How to get value for money from your legal panel
Striking the right balance in an external legal panel requires in-house counsel to consider the types and size of the firms and understand how they could obtain value for money, according to a lawyer.
Speaking ahead of the Corporate Counsel Summit 2023, REA Group executive manager, legal, Scott Stierli said that in order for in-house counsel and the external legal services panel to collaborate successfully, organisations must have an appropriate mix of legal firms in their panel.
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“This will lead organisations to have the right firm involved in the right matter at the right time,” he told Lawyers Weekly.
For example, in-house counsel must consider whether to engage top-tier, mid-tier, or boutique firms, depending on the type of work an organisation requires.
“If there is high-volume, low-complexity work, and that doesn’t necessarily require a top tier. So, it’s about making sure you’ve got the right blend in your panel,” Mr Stierli said.
Mr Stierli will join a panel of speakers at the Corporate Counsel Summit in 2023 to discuss how in-house counsel could strike the right balance with their legal panel (particularly in a turbulent economy) and maintain a harmonious relationship while limiting disagreements.
When asked how organisations could determine how many law firms to include in their panel, Mr Stierli said that there is no concrete number because it would depend on the size of the organisation and the types of work it outsources.
“If there is a number of firms that are receiving a fairly small number of matters in an organisation, then the need for those firms should really be considered unless they’re very specialist firms,” he said.
“There may be some law firms, such as tax or litigation firms, that an organisation won’t need all the time. But if anyone is getting a small flow of work, it’s not the right balance because it doesn’t allow the organisation and the firms to derive value from the relationship.
“On the other hand, if they’re getting enough work and they’re building their knowledge of the organisation, that allows each party to reinvest, which then creates better knowledge of the ways of working. That’s when you start to unlock some real value because the firm becomes an extension of your business. They understand what the organisation’s risk appetite and maturity level is, and can ensure matters are appropriately resourced to match the needs of the organisation.”
How to choose your legal panel
Running an effective tender process to appoint law firms requires in-house counsel to be clear about the scope of the services they are seeking and whether they would like the firms to tender for all legal services or specific services in which they specialise, Mr Stierli suggested.
Following this, in-house counsel must stipulate how they are going to monitor the effectiveness of the legal panel, including the kinds of reporting they expect from their firms, and review the arrangements to ensure it is still working for both parties, he added.
“As part of the process, we also look at having whiteboarding sessions so that there’s a clear expectation of what the key issues are that relate to the organisation,” Mr Stierli explained.
“A question that we see a lot is, ‘what type of value add does an organisation expect from their firm?’
“And I think that should always be left open because where you’ll actually get really good value from your partnership with the firm is where the solution that they developed for you is targeted and appropriate for you.”
Reviewing your legal panel
Monitoring the effectiveness of the legal panel could prove useful when in-house counsel conduct performance reviews of their panel, with Mr Stierli recommending a few metrics to measure their performance.
Firstly, in-house counsel could assess how much time the legal panel took to answer queries and overlay that with the quality of advice received.
“There’s no point receiving advice that’s super high quality but four weeks late and you’ve missed the deadline. So, sometimes it’s a bit of a trade-off, so make sure that they deliver on time,” Mr Stierli pointed out.
A second measure would be to ensure that fee invoices are accurate in relation to estimated versus invoiced amounts, he said, alongside how legal panels tackle additional scope.
“These things pop up from time to time,” Mr Stierli said.
“If they’ve got to do some extra work, how did they raise it with you? Was it in advance, and were they on target if they revised the estimate? So, it’s a bit of an accuracy question.”
This leads to assessing how willing the firms are to be invested in matters with alternative billing structures with the organisations, Mr Stierli mused, which would secure buy-in from both parties.
“I think the first and most important thing is to clearly scope individual matters and clarify exactly what role each lawyer will play,” he said.
“So, that’s between in-house and the external firm, and who will do what work so that everybody’s clear. There are also ways that incentives can be provided to firms so that they actually get buy-in into the process.”
Maintaining a harmonious relationship between in-house counsel and the external legal panel requires both parties to agree on delivery time, cost, and the quality and level of advice.
Above all, all parties must be willing to conduct open discussions if there are challenges and hurdles, Mr Stierli emphasised.
“If an issue arises, don’t let it fester. Engage the firm and try to work through it because, generally, these things can be worked through,” he said.
“But if they are kept in secret or are raised four months down the track, it’s too late. So, it’s about having timely, frank discussions to sort out any issues.”
To hear more from Scott Stierli about how in-house counsel could engage an external legal panel that provides value for money for an organisation, come along to the Corporate Counsel Summit 2023.
It will be held on Thursday, 25 May 2023, at Sofitel Sydney Wentworth.