This is a transcript of a panel discussion that was held at LegalTech New York, 2016. The video of the session is also available in our Experts Corner.

Holly Montalvo: I appreciate everybody joining us today. What we’re here to talk about is driving win-win results between the law firm and the corporate legal department through collaboration, sharing goals, metrics, and getting to a point where there’s a budget that’s got some meat to it.

When looking at the phrase “win/win,” it made me think of the election season. If you were watching the primary results last night it was pretty interesting, defining a win. What is a win? What does a win look like? As we saw last night, you had a third-place person saying that they won. And you had a second-place person who said that he didn’t win, but he kind of did. When you start to look at the different shades of that, it’s related to what we’re talking about today and why it’s so important. Depending upon what the perspective is, what the goal is, what the objective is, a win isn’t always a win. And so today we’re going to walk through that with three key pieces.

When we talk about win-win results, everybody in this room will agree that’s what you want. But how do you get there? We’re going to give you three pillars to help that engagement between law firms and clients.

First: collaboration. First, and I would say most importantly, is using collaboration and communication to make sure that when you’re putting a team on it, you’re trying to figure out what the goal and objective of the client is. You’ve got this piece, which is scope – you can’t go anywhere if you don’t have that. So this will be the first pillar.

The second takeaway is going to be using data and metrics. This is understanding where you’ve been, looking at it from a baseline and benchmark perspective so that you’ve got some insight to make some informed decisions.

And third, we’re going to look at building and using a budget to measure, monitor, and keep things on track so that you can get to those win-win results at the end of the day. That’s what we’re going to cover today.

I’m Holly Montalvo with Wolters Kluwer ELM Solutions. My background is 20 years’ experience working with law firms, trying to grow revenues, using data tools and information to get closer to the client and optimize operations. I lead Legal Analytics for the law firm side of the house.

I’ll introduce my esteemed panel. Bill Sowinski has over 30 years of experience. Bill you can introduce yourself and talk about your experience and background and what you’ve done throughout your career.

Bill Sowinski: I’m Bill Sowinski, I graduated from law school in 1976 and did trial work alternately. I worked for three different corporations, always responsible for their entire body of litigation. We used metrics extensively because we had a lot of mass tort litigation. Here at ELM Solutions, my title is Director of Decision Support Services. What we do is try to help our clients leverage their data and replicate some of the experience I’ve had over my career.

HM: Thanks so much, Bill. And Ed?

Ed Lazartic: Hi, I’m Ed Lazartic. I’m from Wells Fargo. I’ve been working for Wells Fargo for 30 years, the last ten in the law department. We have over 400 attorneys in the group and we hire lots and lots of outside counsel. My job is to help those attorneys make the right decisions on hiring, using data and analytics. We’re going to a new matter management system very soon and we hope that will be a key part of it.

HM: Thanks, Ed. Josette?

Josette Grippo: Good morning. My name is Josette Grippo. I consider myself a “recovering lawyer”. I have been with Baker & Hostetler for almost five years in multiple roles, most recently in this role for about two and a half years. Prior to that, I was a law firm practice group director for a majority of the litigation department. And prior to that I practiced securities litigation at Baker & Hostetler.

HM: And Chris Ende?

Chris Ende: Hi I’m Chris Ende. I’m the managing director of pricing and project management at Goodwin Proctor. I too am a recovering or reforming lawyer. I’ve been doing this role for about five years. Prior to that I was in practice management at Goodwin and prior to that I was a securities and white collar litigator.

HM: What we’re going to do today is really engage and roll up our sleeves. We’re going to do a role-play, which we’re doing for a couple of reasons. As we all know, both sides want to get to the winner’s circle, but how do you get there? There can be a lot of stops and starts when there’s a disconnect or information gaps. If each side is not aligned to what that goal is, you can have some scenarios occur, so we’re going to play through those scenarios and use it to illustrate the challenges that you’re going to face if you don’t have the information, insight, metrics, what the goal is, how you’re going to achieve it, and if you don’t have that collaboration between the client and the law firm.

As we walk through that, we’re going to use those three pillars that we talked about, looking at knowing what the need is, what are the goals and objectives and scope, looking at data and metrics to make informed decisions, and third get to that budget that’s based on true data, facts, and insight. Then we’re going to take a pause to go over things, then do an Act 2 to look at the same situation when they’ve exchanged information, gone through checklists, and have the information they need.

We’re going to use a hypothetical anti-trust case. This is totally fictional. It’s going to be based on a large credit card issuer involved in an anti-trust claim. It’s involving the use of credit cards for foreign transactions, so there’s a lot of complexity here, and the case involves a large number of parties. Our participants are not playing themselves, so I’m going to introduce the characters they will be playing.

Ed will be playing Jack Justice from ABC Financial. He’s the Assistant GC. There are two law firm roles. One person gets to play the relationship manager and the other gets to play the pricing person.

Chris is going to play Paul the Partner. He’s going to be the relationship partner that works with Jack. He’s got a new engagement and he’s trying to build a budget.

Josette is playing Patricia Price. She’s the pricing professional that will try to work with Paul to build that budget and find out what’s needed.

Here we go with Act 1.

CE: [As Paul the Partner, speaking to Jack Justice] Hi Jack, it’s great to hear from you.

EL: [As Jack Justice] Paul, how are you doing? I was lucky enough to score some tickets to the Superbowl and I’m really excited about it - I’m leaving right after we have this conversation. The reason that I’m calling you is that we have an anti-trust matter that relates to disclosure on the use of foreign credit card transactions. I thought you would be a really good firm for this matter, so I’m really thinking about using you. But I have a tough client. My business unit is very cost-conscious and they want no surprises. So by Friday I need you to give me a fixed fee for the matter and I need you to be as cost-conscious as possible.

CE (Paul): Got it. Thanks very much, Jack. Have a great time at the Superbowl. We have a great team that can give you fantastic results. Our anti-trust team is one of the best in the country. We handled the case for XYZ Corp and got an amazing result that was in the papers. You know a lot of our team members already. We were just named one of the best groups of the year. It’s a line-up of incredible people. So we’re going to get working on it right away and I’ll get you that fixed-fee budget quickly.

EL (Jack): I’m going to have my assistant email you all of the documentation. And again: fixed fee, no surprises, do as good of a job as you can on cost.

CE (Paul): No problem. Our experience is unbelievable here so we’ll get the team working on it and get you something really quickly.

CE (Paul): [calling Patricia] Hi Patricia, it’s Paul. How are you doing?

JG (Patricia): Hi Paul, how are you doing? What’s going on?

CE (Paul): Unbelievable news. I just got a phone call from one of our longtime clients, ABC Financial. They’ve got a new anti-trust matter. It’s going to be incredibly big, a huge opportunity for the firm, amazing case, and marquee names involved. I just couldn’t be happier about getting this new case. I need you to put together a budget for it and we need to get it done pretty quickly, so make sure we can get it back to them no later than Friday.

JG (Patricia): Okay. This is great news, for you and for the firm. And you are correct, we do have some great experience in this area. I’ll definitely get the team started looking at some historical data and we’ll start pulling some information so we can think of a benchmark, but I just want you to slow down a little bit. I’m hoping if you have time now, or maybe later today, I can come by your office. I think that we need to get a little bit more detail from you regarding requirements. What are the risks? What are the client’s goals? I need a little bit more on the scope, Paul, before we can move forward and do a fixed fee, especially because this is a fixed fee. Are you around later – can I come by?

CE (Paul): Yeah, I’m happy to help. Time is short here and I’ve got to run to court now. I’ve got another big case and I’m running out now. But I’ll get you details quickly when they come through. Just go ahead and work up your usual magic, you know, put it in a nice format and we’ll send it off, okay?

JG (Patricia): Okay, you and I have done this dance before and we know that it’s just not that easy. I sit in a position where I really want to make sure that we’re meeting your client’s expectations and needs, but I am in a position to make sure we’re meeting the firm’s requirements and needs as well. “No surprises” is absolutely at the forefront for your client, but it’s also at the forefront for the firm. I do think that we need to spend a little more time together. I can wait for you to get back from court. Why don’t you send me the details that your client sends you? I can put some questions around it and we can discuss via email, but I don’t think we can put pen to paper just yet, until we have a little bit more detail from you on the scope and the expectations. When do you think you’ll be back?

CE (Paul): It’s going to be later today. Look, Patricia, I appreciate all your help – you guys do amazing work down there. I think we’re going to be in good shape, but I’ve got to run. I don’t want to bother Jack again. He thinks we know what we’re doing in this area and I’m not going to start asking questions that make him think we don’t know what we’re talking about. He’s going to send details – I’ll send that over as soon as I can and we should be great to go from there.

JG (Patricia): Alright Paul, listen. I don’t want to get you stressed out because I know you have to go to court, but I definitely need a little bit more. Let’s agree on this: I’m going to go into the system and start to pull some anti-trust matters, look at the historical data, look at the leverage, and try to understand what was happening in those matters. And then let’s meet. At that point, maybe we don’t go back to your client, but maybe we create a scoping document for your client so least, again, there are no surprises. But we definitely need to meet before we’re going to sign off on a fixed fee.

CE (Paul): Alright, I have to run. I’ll send over everything as soon as I get it. Thanks.

JG (Patricia): Okay.

HM: Paul then gets the email from Jack and sends it over to Patricia. And we’re going to pick back up after she’s received that email.

JG (Patricia): Good job! I got your email with the scope detail for that ABC anti-trust claim. I appreciate Jack sending it and you forwarding it, but I have to say there really isn’t much to go on here. I know I keep pushing you, but fixed fees are risky for the firm and risky for the client. It’s super important that we’re on the same page and we really need to get more information before we can provide this budget. Now that you have this great win behind you, can you give me 30 minutes? I do this for a living and I promise you I’ll get in and out, but I really need your focus.

CE (Paul): Well, I’m looking at the document and it looks pretty straightforward to me. Let’s just look at the other cases we’ve done in this area, give me your best case scenario where we can do the work on a fixed fee for a nice low cost and make everybody happy, okay?

JG (Patricia): Paul, you’re giving me a rough time here. I have no idea what the client goal is. We’re talking about an anti-trust litigation. This is not cookie cutter stuff. We need to understand the risks, the exposure. What exactly does the client want to get out of this? There just is not enough to go on for a true matter comparison with our historical data. While the analysis I have prepared, which I can send you, is going to give us a good baseline, I really can’t give you full accuracy until I understand your client a little better.

CE (Paul): Okay, why don’t you send me what you have? I’ve done a lot of these before and I’m sure I can come up with a good number. I’ll send the number back to you. Just out it in the slick format with our nice new logo and we’ll be good to go.

JG (Patricia): We’re going to agree to disagree on this. I will send you what we have, but we’re not going to put pen to paper just yet. I will send you concept comparisons and we’ll go from there. Thanks.

HM: What we’re trying to illustrate is that Paul is thinking “I’ve got to get back to my client and I don’t want to bother him” and in his mind he’s doing his job. And Patricia is trying to figure out what that goal is. He’s saying that we can’t talk to the client, but what happens is they start to operate in two different directions. Patricia can’t put together a budget when she doesn’t know what the goal of the client is and she can’t get to the client. And Paul doesn’t want to go back to the client and doesn’t want to make them think we don’t know what we’re doing. So what happens is, instead of engaging and interacting and finding out that Jack’s got a worry about exposure or more plaintiffs coming into the party, they’re operating blind, even though Patricia is diplomatically trying to get more information.

So that’s the illustration of where those gaps exist.  It’s hard to align the right team and the right resources if you don’t know what that goal is or what is a win for the client. During this intermission we’re going to talk about those three pillars and then we’re going to go back and do a role play.

First: Scope – I can’t stress this enough – aligning those goals and the boundaries, making sure that the outcome is not assumed. Paul might think “He wants me to put the A team on it and win” but that might not be the case. He needs to get into the nuts and bolts because it’s a very complicated case.

A checklist – As Patricia was sharing, having a list to go off of “have you asked about this, have you asked about that?” Having a list to go to so that when Paul is having that conversation, he can garner some of that information.

And then the third point: communication. Assuming, as Paul was saying “we don’t’ want to bother Jack, he’s busy”. But if you don’t get this scope piece right, it doesn’t matter what follows because you could be going in the wrong direction. So it’s really important to understand for all the stakeholders, not just the legal objective but the business objective for the client.

And lastly, a clearly defined scope will help you get to the components that will make up that case. This way they’re not going in blind. There are no surprises. If they do hit a bump, Jack’s on board with the plan, and there are no assumptions.

That’s the first piece. The second is the baseline. Patricia was really driving to this. She was saying they should look at historical matters, and try to get an apples to apples comparison so that we’ve got a playing field of where this might fall. Things can happen along the way, but if you don’t identify those risk factors, you’re not going to be prepared to respond.

Benchmark. Legal departments hire the firms that can handle the right matters. They’re looking at performance to see what you’ve done previously, but also looking externally at market benchmarks.

Then we’re going to look for the right team. The legal department needs to know that you’ve got the right resources, that you’re not putting the A team on it when, in fact, maybe you could’ve used a different staffing mix. When you use the data, the data itself isn’t going to drive you to a win, but using it in a directional way can help.

So we’re going to show you an example of some benchmark data. We’re looking at an anti-trust case in a consumer services industry. And this is benchmark data that we’ve compiled to show what the total fees look like. This is market perspective. We’re not saying that this has to be at that $1 million data point. It’s just to give a sense of the playing field – it’s like the Kelley Blue Book estimate. You can look at the typical hours to identify range of how many hours it’s likely to take.

And then looking at the staffing model to see who’s doing the work, what the blended rate is. Again, this is used in a directional way. If we’re looking at that fixed fee that Patricia is talking about, and there’s some risk there, what are some of the benchmark standards we might look to in order to give us a guidepost?

And most importantly, putting pen to paper. And it’s a combination of things: aligning those goals and objectives. Looking at similar matters, in this case it’s a litigation, and making sure there is some synergy. Looking at the data to see where this one falls from A to Z. And we know every matter is different. That’s why there’s a range. That’s why Patricia is pushing Paul so hard and saying that she needs to know more about this.

And then assigning the resources and responsibilities. You don’t know what team to put on it if you don’t know what’s really required on the matter.

And then lastly – the budgeting piece always comes first. Everybody says “Just give me the number and we’ll do it”.  But then do you want to write that down? Because once you give the client that number, you’ve got to manage that. So this piece is looking at the components, taking in all the pieces we talked about – scope, what we’ve done in the past, looking at the variances – and coming up with a budget that’s based on real information. It’s not just a hope and a prayer or a guestimate, but it’s actually a budget you can perform and manage to.

So now we’re going to return to the role play for Act 2. They’re going to have a similar dialog, but after they have gone through the three pillars. And we’ll see how that plays out.

CE (Paul): speaking to Jack Justice] Hi Jack, how are you doing?

EL: (Jack): Hi Paul. I was lucky enough to score some tickets to the Superbowl. But the real reason I’m calling is that I need you to look at a matter for me. It’s related to anti-trust and disclosure on the use of foreign credit card transactions. I know you have some experience in this area and I think you’re the right firm to do the job. But I have an incredibly cost-conscious business unit, so I need fixed fee and I need no surprises. I need to get this back by Friday, time is of the essence. So how does that sound to you?

CE (Paul): It sounds great, Jack. Thanks for calling. We’re happy to get working on this. You’re right, I think we have a great team, but I’d love to spend some time with you walking through the case in a little more detail to find out about what your goals are for the case and what a win would look like. We can make sure we start thinking about some of the key cost drivers so we can tailor the budget to what we think the scope will be. Is this a good time to do that?

EL: (Jack): I need to get on a plane right after we get off this call, but I have a very knowledgeable associate, Sally, who can walk you through the details. I’ll be happy to connect you with her.

CE (Paul): Great, I’ll talk with her, and get all the information. I’ll circle back with our team as well and then we’ll get back to you with our preliminary thoughts. Maybe Sally and I can get together again down the road to make sure we’re on the same page before we get you our final numbers.

HM: As we can see, the interchange with Paul and Jack is about asking questions, trying to get to the scope, asking if there is another person to talk to if you’re gone. This allows Paul to now go to Patricia in a little bit different capacity.

CE (Paul): [calling Patricia] Hey Patricia, it’s Paul. How are you doing?

JG (Patricia): Hi Paul, how are you? What’s going on?

CE (Paul): Good news. We have a new case, an anti-trust matter from ABC Financial and it’s going to be really big. I just talked to our contact there, Jack Justice. I got some really good details from Jack and one of his colleagues, Sally, about the case itself. It’s going to be really complex. They’re not looking to take it to trial, but there will be some really complex procedural and substantive issues. I can fill you in on their goals for the case and some of the key cost drivers, but there’s also a lot of uncertainty. So I want to make sure we can get going on a budget. We need to get back to them by Friday but they’re happy to work with us and have a follow-up call once we get some initial thoughts down.

JG (Patricia): Okay great. Why don’t you send me what you have? It sounds like you did get a lot of the questions answered up front, which is always appreciated. You do a great job of it and we really appreciate it on this side of the house. I’ll start to go through those documents, start to put them in our templates, start to base it off our historical data. We’ll try to marry it with the work you’ve done up front. Then maybe we can meet later today and figure out where the gaps are, especially if your client is amenable to us approaching them again and asking them some follow-up questions to make sure that this budget is solid.

CE (Paul): Sounds perfect. The stuff is on the way and I’ll catch up with you this afternoon.

JG (Patricia): Great, then I will see you this afternoon. Thanks for thinking of us.

HM: Patricia gets the information from Paul. This time she’s got a lot more information. They’ve had an open dialog and talked about the areas where they don’t want surprises. There are no assumptions. And now they’re going to reengage after Patricia has had a chance to put pen to paper and consider some different scenarios. She’s looked at their historical work and she’s got some of the scoping questions answered.

CE (Paul):  Patricia, how’s it going?

JG (Patricia): It’s really coming together nicely, Paul. Sally did a really good job and clearly you asked some really good questions at the outset. I do see a few gaps. I want to discuss the team with you. I got a conference room for us. Maybe I could bring the documents and get the template up on the projector so we can fill that in. We can review some assumptions and look at the staffing leverage. I think that within the time, maybe even by the end of the day, we can get this done. I have a few last questions, but you may even be able to answer them off the top of your head because of your experience. Are you available at 3 o’clock?

CE (Paul): Yes, sounds great. And let’s circle back with Jack and his team later, as well.

JG (Patricia): Sounds good. I’ll see you at 3.

HM: So where we concluded was that coming at that in a different way, where Paul’s not just pushing Patricia to just get the number on a PowerPoint and off to Jack. Now they’ve talked about that risk and about what that goal is and the complexity of the case. They’re communicating on a different level and they’ve opened up that segue so that if they need to go back to Jack or Sally, they’ve got that back and forth collaboration. They’ve opened up that communication between themselves and back to their client.

Let me ask you, Ed: On your side of the fence, if you’ve got your law firm coming back to you with more questions and clarifications while they’re working, how would you receive that?

EL: It is always a matter of partnership. When I first got into this business, I had a supply chain hat on. It was all about coming in at a certain price, I wanted them to come in lower than the lowest price. And I’ve realized this is much more about partnership and collaboration. And communication is key to that.

HM: Exactly. So earlier when we heard Paul say “I don’t want to bother him.” But if you don’t bother him now to get it right and figure out exactly what that goal is, Ed, how are you going to feel about if they get you a budget and it starts going off track? Then they have to call and say “we’re blowing through the budget.” That’s a much tougher call to make.

EL: Absolutely. It does happen. We usually try to have some early conversation about what to do in case it does happen. If I know a firm well enough, I understand that even if that happens, it will be fair.

HM: Exactly. Obviously, after the two acts we saw, you want to get to Act 2. Each side is sharing information, there’s collaboration and no surprises. Now we’ve got to talk about the elephant in the room. When we depicted those two scenarios, we did it in good spirits – we’re not picking on the law firm or the corporation. We’re trying to find the alignment – what is truly going to be the win and how to we get there?

So now we’re going to talk to the panelists and find out what they’re facing with the challenges we just illustrated. When you don’t have enough information, or the data doesn’t make sense, or you haven’t scoped it out. When they’re striving to get to the Act 2 scenario, how are they using data and metrics and processes to aid them along the way?

You can have the best technology. You can have the best information. You can be doing everything right and checking the boxes. But if you don’t get the scope right and alignment of the goal, you’re going down the wrong path and you can’t correct that. Having the processes in place, as well as the tools, to be able to use that collaboration is key.

Where are you currently at in your organization? How did you start? We’re trying to get best practices. And then we’re looking at moving forward so that you can leave here equipped with some tools and best practices that we’ve shared.

We’re going to start from the corporate perspective with Bill. Bill can you talk about your 35+ years’ experience? Bill’s had the unique experience of being on both sides of the table. He’s been in-house, managing outside law firms. And he’s used data, information, and analytics to see both sides of the fence.

BS: Clearly, the most important thing is for both the law firm and the corporation to understand what a win is. When I was in-house, I would always be asked by the General Counsel or by the CEO “what about this case, what’s going to happen?” They’d be watching it. So I had to be certain that I communicated correctly and put the parameters around it that were necessary. As you folks know that if you lose credibility in-house, it hurts your career. So don’t let that happen. Good communication with your law firms is absolutely critical. So that you can tell your internal folks – these are the objectives, these are the variables that might impact what happens, these are the costs we’ve calculated and the variables that might impact that.

But to get to that information you want to be able to use some historic information. You want to tap your own body of information and work with the law firm to see if they can share with you. When I work with clients, it’s remarkable how many of them haven’t captured the information carefully and need to start doing that. Sometimes when you reach out to the law firm they haven’t done it that well either. But the information that clients have is always better than they think it is. Especially if you use electronic invoicing – you have all the building blocks there.

Articulate the goal, leverage the information, and make sure the law firm understands that you have internal audiences so that they present the information to you in the way that you’re going to need it.

What the law firm has to work with you to do, to help you think out the parameters and articulate the variables and what you should say to the folks in-house who’ve got their eyes on this case. They have to share with you the strategy and the risks so you can quantify them. As I mentioned before, everybody has cases. Take a look at the history on a line-by-line basis if you have to understand what it costs to prepare an expert witness, or develop a financial loss value. What does it cost you in other cases?

And the most important thing relative to law firms is: communicate. The law firm has to be able to appreciate that they can talk to in-house counsel anytime. They need to stay on top of the case and one of the best things outside counsel can do is communicate. Corporate counsel should demand that because you never want to be caught unawares.

HM: That’s a great point, Bill. Keeping that channel of communication open so they can stay on track is important. And when it comes to looking at data, try to find the things that will be meaningful, don’t just measure to measure.

And to Bill’s point, there are going to be different steps along the way. You’re never going to be able to say “We have to do exactly A, B and C for this case.” It’s never going to be perfect. But sometimes there might be directional data. With that in front of you, you can start looking at things that might be driving the costs up. You can look at performance and see that some matters went smoothly and some hit some bumps. Then you can look at why. Because the data point is important but you also need to have the context behind it. That’s why we have developed some key performance indicators for corporate legal departments as well as law firms. Use them to find those things that are going to be meaningful, get answers, and find some visibility into the data.

BS: To the extent that you can estimate how much you think things are going to cost, especially if you have four or five things going on at once, as soon as something looks like it’s going off the tracks, jump on it right away.

HM: Exactly. The idea that it’s just going to get better? (Audience laughter) We can hope, but usually it doesn’t. And at that point it’s a tough conversation to have. So when something starts going off track, then maybe the law firm re-engages the client and they can get to the bottom of the issue.

Now, Ed, we’re going to talk about what matters on your side of the house from your perspective at Wells Fargo.

EL: Bill really accurately described that understanding the corporate goals and approach is critical. Part of that is the law firm and the client knowing one another. You get a better understanding about who they are, about what the approach is going to be, and ultimately that familiarity is more than a nice to have – it’s critical. I rarely ever use new firms on an AFA. I want to know what I can do work with them.

An equitable, cost-conscious approach is really important. I joked before about having lower than the lowest price that was out there, but I realize that there’s a sense of fairness for both the law firm and the company. We have done some work around bidding. I do have the data to suggest what’s a fair price and what’s not. It gets a little more challenging when the case is big and hairy and ugly, but on the routine stuff, it’s straightforward.

HM: And when you get that information and you have it in front of you, do you share that? For example, if you hit a bump along the way, would you share that with your outside firms?

EL: If it’s warranted, yes. There are 2 aspects to this. I’d almost like to see what’s in the firm’s hands because that’s going to inform their perspective. This is both parties agreeing to share. I don’t think it’s happened that often, but it has happened.

HM: That’s a good point. There will be certain situations when you don’t. But it’s okay sometimes to ask, even if the other party isn’t comfortable sharing. You’re trying to get closer to one another so that your goals are aligned. So that when you go back and put the team on it, it needs to be fair, cost conscious, and effective.

BS: Sometimes when you reach out to law firms they don’t want to share their financial information with you and I get that. But they’ll share the hours with you and information on the folks who did the work, especially if you have a good relationship.

HM: Exactly, and if there’s pushback you’ll know, but you can try to forge forward instead of just assuming that they won’t share their information.

EL: With any fixed fee arrangement, project management skills are really key. We’ve changed the risk profile to show that we’re not just buying an hourly case for the law firm to manage, we’re buying it at a price. That provides me comfort, but the firm’s management of that can be pretty challenging. I’ve seen firms that are really good at it and I’ve seen firms that are not good at it.

HM: Is this process and project management piece becoming a bigger focus?

EL: Absolutely. Toby Brown from Akin did a presentation last year that I thought was fascinating because he took the covers back and talked about how he manages projects within a group. I always want to law firm view of the world.

HM: And I know it’s the same on the law firm side of the fence, wanting to get a little bit closer. Can you talk about metrics?

EL: We do have Matter management systems. They’re a little dated. We’re moving to the latest version of Passport but we’re not there yet. A lot of the data that we have, right now we’re using offline. We have some things that are easy to do: we have a consumer lending litigation program with over 10,000 matters in it. We use every aspect of the historical data to help make decisions, beyond geography.

Where it gets a little more challenging is in taxonomy, or defining the work. We’re a large, very diversified bank and we have thousands of matters. The taxonomy has really been the most challenging thing to do. For example, we have a lot of bankruptcy in a lot of different places and we have a bankruptcy team. The first definition might be “judicial proceeding” and there can be dozens and dozens of options beyond that. In just the work that’s happening with the bankruptcy team, I found 1500 varieties of what appear to be the same matter. And that will just kill you. I can’t understand it. I have to go back to the attorney and say “look at this list and tell me what’s this and what’s that matter”. We’re doing a lot of work on that front. That’s very important to us.

The other biggest challenge is measuring quality. We used to have a survey in place at the end of the matter. Some attorneys took it seriously, some did not. I think it’s critical. I know the firm wants the feedback, too. I think there’s too much management by recentness. Maybe a firm did something horrible or something great. But I want a measured, balanced approach. That’s something that has become very important to me as well.

HM: That’s great feedback and it’s what we hear a lot. Thanks for that candid view. Now, to get the law firm perspective, we’re going to go to Josette, who is in strategic pricing and LPM at Baker & Hostetler.

JG: A lot of my comments echo what my colleagues have been talking about. It really is a partnership. What we try to do at baker is to help the partners understand why this matters so much. I think they look at data as our job. The culling and analyzing of the data is really our job and they want to understand their role, which really is the relationship. We try to visually show the partners that we have this pricing and LPM team in place. Our LPMs are from the manufacturing side, which was a strategic decision that we made – on the manufacturing side they’ve really got this pretty well locked up and they’re teaching us quite a bit.

We want the partners and relationship managers to know that we see this as a partnership of all three prongs, so we as the support team are part of that partnership too. And we are going to be that foundational rock for those clients and for the partners to protect their interests. That’s where the value comes. We get a lot more “repeat clients,” as we call the partners at the firm, because of that trust and because of that foundational springboard that we’re providing.

We try very hard to be very concise with the partners so they understand exactly what we need from them. The more we ask of them the more overwhelming it gets, so we stay very concise and focused for them to give us as much as they can. And then we show what the output is for the client, the budget requirements, the scope, and the timeline. We really do see it as a three-pronged partnership between us, the partner, and the client.

We make sure that the client knows my team is in place and we open those lines of communication. I’ve talked to many procurement people on the client side to take the burdens off of the lawyers. If the client wants to take us out of the equation and go directly to their people, they are available.

This is our value-based approach. We definitely think that innovative pricing, hybrids, and alternatives are the way of the future. The billable hour is still very important to clients because it’s easy to measure, but we are trying to take more of a value-based approach. That’s the challenge: What is value? What is the win? We’re all going to struggle with that. I don’t think that’s a direct science – it’s a collaboration. Value is different depending on what the client wants. With some of our clients, the value is the goodwill and the reputation that are going to suffer, or that they’re going to gain, from engaging in the activities they’re engaging in.

So we do try to always deal in a value-based approach, but it’s not easy. Because the client will say “what is value?” but we think that these are organic touchpoints to talk through with the client. These are real conversations that we need to have.

We offer all the different types of pricing that there are, but we try to tailor all of our pricing to practices, phases, and tasks. Again, to the taxonomy issue, this is a huge challenge. “Garbage in, garbage out” is something we all deal with. It’s never going to be exact. It’s pretty burdensome and there is a lot of labor that goes into cleaning the data and I’d be lying if I said that all of our data is really clean. It’s getting there, but this is a process we are going through with our clients.

To the underlying theme of today, which is communication, I think the key is honesty with the client, that we don’t have this down exactly and we want to share this with them. I think that there’s something honest and attractive about being open in your communications. That is an approach that we’ve been coaching our lawyers to take.

My last slide is the balancing act. I think this is the challenge that people like myself and Chris face. Being a support person in a law firm and knowing that the partners are really your client, but the law firm as an institution is also your client, is a very tough act to balance. And then the partners, who are my clients, have their own clients that they’re balancing. So the scales are constantly tipping for all of us at any given time. I have never been in a situation where it’s ever been perfectly balanced – that’s just the truth. And I don’t know if there is ever a situation where it’s perfectly balanced.

On the law firm side we’re dealing with client relationships and making sure that the partners are protecting them. But we do have revenue goals. That’s not a secret – we are a business. We have margin and cost that we have to be very careful to watch and measure because we sell time. We have to be honest about that. And, Holly, you know the KPIs. Those KPIs change every day. And they’re different to every lawyer, every practice, and every industry. To keep yourself educated about the market is very important for people in my position.

On the client side, we are in a tremendously competitive market and we want to meet client expectations but we also don’t want to sell ourselves short. There are huge risks that the clients are facing and we need to be sympathetic and empathetic to that. And obviously there are pricing pressures. The literature tells us that our clients are under tremendous cost constraints. Their teams and their budgets are getting cut. I do a lot of client interfacing and it’s always refreshing when a client is just honest and says “I don’t want to have this conversation with you. I’m under the same pressure you are. I’m being evaluated with respect to the savings that I bring in. How can you help me with that?” We have to do it without sacrificing quality. Because all the law firm has is the quality of service. So all of this data and metrics are great. But at the end of the day, they’re practicing law and they have to get results.

So what do we see as the foundation to help with that balance? Clearly there’s got to be trust between the people in our position and the partners. I think that the trust between the partners and the clients is a little bit more organic. The partners are more used to that. The trust in the support staff professionals is tougher for them and for them not to see you as the law firm Big Brother. We need to educate. We do a lot of training. Sometimes the education is tough. We don’t always use a win as our education tool. 

More often than not we use a loss as the education tool to show the implications of a write off or when it goes out of scope. What happens when you do an agree discount but something goes awry and this discount ends up being huge?

We hear the word “transparency” often. But what I personally need from the partners is a vulnerability and an openness to understand that this is new for everybody. Lawyers need their egos. They need to know that they are really good at what they’re doing. And this is new terrain. While it’s been around for a long time, it’s more in demand than it’s ever been. So they need to be a little bit more vulnerable and open their books of business to us, and open their thought processes, and admit when things have gone awry, do the “mea culpa” and move on. Then, we can fix it going forward for the best practice.

HM: Thank you, Josette. Chris?

CE: I know we’re getting short on time. I can echo everything that’s been said. As Holly mentioned, part of what we focused on in the role play was that if you get the transparency and communication part wrong, everything crumbles from there. But when you do get it right (and we’ve worked so much on that at Goodwin), it’s partly because you have that good support behind it.

I just want to share in a very practical way some of the tools we’ve used. Once we get the scope, we do have an experience database that took a long time to create. It has about 1,500 or so entries now. We put everything we have in terms of budget, a pricing proposal, an AFA, etc., into that experience database. So it’s a good place to start to see if we have that “apples to apples” comparison. It can tell us: What have we offered? What’s worked? What hasn’t worked?

We also have a lot of KM, data mining tools where we can put those cost drivers in. This slide has a very basic, scaled back example. But it’s a very good KM tool where you can get specific in terms of whether it’s an IPO, the deal size, the client industry, matter industry, time frame, etc., and look at all the key data points. You get some very good data back. And, as Ed mentioned, we do go back to our clients. If we’re way off we’ll share it. We’ll say “We’ve done 50 of these and here’s how we triangulated to figure out where we are. We’re way off. Do we have the scope wrong?”

And then we put it into a more detailed template. We find that this is a great way to get on the same page. A client might think, “This is a motion to dismiss, $10,000 will be fine.” But then we’ll look at the hours and what we have to do at the least, and we may find we’re way past that. We’ll share this with our client and walk through it, especially if we’re not on the same page. Once you get that worked through, then it’s the reporting. We’ve found clients like to see at the top of the page a very high level overview showing how you’re doing against your budget. And then if something doesn’t feel right you can drill down into the matter and see by task, phase, and individual, what did we budget and where is it going off the rails?

This has been the key to allowing the partners to go back to the client and let them know, not just that something has gone wrong, but the actual issue, why it’s going in a different direction. Then we can talk about it. We’re found that, to get to the next level, these tools have given people the help they need to go and have the good conversation.

HM: I appreciate that. Wrapping up, we talked about the scope, knowing what a success and a win looks like, and making sure you’re not leaving any question unanswered.

The “during” piece: manage the expectations, keep an eye on whether the budget is on track or off track. Communicate throughout the whole life cycle so that when the matter is complete and we tried to get the win/win, we know that the result really was a win for the client. Assume nothing.

Try to initiate that post-case dialog because you aren’t going to be able to get that anywhere in the market. Matters always have a little nuance and it’s important to repurpose that knowledge as you move forward. You need to memorialize and capture the information so that you can move on using bet practices.

You can have great tools, but if you don’t have the scope right, if you’re not aligned on the goal, or if you’re not communicating and having that collaboration, you won’t be on the right path.

Thank you, everybody!

[Applause]