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My friend, and longtime collaborator, Dr. Silvia Hodges Silverstein, asked me to share ideas with her thought-leading members of Buying Legal Council on how they can cut costs while adding more value. We discussed a broad range of ideas in a highly engaging panel discussion with top buyers of legal services. Each individual had recommendations and ideas. I focused on 5 major tactics.

Savvy law firms can offer these ideas to their clients to save money, increase value, and get more business for themselves. We discuss each below:

1.1 Ask Your Top Law Firms for a Request for Value

The RFV is a short, simple document asking law firms how they can measurably add more value in the short- and long-term.

    • Ask your law firms how they can be more effective, streamlined, and efficient.
    • Bar any discussion of cutting rates, you will get more substantial savings elsewhere.
    • Be clear in indicating you want ideas on operational and structural changes — this is where the big, and often hidden, money is.
    • Invite recommendations about changes in how your department operates.

Limit the size and scope of the response. Short answers bring out more developed thinking and eliminate work for you.

2.1Identify Self-Inflicted Costs

An outsider can more easily spot duplication, inefficiency, and non-value-added activity, especially in the informal systems people rely on. Your job is to find the duplication in effort — usually in communication and procedures — and stop them cold. Some clients report productivity boosts between 15% and 20% after formal system reviews. You can get at least halfway there with informal reviews. Your law firms with strong relationships and opinions can be extraordinarily helpful in the effort.

3.1 Use Fewer Law Firms

Outside counsel management time is one of the largest hidden legal costs. This goes beyond the legal work and well into the management and administrative aspects of the job at hand. Large companies use hundreds of law firms — but only between 5 and 25 in a substantive manner. Smaller companies use between 3 and 15 law firms, with up to 9 in a substantive manner. This translates into dozens of conversations about everything from strategic decisions to mistakes in bills. 

Using fewer law firms means less management time, more concentrated knowledge about your company, streamlined communication, and more economic power. If you truly need hundreds of law firms for specialty work, let other law firms manage them. Your time is worth more than you will pay.

Your goals and feedback will serve as the North Star for your new and more productive relationships. Be sure to share these with the law firms on your newly reduced panel.

You can use a Request for Value to start screening the law firms you want to keep. Top legal decision makers tell us they are always surprised at who brings the most insightful ideas and the firms who unexpectedly default to rates — even though you asked them not to.

4.1 Adopt Time-based Metrics for Outside Counsel

Measuring and setting standards using elapsed and estimated time is an extraordinarily powerful tool in creating value and saving time. The most powerful metrics include:

    • Time to reach a stated goal. Delineate a date and time for completion. You can use this to spot changes early, measure productivity, and gauge efficiency over time. This metric also improves reliability on delivery as all parties focus on the time due.
    • Time to reach an interim deadline. On larger matters and projects, targeting interim deadlines gives insight about overall progress and any changes the matter may require. Lay out dates and deliverables along with the name of the individual responsible for making it happen.
    • Estimate-to-complete. For large matters, allocate the time needed to complete an assignment based on current facts and circumstances. This means stopping at key points and re-evaluating strategy and resources to gauge where you are and identify any necessary changes to reach targeted dates and goals.

These time-based metrics can serve as the basis to develop estimates for key tasks and similar efforts in the future.

5.1 Alternative Fee Arrangements

Alternative Fees, especially fixed fees, save 17% on average — with better outcomes and client service. You can find the law firms best at implementing AFAs here.

You can use these measures immediately; they require new behaviors, but no new technology. You will have more success picking one strategy at a time — especially the ones with which you are most comfortable and fit your culture. But sometimes a little change can go a long way in making life easier and creating a better culture moving forward. Either way, these changes lay out a path to savings, create more value, and reduce risk because each brings improved controls. All valued tools in a pandemic — and beyond.

For an in-depth look at these cost cutting measures you can view the video here:

Be well. Be cautious. Be safe.


The MAD Clientist

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