alternative fee arrangements

Perkins Coie’s Toby Brown discusses the importance of trust and communication in maintaining positive relationships between in-house and outside counsel. 

Tell us about your role as Chief Practice Management Officer at Perkins Coie.

Toby Brown: My role really started with – and expanded around – pricing and profitability. As that area became more advanced, it highlighted other needs and demands like legal project management (LPM). I still oversee pricing now, in the sense that pricing is how we win work, and legal project management is how we manage that work in regard to client success and profitability. About a year and a half ago, I also took on the role of overseeing our lateral partner acquisition. It might seem like that’s unrelated to my role as Chief Practice Management Officer, but actually it requires the same type of assessments we make with pricing and practice management.

With the growth of the in-house legal operations community, we hear many references to legal project management. What does LPM look like from the perspective of a law firm? What should our in-house readers know about how law firms are approaching it?

Project management is a function – I liken it to standing in the eye of the storm – in which all team members need to understand where they are in the process of managing a budget, whether it’s for litigation, an M&A deal or another type of matter. Really, it’s a different function within the practice of law and it’s on the forefront of change. From a law firm perspective, what we’re essentially asking of our lawyers when we implement legal project management is for them to change the way they serve their clients. It’s about adding another dimension to case management – a budget constraint within a scope. And if the scope changes at any point, whoever identifies that needs to alert the team.

The challenge is the same for in-house counsel. They are also asking their lawyers to do things differently. It’s important to communicate with law firms, to be specific about expectations – how matters should be managed and that project management should be a part of that. Otherwise lawyers from outside firms won’t understand or appreciate the effort that really needs to be made.

Pricing is always a hot topic. How do you advise your colleagues on their approaches to pricing and AFAs?

It’s important to communicate with the client, to understand their motivation around fees so we know what types of fees to propose and how to better engage with that client. I’ve had partners say, “Well, the client wants fixed fees, and they want them because of predictability.” And I’ll ask them to take a step back and really question why they think the client wants predictability in a certain situation, forcing them to think about whether or not that’s the main motivation behind the desire for fixed fees.

For example, right now I’m working with a client whose main goal is to demonstrate to their in-house team that fixed fees can work both in terms of cost and work quality, which is quite different from someone saying, “I need a fixed fee for predictability,” or “I need a fixed fee for efficiency.” So it’s really important to understand what those motivations are, and then we can use them to find a win-win pricing solution.

What do you see as the most important issues for law firms to maintain good relationships with clients and vice versa?

I always say the ingredients for a successful relationship are trust and, again, communication – both for law firms and for clients. If the client wants efficiency, if they want cost savings, they need to communicate that to their outside counsel.

On the other side, the conversations law firms have with their clients shouldn’t just be about the legal tactics of a matter. Outside counsel have to understand the client’s situation, the client’s business. And in my experience, once you ask, the information flows. For example, about a year ago I was working with a client who was very concerned about rates in a specific situation. I finally asked what was driving that concern and the client then spent 30 minutes explaining in great detail the pressures their industry was under. I’d already understood those pressures at a high level, but suddenly I understood them at a much more granular level.

Outside counsel guidelines continue to be a point of friction between law firms and clients. What is your advice to our in-house readers on how to create and enforce effective guidelines?

Yet again, trust and communication are at the center of this. I read probably one outside counsel guideline every day and in them I’ve noticed a great deal of mistrust and not enough communication. Oftentimes, the mistrust can stem from one single experience. A few years ago, one of our clients sent us updated guidelines and I noticed a dramatic change. When I asked the client what drove that change, I found that it was a specific outside law firm that had done something that really upset them. So they updated their outside counsel guidelines with a bunch of rules that really were pointed at that one firm, but the presumption there is mistrust in their relationships with all of their outside counsel. It’s important for in-house counsel to consider what kind of relationship they want to have with their outside firms and how they want to build that relationship, and their guidelines should reflect that.

There’s a great deal of talk about innovation in law. Where do you see the most innovation happening?

Until it’s practical and engaged with the client, I just don’t see much innovation occurring. I keep hearing about innovation with smart contracts and blockchain and all these other things, but I don’t have clients coming to me saying, “I really, really need smart contracts with blockchain.” They’re coming to me with business problems – problems we can solve by working with them in a collaborative fashion. So that’s where I see innovation, in the collaboration between outside counsel and in-house law departments.

Jonah Paransky of Wolters Kluwer’s ELM Solutions explains how law departments will deliver value with operational rigor. His remarks have been edited for length and style.

CCBJ: How has the corporate legal department’s role expanded beyond its traditional responsibilities?

Jonah Paransky: There are several key items worthy of notice. The first is there’s been a sea change in expectations for how corporate legal departments will operate. Continue Reading Corporate Law Departments, Expected To Be More Like Other Units, Face a Sea Change

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For 10 years now, the Blickstein Group, in cooperation with Consilio, has been surveying Legal Ops and other law department professionals, focusing solely on the operations function and seeks to provide benchmarks that are useful to the largest law departments. They have just completed the 2017 survey, sponsored by QuisLex, Exterro, Onit, Wolters Kluwer, Legal Decoder, iManage and HighQ, and the results are fascinating as always. Continue Reading Findings from the 10th Annual Law Department Operations Survey

Susan Hackett is a law practice management and legal operations consultant; she founded her firm, Legal Executive Leadership, LLC, after serving for more than two decades as the general counsel of the Association of Corporate Counsel. One of her best known initiatives at ACC continues to occupy her in her current practice: promoting the use of value-based or alternative fee arrangements (AFAs) to make costs more predictable, transparent and aligned with the value of the legal services provided – for both firms and clients.  Her remarks have been edited for length and style. Continue Reading Crafting the Right Fee Arrangements: The results and value of work should take precedence over time spent

Interview with A. Carter Arey / McGuireWoods

A. Carter Arey is a senior counsel at McGuireWoods who co-leads the firm’s ClientSync team. Her focus is on legal project management (LPM), which is designed to help the lawyers deliver what their corporate clients want: quality legal services, pricing and predictability that they can understand and plan around. The interview has been edited for length and style.

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