them without strategic objectives in managing outside counsel relationships.
Outside counsel guideline billing rules, finance accruals expectations, timekeeper rate review/approval, AFAs, and more can all be automated in technology, but they must first exist.
Once implemented, a cadence of review, reporting, and management can happen.
A department’s next level of evolution would be to evaluate its matter management and collaboration requirements to determine if it needs further technology capabilities to support those needs.
The evolution of legal services is on a trajectory toward transformative change, driven by a collective push toward value-based pricing models.
The legal industry’s growing preference for more predictable and transparent legal costs underpins the shift from traditional hourly billing. Alternative fee arrangements, including flat fees, contingent fees, or success-based fees, are increasingly preferred.
These models align outside counsel’s incentives with client outcomes and establish a partnership rooted in mutual success and cost-effectiveness. These forward-thinking pricing strategies are pivotal in promoting efficiency, ensuring cost certainty, and deepening alignment with client objectives.
Complementing this significant shift is the increasing role of technology in managing outside counsel relationships.
Advanced AI and analytics are reshaping the legal services landscape. Encouraging the adoption of Generative AI (GAI) by outside counsel is one way to drive operational efficiency.
GAI offers transformative potential in legal practice, from automating routine tasks to providing sophisticated analysis and predictions. Legal operations leaders can encourage outside counsel to integrate GAI into their services, highlighting its benefits in enhancing efficiency, accuracy, and innovative legal solutions.
Updating billing practices to reflect the efficiencies brought by GAI ensures that billing models are aligned with the advanced capabilities and time-saving features of AI technologies.
Outside vs. In-House Perspective
Understanding how outside counsel perceives management efforts from in-house teams is critical for fostering effective collaborations.
Surveys and feedback mechanisms offer valuable insights into these perceptions, revealing sometimes surprising expectations and views held by both parties.
In-house teams must comprehend what outside counsel values in a partnership, what they perceive as challenges, and their expectations regarding communication, transparency, and strategic alignment.
These insights often highlight areas where in-house management can improve, such as clarity in communication, responsiveness, or flexibility in approach.
For instance, outside counsel might value more detailed briefings on cases or appreciate greater autonomy in certain aspects of case management.
Conversely, they might expect more guidance or feedback in other areas. Understanding these nuances helps in-house teams tailor their management style to enhance mutual satisfaction and efficiency.
Building Trust and Knowledge
Successful legal partnerships are fundamentally built on the often overlooked but crucial emotional and intellectual connections that foster effective collaboration.
Building trust and fostering a shared understanding between in-house teams and outside counsel goes beyond transactional interactions, leading to deeper engagement and more productive outcomes. This relational approach can unlock new levels of efficiency and creativity in handling legal matters.
When outside counsel feels trusted and understood, they are more likely to invest more significant effort and thought into their work, leading to outcomes that may surpass expectations.
For in-house teams, acknowledging and valuing the human aspect of legal partnerships means going beyond mere expertise and experience to build relationships based on mutual respect and shared goals.
This approach enhances the quality of legal services and contributes to a more fulfilling and dynamic working environment for all involved.
The future of managing outside counsel is bright with potential.
It heralds a time where the confluence of technology, innovative pricing, and a focus on human relationships will fundamentally reshape how legal services are delivered and consumed.
For those willing to embrace these changes and adapt, the opportunities are boundless, setting the stage for a more dynamic, efficient, and equitable legal landscape.
Elizabeth Lugones is COO/ Senior Advisor of UpLevel Ops who has built and managed Legal Operations teams in various industries in both public and private companies over her 20+ year career. She excels in global project management and business reengineering, with particular expertise in process improvement, change management, cross-functional collaboration, and team building, but her true passion is helping others find their own strengths and talents and harness them for the value of all.