Last week, I wrote about the impact that legal operations professionals will have on law firms. Today, a story about just that. Plus a lesson: Legal operations is not just about paying law firms less. It is about changing the nature of a relationship between a law firm and a client.
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A New Client Service Model at Perkins Coie
About three years ago, Adobe Systems Inc.’s legal department put out a bid to select new preferred law firm partners.
Lisa Konie, senior director of legal operations at Adobe and a board member at the Corporate Legal Operations Consortium, said the company gave firms specific amounts it had spent in past years in a number of practice areas and regions.
Konie’s team approached Perkins Coie, which had submitted a bid and spent about a half day interviewing with Adobe’s in-house legal leaders, about the prospect of a single flat fee to govern the entire relationship. Perkins Coie would provide the legal services Adobe needed, and Adobe would send the firm a check at the end of every month. If they could do that, it would be a “nirvana” scenario, Konie said.
To Konie’s surprise, that blissful situation has been playing out ever since.
On the pricing side, Perkins Coie provides Adobe with a dashboard that shows the work it has done on the company’s behalf. If legal spending is too high one month, it will adjust down the next, or vice versa. The key to the billing agreement, said Konie and Perkins Coie patent litigation partner James Valentine, is trust.
From that trust, the two organizations operate much more seamlessly than a typical law firm-client relationship. The two sides have a quarterly call to discuss high-level legal issues and business strategy at Adobe. Lawyers and other support professionals from both organizations often work as an extension of one another.
Perkins Coie helps Adobe lawyers find pro bono opportunities. Adobe invites Perkins Coie lawyers to training sessions at its offices. And vice versa. The two organizations created a summer internship program where a diverse law student spends half the summer at Perkins Coie and half the summer in Adobe’s legal department.
Konie, who has been working in legal operations at Adobe since 2004, said she has never had a relationship with a law firm like the one she has with Perkins Coie.
“This is no longer an us-versus-them scenario,” Konie said. “This is us truly working together as if they were an extension of our legal team.”
For his part, Valentine, a key Adobe relationship partner at Perkins Coie in Silicon Valley, said he feels the same way.
“When I first started out at a large New York law firm, I had a clock in my brain telling me this is billable [or] this isn’t billable,” Valentine said. “That clock, I’m happy to say, is no longer in my brain. When Adobe needs something done, I’m happy to do it.”
In conjunction with the CLOC conference last month in Las Vegas, Perkins Coie announced a marketing effort aimed at creating more client relationships that are similar to the one it has forged with Adobe. Called Perkins Coie Client Advantage, it gives clients access to the professional staff that Perkins Coie has hired over the years in an effort to help corporate legal departments become more efficient.
Clients can gain access to people at the firm who have a deep understanding of financial reporting, pricing, electronic billing, professional training and development, as well as diversity efforts, pro bono opportunities and community involvement.
“We are seeing a meaningful change in how law firms interact with their clients,” said Perkins Coie managing partner John Devaney. “There is an increasing expectation on the part of clients that their law firm partners are going to provide support that goes beyond just the delivery of legal services.”
Perkins Coie said the services of its professional staff would not typically be billed to clients. Devaney said the firm had been providing these services to a number of large clients and the Client Advantage program is a way to market those services to more clients.
Another client that has benefited informally from the program is Microsoft Corp., which Perkins Coie has worked with for about the past year under a flat fee agreement as part of Microsoft’s broader push to eliminate the billable hour.
Judy Jennison, the Microsoft relationship partner at Perkins Coie and a former in-house lawyer at the company, said the flat fee model has been a “game-changer” in creating a stronger relationship between the lawyers at Perkins Coie and Microsoft.
“The world is changing so rapidly, and we really have to start thinking about the way we practice law much differently,” said Jennison, an intellectual property litigator. “The more creative law firms are, the better off we’ll all be. We need to change and grow. The profession is not going to look the way it used to look in 10 years.”
Adobe’s Konie said she hopes what might be called her “nirvana story” would inspire other law firms and corporate legal departments to try something new.
“The more we can get out there saying, ‘It is possible to do things differently,’ I really am hopeful that people will start actually asking questions like, ‘Why do we have to do things the way we always have done them?’” Konie said.
More on Last Week (Right Now)
Last week, in the wake of the annual CLOC conference, I wrote about the impact the legal operations movement might ultimately have on the legal market.
My overall point was something like this: If legal departments think they are pretty far down the road of legal operations efficiency, their impact on law firms will not be much. But I doubted the results of a survey that suggested at least some set of legal departments views themselves as 80 to 100 percent “there.”
I received a couple bits of important feedback that are worth following up on. The first comes from Kevin Clem, a managing director and leader of the law department consulting group at HBR Consulting. Clem has been a speaker at CLOC on the topic of legal department “maturity.”
In his presentation last month, Clem surveyed the room and asked those in attendance how they would rank themselves on the 12 “core competencies” that CLOC focuses on. Not a single competency received even a “4” out of “5” on a maturity ranking.
“There is definitely room to grow,” Clem said.
The second response, from Fenwick & West chief marketing officer Robert Kahn, pointed out that the goal of legal operations professionals is not simply to spend less money on law firms.
Increasingly, businesses view legal operations professionals as “essential to creating, delivering and managing all the processes, people and technology required to do legal right in a 21st century business environment,” Kahn said.
Legal operations professionals will be more central to the law firm-client relationship, and that is something that Kahn thinks law firms should take note of and make a point of addressing in the future.
“CLOC doesn’t necessarily mean the end of law firms,” Kahn said. “What it does mean is that law firms have some serious thinking to do about what areas of the legal department’s need they plan to address, and how they will evolve to meet those client needs and deliver those services.”
Roy’s Reading Corner
On the Innovation Pipeline: This week I wrote about the Northwestern University Pritzker School of Law’s efforts to teach students skills that might make them natural fits for legal operations roles. The underlying question: Do Northwestern’s students want those jobs, considering 55 percent of its most recent graduate class got Big Law jobs starting at roughly $180,000? It turns out the legal education “innovators” face some of the same challenges as those in other areas of the law.
From the story: In aligning itself with a view of an emerging, technology-centric legal market, Northwestern finds itself facing questions similar to those in the vanguard of other areas of the legal economy: Just how fast will the future get here? Is enough change happening to create demand for a supply of its product (law students with new skills and interests)? And, either way, should a prestigious institution cater to an uncertain new market when the current well-heeled market still pays top dollar to more than half of its students?
You can watch a “Global Legal Innovation Summit” at Northwestern here.
That’s it for this week! Thanks for reading, and please reach out to let me know your thoughts here: firstname.lastname@example.org.