The Delivery of Managed Legal Services: Part 2

In part one of his series, former general counsel and current Counsel On Call Director, Eric Griffin, described the waves of change he’s witnessed in the legal industry throughout his career due to the disaggregation and commoditization of legal work and associated rise of managed legal services.


In my last
post, I concluded by describing a “three legged stool” model of providing legal services in the modern era; in-house counsel focuses on the business issues, outside counsel focuses on strategy and high level analysis, and the legal business process manager acts as the gatekeeper on costs, process, technology, staffing, metrics and improvement.

But are all types of legal matters amenable to legal process management? If not, what kinds of legal work should be considered for process management?

The fact is, practically all legal tasks (other than those performed in connection with “one-off” and highly unique and infrequently repeated matters) are amenable to process management initiatives. Specifically, managed legal services can bring tremendous efficiency and cost savings to projects involving high volume or repetitive tasks such as (but not limited to) the following:

  • Litigation (discovery, review, research)
  • Due diligence / M&A
  • Corporate work
  • Contracts management
  • Employment matters 
  • Investigations
  • Compliance

To pick just one example, let’s consider how a managed process can bring increased efficiency to a company that (as part of its ordinary business) enters into a high volume of I.T. equipment purchases and I.T. services agreements.


Problem:

The I.T. procurement process has become highly fragmented, with several different in-house and outside lawyers preparing and revising the contracts. This is due to the limited resources of the company’s legal department, the varying volume and complexity of the transactions in question, and the time required on other projects. As a consequence, there is a wide variance between the final contract product, which increases default and post-closing contract compliance risks. Moreover, the small staff of in-house lawyers is increasingly frustrated with its workloads and lack of professional development, as almost all their time is spent reviewing routine (but important) procurement contracts. More strategic legal initiatives languish as a disproportionate amount of time is spent on the contracting process.


Possible Solutions:

There are several options for the General Counsel in this scenario:

  1. The company hires more in-house attorneys and paralegals to handle the workload. This may not be a realistic option due to budgetary and hiring constraints. Also, hiring more personnel does not solve the one-dimensional workloads and attendant job satisfaction issues of the contract review attorneys.

  2. The company consolidates all of the review with a law firm, and negotiates reduced rates or alternative fee arrangements to keep the costs in line. The likely problem with this approach is that very few traditional law firms have a cost structure that will permit it to lower its rates sufficiently to make this an attractive alternative. Also, the procurement process requires an intimate familiarity with the company and all potential stakeholders in it, as well as company policies and procedures that relate to the process. It is very challenging for an outside law firm (no matter how committed and diligent) to satisfactorily handle a traditionally internal function.

  3. The company hires a managed legal services provider to supplement its internal legal team and take on the procurement contract work in whole or in part. This approach provides greater flexibility and can be scaled up or down as circumstances warrant. The company gets the benefit of highly-qualified transaction attorneys who are integrated into the company’s existing team without the expense of adding full time employees. In-house lawyers are then enabled to dedicate their time to more strategic and higher value work, and achieve greater job satisfaction.

As a former General Counsel, I believe the only realistic option is number 3, the managed legal services option. This is not just to solve the immediate problem of providing additional resources, reducing costs, creating tailored workflows, improving the work environment… such a provider improves client communications with strategic planning and budgeting and tracks progress by providing standardized reporting and metrics. With constant “eyes on” protocols and attendant tracking and reporting, a virtuous cycle of continuous improvement becomes a reality. More work gets done more efficiently, for less money.

A legal department’s use of a good legal process management provider makes the General Counsel and the legal department look good. And that’s what it’s all about, right?

 

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