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Is There Life After 2000 For The Generalist: Client Partnering (Outside Counsel Strategic Alliances)

Table of Contents

1. Background

2. What is partnering?

3. What does a strategic alliance look like?

4. How can a strategic alliance be accomplished?

5. Related issues

a. Insourcing/Outsourcing
b.
Counsel as project manager
c.
Regional counsel
d.
Performance evaluation

6. Conclusion

7. APPENDIX A – Counsel Evaluation Form

8. Reference Materials



1. Background

Clients expect more of lawyers. They are aware of their rights as consumers, and their power of choice. In this context, a partnership model may be a useful alternative to the classic supplier model. Specifically, the lawyer may shift from reactive dispute resolution to proactive dispute avoidance. How the service is delivered – i.e. the value-added role of the lawyer contributing to the achievement of the client's long-term objectives – is as important as the service itself.
BarTalk, "Emerging Issues in the Legal Profession", February 1998, Vol. 10 – No. 1.

One of the trends in the legal profession is to change the nature of the relationship between client (usually but not always a corporate law department) and its outside law firms from a supplier relationship to more of a strategic alliance or partnership. The purpose of this paper is to explain what is meant by partnering and how it can apply to the generalist.

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2. What is Partnering?

In the past, legal services were treated as a service purchased by a client on a matter by matter basis, much like the purchase of any commodity. Relationships were secondary to results and there was little alignment with business interests. Law departments then came under increasing pressure to ensure that legal services were of high quality and cost-effective. With the enhanced role of the corporate legal department assuming responsibility for the selection and management of outside law firms, this matter by matter approach has shifted. Many legal departments have realized the benefits that can be obtained from consolidating work into a carefully selected (usually smaller) group of law firms with whom a closer working relationship is established. This more collaborative approach is commonly referred to as partnering but a more appropriate term may be strategic alliance to differentiate it from an actual partnership (like between partners in a law firm).

The distinctions between a supplier and a strategic alliance arrangement can be described as follows:

Supplier Relationship Strategic Alliance Relationship
Matter by matter engagements Longer term relationship
No stability of relationship More stability (and ability to make investments in resources, technology, etc.)
Limited client loyalty Increased emphasis on client loyalty, trust
Disparate business goals and interests Alignment of goals and interests
Little interdependency Mutual benefits from interdependency
Directive approach Collaborative, teamwork approach
Communication as needed Closer communication and sharing of work product
Supplier Relationship Strategic Alliance Relationship
Hourly billing Alternative fee arrangements
Little sharing of financial goals Treating the client's money as the law firm's own

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3. What Does a Strategic Alliance Look Like?
The specifics of this redefined relationship are limited only to the imagination of the participants provided they are designed to meet the goals mentioned above. Some of the attributes of a strategic alliance relationship might be as follows1:

1. Multi-year agreements

2. Reverse seminars (to educate the law firm on corporate organization, decision-making and strategy so that the law firm can assist the client to achieve its objectives in the matters they handle)

3. Emphasis on teamwork – clearly defined roles and expectations for client and law firm and collaborative effort to achieve goals

4. Firm Team Leader – designation of a "point" person in the law firm who is responsible for managing the relationship, allocating resources, handling complaints etc.

5. Shared staffing – law department counsel play an active role with the outside legal team in the handling of cases or transactions

6. "Swap" or secondment programs – the law department and law firm trade lawyers for short periods of time to improve communication and integration of interests

7. Assignment of client teams in law firms

8. "Rent-a-Lawyer" programs – a law firm counsel joins the law department to assist with a specific project

9. Joint training programs – continuing legal education for law firm and law department

10. Strategic legal planning – joint development of regular (annual) plans and budgets for the provision of legal services

11.Integration of legal service suppliers – the unbundling of legal services and outsourcing as appropriate. May include a requirement that all outside firms use designated outside service suppliers (such as litigation support vendors, court reporters, courier services etc.)

12. Technology integration – an improved communication system including the strategic use of electronic communication (email, shared databases, research tools, etc.)

13. Matter management system – collaboration on a system which will track all engagements, the status of all legal matters, resource allocation etc.

14.Uniform Task-Based Management System – electronic billing and payment using a standard billing format and code sets

15. Effective use of case and matter budgeting.

16. Innovation – a willingness to re-engineer key business processes both at the client and law firm ends

17. Effective performance measurement and feedback mechanisms

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4. How Can a Strategic Alliance be Accomplished?

A strategic alliance relationship is just as available to the generalist as it is to the specialist or to the full service law firm. The key is to identify the client's business objectives and goals as well as its legal needs and to redefine the relationship to better align with those needs. The law firm must do its homework and ask questions to find out about the client, its business and its priorities. Most law departments have defined what they are looking for in an outside law firm and may have some form of vision or mission statement for the department. This information will be invaluable in positioning the law firm to form a meaningful strategic alliance.

The new relationship can be initiated either by the client or by the law firm. Client initiated programs are most commonly linked with strategies for the selection and retention of outside law firms2, such as:

  • Informal selection mechanisms based on known reputation, previous experience etc.
  • Requests for expressions of interest
  • Requests for Proposals (open or invitational)
  • "Beauty Contests"
  • Presentations
  • Bidding
ICBC is presently using a Request For Proposal process to select BC law firms to provide its Claims Division with legal services for the next three years.

Law firms (of any size) can initiate such discussions by approaching existing or prospective clients with a well thought out strategy based on the client's business and legal needs and incorporating some of the attributes mentioned above. While the generalist (particularly in a small firm) may not be able to participate in 'rent a lawyer' or swap programs, most of the other strategies including joint training programs, strategic legal planning and technology integration would work very well.

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5. Related Issues

a. Insourcing/Outsourcing

Law departments need to make strategic decisions about whether to have matters handled by in-house counsel or by outside law firms. This is a make-or-buy decision which should be based on well-researched information relating to the following issues:

  • the expertise and experience available in-house
  • in-house counsel workload
  • whether special skills or expertise is required
  • cost
  • confidentiality or sensitivity of the information or issues
  • whether extensive knowledge of the client business is required

This is, of course, not an all-or-nothing decision. With an appropriate strategic alliance in place, there can be a combination of in-house and outside resources dedicated to a particular matter to ensure maximum cost-effectiveness. In most cases, the optimum teamwork arrangement involves a tripartite relationship involving the business executive (responsible for the legal issue), in-house counsel and outside counsel. At ICBC, a non-traditional model is used. The litigated files are handled by our claims staff who provide instructions to either outside counsel or in-house counsel - a " bipartite " arrangement.

b. Counsel as Project Manager

What sophisticated clients are looking for today are counsel who can be effective project managers on each and every matter they handle. Lawyers often tend to think of themselves more as artists than as project managers, the latter conjuring up images of engineering or research rather than the courtroom. However, there is a need for counsel to begin to think in project management terms, to be able to develop a meaningful plan for the matter in question (what needs to be done, when and by whom), to provide a detailed budget (with a timeline), to develop a resource allocation plan and to be able to track and report on that plan in a timely way. This kind of information will be invaluable to a client who is looking to manage and control legal services and costs. There is a distinct need for training and professional development in this area.

c. Regional Counsel

Another model which is being used by some larger more sophisticated law departments is the regional counsel or coordinating counsel approach. The client selects a small number of law firms, each responsible for a particular geographic region. Each selected firm receives a significant volume of legal work and the firm makes the decision to either handle a matter itself or to delegate the matter to another firm in the region. The selected firm remains responsible for the relationship with the client and is accountable to the client for the performance and results obtained by other firms. Obviously, under this model, the selected firms must have a very close strategic alliance with the client and be prepared to provide or participate in some of the key attributes of such an alliance such as improved communication, effective use of technology and case management3.

d. Performance Evaluation

Although a strategic alliance assumes a more stable, longer-term relationship, there must still be an effective process for evaluation of law firm and counsel performance. The newest concept in this area is the balanced scorecard which attempts to measure performance in a balanced approach involving four different areas (financial, customer service, business process and learning and growth). Technology is of great assistance in this regard since key information and metrics can be matched with the scorecard components.

There are other less sophisticated but very workable models which are currently being used by law departments. At ICBC, for example, a counsel evaluation form is completed and submitted electronically by the handling adjuster at the close of every litigated file. A copy of the form is attached as
Appendix A. There are essentially three main areas that can be measured: service, results and price. This simple form seeks key information on the first two components. Improved information on pricing issues will be obtained through the implementation of a matter management system which incorporates UTBMS. ICBC now has three full years' worth of performance data which is proving to be remarkably helpful in making key decisions about allocation of work, hourly rate increases, specialization and the like. It has also provided an opportunity for ICBC to provide a more formal thank you to counsel who receive an excellent overall rating.

An emerging issue is whether, in the context of a longer-term strategic alliance it would be appropriate for outside counsel to comment on the performance of the in-house counsel or file handler (a "360 degree" approach). There are divergent opinions as to whether this approach would be helpful or harmful to the relationship and whether counsel would be willing to give candid assessments about their client. Such information could, on the other hand, provide excellent feedback to the client to assist in identifying training needs and improving file management.

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6. Conclusion

The strategic alliance is a concept ripe with possibilities and benefits for the generalist. This is not a concept limited to big firms and major clients. Law firms which recognize this challenge and strive to renew or revise their relationships with clients in this way will prosper. Corporate clients appreciate being approached in order to develop this kind of relationship. Furthermore, corporate clients will be approaching firms and they must be ready to move with them into the year 2000 and beyond.

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7. APPENDIX A

Date: 23APR1998 Time: 04:23:00PM
Lawyer's Name: (Last/First)
Law Firm:
Claim no: Legal File No:
Loc Name: Head Office Claims Region:
Style of Cause: VS
Resource Name:

Resource No.:

Main Issues: Liability & Quantum
Main Injuries: Orthopaedic
Claim Resolution: Settled By Adjuster


a. Performance Evaluation

The counsel's performance with respect to:

1. Providing appropriate advice, recommendations and guidance Excellent
2. Accepting and following instructions in a timely manner Excellent
3. Preparing for and presenting the defence at meetings, discoveries, ADR and Court appearances Excellent
4. Attitude and conduct (professional, courteous and defence oriented?) Excellent
5.The final result of claim was: Excellent
6. To what extent were counsel's efforts responsible for this result? Much
7. Have you provided counsel with performance feedback on this file? ) Yes
8. Is there any reason why counsel should not be advised of your evaluation No


b. Overall Rating

Excellent.

c. Comments and Suggestions

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8. Reference Materials

1. Bower, "The New Relationship Between Inside and Outside Counsel", Report to Legal Management, December 1997, Volume 25, Number 3.

2. Partner's Report, "Partnering", February, 1998.

3. Sellinger and Lauer, "Managing Litigation Effectively Through Partnering and Teamwork".

4. Fitzsimons and Lauer, "Partnering: The "New" Client-Law Firm Relationship", Corporate Legal Times, July 1997, Volume 7, Number 68.

5. Stock, "Outside counsel partnering programs: The elements", Canadian Corporate Counsel, October 1996, Volume 6, Number 2.

6. Report on Selection of Outside Counsel by Corporations, The Greater New York Chapter of the American Corporate Counsel Association, July 15, 1997.

7. BarTalk, "Emerging Issues in the Legal Profession", CBA (BC Branch), February 1998, Volume 10, Number 1.

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[1] Taken in part from Ward Bower, "The New Relationship Between Inside and Outside Counsel", December 1997, Report to Legal Managment, Volume 25, Number 3.

[2] May involve convergence, i.e. reduction of the number of law firms in order to increase the volume of work assigned to each firm and lengthen the term of the relationship thereby increasing the stability of the relationship and the alignment of interests.  To obtain benefit, however, a reduction must be part of a plan to use the remaining (selected) firms more effectively.

[3] See, for example, Bowers, "Huffy Corp. The Latest to Start Regional Counsel Program", Corporate Legal Times, July 1997.



Kari D. Boyle is presently Special Counsel with the Insurance Corporation of British Columbia. The Special Counsel Department is responsible for managing and evaluating the performance of approximately 160 outside law firms in B.C. (over 800 legal resources) which provide legal services to ICBC.

Kari obtained her LLB at the University of British Columbia and was called to the B.C. Bar in 1981. Kari practiced in the area of corporate commercial litigation with Edwards Kenny & Bray in Vancouver and became a partner of that firm in 1987. She was an active member of the Vancouver Bar Association from 1985 to 1990 and served as its president in 1988/89.

Since joining ICBC in 1994 she has been active in counsel management issues and has worked with the group developing the uniform litigation task codes for Canada. From January 1997 to February 1998, Kari was project manager for the team developing an effective dispute resolution process for ICBC's Claims Division. She is now project sponsor for ICBC's Legal Services Management Project to design and implement an RFP for legal services as well as matter management and UTBMS.

 

Neither the author nor the CBA should be construed as endorsing any product or website listed in this article. The views expressed in this article are those of the author and do not necessarily reflect the views of the CBA.
In this document, any reference to "jurist" or "lawyer" includes, where appropriate, "Québec notary".

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