The tipping point for the ACC Value Challenge has passed. The majority of attendees at the Boston ACC meeting were buzzing about the Value Index (where clients rate law firms), cost control and predictability.
There was a rumbling anger beneath the usually calm demeanors of the employed counsel. This article will discuss the Value Challenge and Index as defined by ACC members. It will also give you a flavor of the divide between law firms and clients, with suggestions for what that divide means for those of us who are stewarding the electronic discovery process.
The ACC Value Challenge
Last year, the ACC released the ACC Value Challenge:
According to a recent issue of the California Bar Journal, a survey by the Corporate Executive Board found that “while non‐law firm costs increased by 20 percent over the past 10 years, large law firms’ prices jumped almost 75 percent in the same period.” These numbers confirm the disconnect most if not all of us have been feeling.
With the economic meltdown, law firms are now facing additional pressures: loss of clients and business, reduced access to bank lines of credit, a need to downsize and better manage overhead, and at the same time, keeping as many people employed as possible.
Believing that solutions must come from a true dialog and a willingness to change things on both sides, the ACC Value Challenge is based on the concept that firms can greatly improve the value of what they do, reduce their costs to corporate clients and still maintain strong profitability. Our task is to help shift the discussion to a focus on value and to find solutions that work for all sides.
Taking hard aim at profits-per-partner metrics showcased by the AmLaw 100 rankings, the ACC Value Challenge educated employed counsel about the economic model of law firms. A spreadsheet, available here, demonstrated visually to counsel that the associate lockstep model with high attrition has increased costs to clients and reduced profitability to law firms. Counsel, shocked by the impact of an inefficient economic model, has found a way to collaborate with outside counsel, with benefits accruing to both.
It is useful to hear the conviction in the voices of employed counsel when they talk about realigning value. In-house legal expert Susan Hackett, senior vice president and general counsel of the ACC, has a podcast series focused on the ACC Value Challenge on Legal Talk Network.
It is even more useful to see the resolve of counsel to demand value. Check out the Getting Legal Done user group in Boston, which features conversations on ACC Members Talk to Outside Counsel and the ACC Value Index.
Many of employed counsel started their careers at law firms and viscerally understand the pressure to bill, to re-create work product, to dive deep into issues and to find intellectually challenging tangents to run down. They understand the cultural issues inside law firms and the resistance to change. They also understand the pressures the businesses they serve face and the need to demonstrate value to their management.
Ranking Law Firms at the ACC Annual Meeting
There were kiosks available for ACC members to rate their law firms from 1–5 on the following categories:
· Understands Objectives/Expectations
- Legal Expertise
- Efficiency/Process Management
- Responsiveness/Communication
- Predictable Cost/Budgeting Skills
- Results Delivered/Execution
There are spaces for comments, and the survey includes a question about willingness to use the firm again. While the categories are broad, counsel now have a starting place to get their houses in order.
Implications for Technology
Fred Krebs, president of ACC, went to ILTA to bring the Value Challenge home last summer in a session entitled, “The ACC Value Initiative and What It Means to Technologists.” A nice recap of the session is available here at the In-House ACCess website. Krebs focused on technology, metrics, collaboration and process:
The smart use of technology (making sure systems work efficiently), metrics (analyzing the data and improving processes) and collaboration (internal dialog) all play a significant role in helping firms to be more responsive to their clients’ needs. Technologists, working closely with the attorneys and other administrative departments, can develop streamlined solutions and processes that can help with efficiency, reducing costs and long-range forecasting.
Improving processes, however, should not be confused with “moving things around to just look different,” explained Krebs. Referencing an article by Steve Levy in the August issue of Law Technology News, Krebs noted that, “Automating broken processes won’t make us smarter; it can make us stupider faster.”
Tim Corcoran, senior consultant from Altman Weil, used the analogy of the myth of ever-increasing property values to underscore the change in legal billings, pointing to technology as an enabler to allow counsel to do more with less:
Corcoran referenced a recent Altman study which showed that, in 2009, 40% of the in-house counsel surveyed planned to reduce the use of outside counsel, and almost 30% had reduced their internal staff.
Implications for e-Discovery
In panel discussions, the “cottage industry” around e-discovery was brought up as a driving factor of cost increases and unpredictability. The specter of scores of attorneys reading documents page by page at high rates was used as an exemplar of outside counsel using highest-cost labor to address one part of litigation. The American College of Trial Lawyers report underscores this concern, which will be addressed in potential changes to the Federal Rules of Civil Procedure at a meeting of the Rules committee at Duke University in May.
I will be moderating a discussion on “The End of e-Discovery as We Know It?” on a free ALM webcast airing December 9, 2009. Richard Braman, the founder and executive director of The Sedona Conference®; Craig Merritt, partner at Christian & Barton LLP and a former member of The American College of Trial Lawyers Task Force on Discovery; and Bruce Parker, partner at Venable LLP and a member of Lawyers for Civil Justice will participate in the lively discussion.
At Fios, while we are not practicing attorneys, we recognize that we work for attorneys. For example, from our inception 10 years ago, we institutionalized conflicts checking. Over the last several years, we have experimented with alternative fees to better align with the objectives of both law firm and corporate clients to achieve predictability and cost control. We launched litigation readiness services in 2003 and set out to help our clients develop repeatable processes to reduce cost.
We stand ready with budgets, communication plans, certified project managers and a service model that emphasizes understanding objectives and frequent communication. We’ve tightened our delivery times and, by applying metrics and quality control, have dramatically reduced our error rates. Our new partnership with Ajilon Legal allows us to provide an “all in” document review rate, from collection through production. We have heard our clients’ concern that cost be proportional to value.
The ACC Value Challenge conversation is one that will continue to take place over the next couple of years as the legal community adapts to economic, technical and political challenges. I’m thrilled to be leading the effort at Fios to help keep you informed, connected and aligned to initiatives as they emerge.
Filed under Sound Evidence.