I should be taking a victory lap. Instead, I am on an apology tour urging in-house departments not to listen to me—i.e., ignore my long-standing advice re asking law firms about their use of technology. I’ve concluded that the common application of my advice only adds unnecessary friction to an already friction-laden system—similar to the value-subtractive frictions introduced by ubiquitous, well-intentioned, and misguided approaches to discounts, panels, outside counsel guidelines, AFAs, etc.
I understand the motivations. I also understand the constraints. Everyone operating in our space should be able to connect the dots on these four statistics:
- 75% of GCs recognize workloads will outpace budgets (problem)
- 74% of in-house lawyers are experiencing burnout (consequence)
- 70% of law departments are not investing in digital transformation (unavailable solution due to resource constraints)
- 70% of law departments are asking law firms about technology usage (attempt to cope within resource constraints)
Though I would prefer the first three statistics were less depressing, I can conceptualize a world where (a) the last stat is higher and (b) this is a good thing. I now strongly doubt (b) is likely. Which makes the seeming inevitability of (a) somewhat tragic: 97% of law departments are either already asking law firms about technology (70%) or plan to start asking within the next three years (27%). Observe the upward trajectory:
This should be gratifying to me. I am the author of Unless You Ask. Published by the ACC, that guidebook is premised on the importance of these types of questions and takes its name from a 2015 Altman Weil survey in which 62.7% of law firms responded they were not doing more to change the way they delivered legal services because “clients weren’t asking for it.” Well, they are now.
Instead of patting myself on the back, let me say this: I was wrong. I am sorry.
I stand behind my symptom identification. I stand behind my differential diagnosis. I stand behind my treatment plan—in the abstract. But my advice was poorly calibrated to survive contact with reality.
I know how much pressure in-house departments are under. I recognize this will only get worse. I should have foreseen that, in making attendant tradeoffs, most departments would opt for an oversimplified alternative to the resource-intensive structured dialogue I advocate. I should have better understood the net negative impact of the additional friction.
While the situation still screams something must be done, doing nothing is superior to doing the wrong thing, which includes doing the right thing the wrong way. At best, the wrong thing squanders already scarce resources. More often, the wrong thing makes a bad situation worse.
Succinctly, some advice to law departments. Doing the right things below is legitimately hard (and likely infeasible for the severely resource constrained) but this reality should not be a barrier to expending less energy on the wrongs things so common to legal buy:
- Minimize fake discount discussions as much as feasible and reorient towards real pricing conversations—i.e., pricing the work (not the lawyer) in context of the (i) value of the work to the enterprise and (ii) the market in which the work is being bought
- Do not treat AFAs and panels as variants of the discount discussion or even ends in themselves; rather, AFAs and panels should be among the natural outcomes of the work decomposition, work pricing, and work/supplier sorting fundamental to rationalizing your legal value chain to better deliver business value (e.g., embedded advisory, compliance by design, portfolio partnerships, legal marketplaces)
- Focus outside counsel guidelines on reducing friction in your B2B relationships and improving transparency, with an emphasis on consistent data quality and a strong bias towards driving industry-wide standards (e.g., SALI)—rather than further increasing friction in the vain hope micromanagement will deliver incremental cost savings (i.e., another cumbersome discount variant)
- Do not ask law firms about their use of technology unless you can, and will, use the answers to engage in structured dialogue to change behavior, theirs and yours, in a manner that sustainably improves business outcomes at scale and pace
That’s the short of it.
For the intrepid few who prefer the verbose, nerdy version, I will expound more in subsequent posts and consolidate the entire brain dump here with the aim to flesh out the above. My objective is to increase understanding and, especially, empathy as we do our collective best to, at the very least, not further increase unnecessary friction. Specifically, I will attempt to:
- Reinforce that we face wickedly complex problems
- Explain that it is both natural and counterproductive to seek simple solutions to complex problems
- Illustrate why facially simple solutions—discounts, AFAs, panels, RFPs, outside counsel guidelines—to the complex problems of legal buy are counterproductive on both an individual and system level