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“A Good Crisis is a Terrible Thing to Waste…” The ACC Value Challenge. Reconnecting Cost with Value. July 17, 2009 ACC Northeast Chapter Susan Hackett, ACC. Do clients and firms really mean it this time?.
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“A Good Crisis is a Terrible Thing to Waste…” The ACC Value Challenge Reconnecting Cost with Value July 17, 2009 ACC Northeast Chapter Susan Hackett, ACC
Do clients and firms really mean it this time? • Decades of escalating legal costs without improved efficiencies: The Tipping Point • Changing economic pressures on both sides – now emphasized by the downturn • Not a matter of blame; both sides need to change & take responsibility for driving value
Client practices focusing on value… • Cigna’s “Nailing the Basics”: Budgeting practices • Only real-case budgets rewarded • Training programs support skill development • Metrics and comparatives drive evaluations • Client reports on performance and accountability • DuPont’s paralegal program: using in-house talent • Outside firms cannot bill for tasks paralegals can do • Strong paralegal training and self-management • Measuring use through e-billing/year-end evals
Client practices focusing on value… • GE’s Preferred panel firm training • Focus on portfolios of work – in this case, M&A • Training/skill building at GE’s exec learning center • Regular collaboration meetings • Knowledge management – continuous improvement • SoCal Edison’s balanced scorecards • Measuring department performance to targets: • Results achieved, progress against goals, performance against budget, people related goals • Reporting quarterly to clients to show dept. value
Client practices focusing on value… • FMC Technologies ACES system • Combining a mixture of alternative and success fee billing practices for outside firms with • Rigorous performance evaluations: both inside and outside counsel. • “Unpredictable” nature of law ≠ inability to budget/set targets • All counsel compensated based on results/driving the focus on outcomes • All lawyers valued for their business judgment first
Some large law departments and their focus on value may take a lead or get more attention … • … But adopting value practices is just as important (and maybe more so) for smaller law departments • Many of larger department techniques are scalable for smaller department use. • Many smaller law departments have value lessons and practices they can teach their larger brethren, too. (And the same goes for firms.)
Firm practices focusing on value… • Drinker Biddle: tackling the entry associate crisis - no deferments, but mandatory training - cutting back on starting salaries and hours - educators drawn from excess capacity • Abbott Simses: early case assessment services - firm specializes in settling out matters early - decision tree analysis/process - incentive fees for working a case less
Firm practices focusing on value… • Seyfarth Shaw: lean six sigma in a law firm - regular caseloads are reverse-engineered - process management: process times are down, as are client costs - intelligent staffing options employed • Valorem: value billing, defined by client - budgets are set as are expectations - final bill has a client “value adjustment” line item
“Yes, you can!” • There’s nothing in any of these practices that you don’t know and recognize: most are just plain common sense combined with a decision to drive value in process. • What is it that you need to move from intellectual agreement with the theory to practical applications you can begin to implement? • Change management can be both radical and incremental – it can be planned and collaborative • The real risk (for both firms & departments) is not acting: everyone wins
Unique Opportunities… … For firms that are early adapters – demonstrating their savvy in managing their own business. (Helping clients who don’t have the time/capacity to re-invent the firm for them.) … For firms with a clearly defined value proposition and a willingness to open the kimono to clients – trust, risk sharing, transparency, collaboration. … For the mid-tier and value-firms, as well as boutiques: reasonable rates, lower fixed costs, greater flexibility, nimbleness … For clients that previously did not have the leverage of the Fortune 50 in driving innovative terms with firms … For in-house counsel to drive better internal mgmt.
In the end, it’s all about value.