In-house teams should examine outside counsel’s approach to technological innovation when considering cost-reduction solutions.
At a law conference last week, I participated in a session with a group of in-house counsel where we dug into an exercise called “solution mapping.” This a process where you try to get to the heart of a problem by iteratively identifying supposed causes, eliminating those beyond your control, and finally settling on a root cause to test out measurable solutions to that cause.
For instance, say the problem is that you were late to work. Potential causes: traffic jam, woke up late, kids couldn’t find their homework. If you eliminate the problems you couldn’t control (traffic, disorganized kids) you are left with the one you could: you woke up late. Now, repeat the process with “woke up late” as the identified problem. Potential causes: partner was out of town and didn’t wake you up, forgot to set alarm, had too much wine the night before. Again, eliminate the problems you couldn’t control (partner in absentia, too much merrymaking) and identify the one you could: you forgot to set your alarm. Then, try to address that problem and see how things work out. Your own personality and living arrangement will dictate your choice of solution test: buy a new, smarter alarm clock? Set your alarm to go off every day, even when you don’t need it? Get a puppy that wakes you? Assign the chore of waking you up to your children?
The conference group of in-house counsel undertook this exercise for the problem of “Unexpected and high billing on legal matters by outside counsel.” After several iterations, they came up with a few potential root causes of the overbilling problem such as poor planning, unnecessarily hostile litigation posture, profit motive of partners, hourly vs. project billing. “More frequently scheduled communication/updates” was one proposed solution, but that solution could be applied to all project management since the pyramids were built, so the majority settled on “alternative fee arrangements” as the solution they would be willing to test to see if it fixed the problem.
What I found instructive about this go-round was that none of these in-house counsel broadened their perspective to look beyond the status quo. They didn’t consider, say, use of antiquated technology or poor workflow at their outside firms—factors that can certainly impact costs—as areas of exploration. Thus, the possibility of applying new technologies or developing innovative processes couldn’t be posited as solutions. Alternative fee arrangements, already a staple for some of the attendees via putting legal work out to bid, is essentially an accommodation to the status quo; it’s not a new solution, just a different billing method.
I suggested to my small group that “because we’ve always done it this way” could be the reason outside counsel is costing too much—in other words, lack of innovation. But that suggested cause was dismissed as being beyond the control of in-house counsel.
The belief by in-house counsel that challenging the “because we’ve always done it this way” mindset is outside of their control is very telling. Ironically, the solid relationships and trust that rainmaker partners and in-house counsel share often rationalizes unexpected and expensive billing practices rather than enabling a conversation about change. Today’s legal environment consists of more dynamic challenges than ever before, and both in-house and outside counsel should be educating themselves and communicating about new processes and technologies that will address them. Bidding out legal work might help control costs and force a minor level of innovation, but it keeps the discussion on dollars, not process, and definitely not innovation.
Instead of in-house counsel using purse strings to merely reduce costs, I suggest they use them to encourage joint education and exploration of alternatives with outside counsel. Outside counsel that truly value their client relationships will welcome the opportunity to undergo that process, and such a discussion will deepen the relationship. In-house counsel that advance beyond being rubber stamps or auctioneers may find that they become the management leaders within their teams. Learn together, implement together, assess results together, repeat. And hopefully get those well-deserved bonuses along the way for unleashing new efficiencies.
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