Where other industries have seen drastic shifts in the way people obtain goods and services, the buying and selling of legal services has remained almost unchanged in Australia. On 23 August, the BuyingLegal Legal Procurement Forum held at KPMG in Barangaroo discussed current and expected changes in Australia and the influences of the rapidly evolving legal market in Europe and the U.S.
Janders Dean is pleased to have supported this inaugural event, and our team had an amazing time with the various thought leaders on the day.
Dr Silvia Hodges Silverstein (Buying Legal Council) explained some of the changes happening globally. GlaxoSmithKline was one of the first to introduce a tender process for firms to bid for their complex legal professional services. There is a concerted effort to consolidate law firms so numbers are reduced, and to focus on deeper collaboration and better technology to improve business aspects in servicing clients. The increased use of electronic billing is an example of this. Australia has seen a number of legal technology providers simplify legal procurement.
Challenges with Innovation
One challenge was innovation for a long and expensive matter – should the client or the firm pay? Stock suggested a variable fee for results, service, innovation and costing, since just providing ‘fixed fee’ might not be enough to distinguish the good legal service from the great one. Like with many products and services we buy in Australia, consumers are prepared to pay more if they seek a premium service. For the legal industry, Stock suggested firms get the sequence right for complex legal matters and invest enough resources to plan, execute and transition to the new order.
Wells Church (Director at Integreon) quoted Mark Cohen, a global thought leader in the legal industry:
“ Legal culture is rigid, hierarchical, pedigree-centric, internally-focused, cautious, reactive, and rewards input, not output… Diversity is conspicuously absent from the legal ecosystem, especially at its highest ranks. Lawyers are trained to be ‘right’, risk-averse, and to identify problems… Law creates its own standards of excellence that are based upon ‘reputation’ and the assumption that certain schools and firms… confer and maintain it… Lawyers are not trained or encouraged to be innovative; legal culture enshrines stasis and caution. Legal culture see things through its own prism; it divides the world into lawyers and ‘non-lawyers.’ And it takes great pains to preserve that separation rather than to align lawyers with their clients.”
– Mark Cohen (Goodbye Guild: Law’s Changing Culture).
Church suggested a need to strategise legal services for agile businesses, and to successfully do this, we may need to embrace new models of working. If what Cohen said is true, then to change our risk averse nature, law firms can find a pain point of their clients. Experiment, small. Focus on change management as a priority and, rather than living on the constant distrust of lawyers, it might actually be possible to turn customers of changed services into advocates.
Katie Walsh (AFR) led and reported on a panel with Jason Ryan (Lexvoco), Wells Church, Anna Lozynski (L’Oréal) and Adam Cooper (Flinders Ports).
While Cooper chose personal relationships as a significant factor when buying legal services, Church drew on his earlier talk by explaining that the business model change meant a focus on process, people and tech. For Ryan, these changes could be ‘no tech, low tech or high tech’.
There has to be a business case for change, and an ultimate benefit for clients. Lawyers want things perfect (just check how many updated versions there are of the last document you drafted). It just adds to the challenges that make change so slow in the industry. Church and Lozynski agreed – for disruptive change, it should be done now, and fast, by drawing on internal and external players and, according to Ryan, drawing inspiration from other industries. Lozynski agreed, pointing to the need to make these changes quickly and imperfectly, and to allow room for responsiveness, using synergies from tech law providers. She has introduced internal apps at L’Oréal so staff can create their own agreements. Because she’s not focusing on basic work, she can put her efforts into more interesting legal work.
A number of reasons contribute to the failures in lawyer-client relationships.
Richard Burcher (Validatum) warned against:
- unrealistic time frames, which are counterproductive for both. This is evidenced by the lack of communication and slow turnarounds being the largest number of complaints to the Law Society. Communication and service issues, for example acting contrary to instructions, failing to carry out instructions and no communication were the second most common complaints in 2016.
- taking clients for granted. You’re only as good as your last job.
- delivering the Shard if the client asks for a tree hut. They’ve asked for a tree hut because that’s what they want to pay for and it’s all they need.
- treating every engagement like your first engagement.
- extracting as much information as possible from clients to make the costing process as clear as possible.
- treating the client’s money as if it’s your own. Jamie Levy (Director of Law at KPMG) referenced Wachtell, Lipton, Rosen & Katz, a firm widely regarded as the most prestigious law firm in New York, which does none of its work based on time billing, but based on the profitability of the case.
- being cost conscious and deliver higher value than expected of your client. It is a sure way to keep them coming back.
The future possibilities are endless if large players in law firms are prepared to make changes. The changes I’m thinking of aren’t just ‘hot desking’ in new offices. The changes are in context of our current experience economy. They’ll involve service integration so the client has to think less and question services less. And they’ll involve more accessibility and transparency for the client, which is at the forefront of firms willing to invest in knowledge, like LegalVision.
One recurring theme from each of the speakers was the importance of thoroughly knowing the client. Know the client’s business, the client’s commercial challenges, the client’s ultimate goal – be in a position where you can anticipate what they need. The relationship will turn from prevention to proactive activity. This was discussed in a podcast with Lawyers Weekly and Natalie Kurdian, partner at PwC. The stronger your understanding and knowledge of your client, the more they will view your services as an investment.