Sustainability (Chosen over Short Term Profitability)
The challenges facing law firms since the 2008 banking crisis are widely reported. In the most part, there are simply too many corporate law firms whose business models have been overly reliant on customer loyalty and unchallenged hourly rates.
As in-house legal departments face ever-increasing pressures of tighter budgets and greater workloads, coveted work is being secured through points-based procurement assessments which place sometimes disproportionate emphasis on price. It is a race to the bottom that law firms cannot afford to win (or lose). It is also of no benefit to clients who want to secure long-term supply partners. A market survey carried out by Legal Week Intelligence,2 recently revealed that, despite budget pressure, clients still identify “quality of service delivery” and “commercial approach and understanding my business” ahead of “value for money”.In short, the lawyer/client model has to change, and it will. It needs to move from one of simply winning on price to a sustainable, mutually beneficial outcome. In the new world, the winners will be those law firms who can offer real value and quality service to legal departments by reducing workloads while containing the risks and costs. The managed services model offers just that. Those law firms who can offer managed services alongside a sustainable pricing model (for both the law firm and the client), and who do it well, will have a clear and compelling point of differentiation.
The lessons learned by the law firm from one particular engagement translates into other work for the same client by showing that law firms take seriously the charge to do more for less. These lessons can also turn into new work for other clients as the constant iteration of this new delivery model yields more learnings. Further, if the client is willing to speak publicly about the successes of the managed-service delivery model (or allow the law firms to do so), there is a great advantage when competing with other law firms for new work. There is a big competitive difference between saying “we know how to improve processes and provide greater value, and we hope to do this one day soon for a client” and saying “we have a record of success improving processes for clients, and here is what client X says about the additional value we have provided.”
4.2