It’s All About Value
The ACC Value Challenge:
25,000 members from over 10,000 companies
Launched September 2008 after four off-the-record
regional sessions
Kept hearing these themes:
 Value
 Predictability
 Cost control/profitability
Needs to be a true dialogue
Change needed on both sides
Have met with nearly 5,000 in-house and law firm
attorneys in the U.S., Canada, Europe and elsewhere
© M Roster 2/10/10
1
1
It’s All About Value
In the past 10 years, costs to U.S.
companies went up 20% . . .
. . . except legal costs, which went up 75%.
-- Study by Corporate Executive Board
© M Roster 2/10/10
2
2
It’s All About Value
Others have had to confront similar change:
Auto manufacturers (and dealers)
Airlines (and travel agencies)
Publishers (and distributors)
Other industries (you know and/or represent)
You
© M Roster 2/10/10
3
3
It’s All About Value
Change is difficult for both sides:
Existing methodologies
Legacy systems
Income expectations
Culture
© M Roster 2/10/10
4
4
It’s All About Value
BUT this isn’t new or revolutionary:
There are lots of effective approaches
Most were done before and are actually
more viable today
Until the mid-1970s, no firm billed by hours
alone
In other words, it hasn’t always been done
this way
© M Roster 2/10/10
5
5
Spaghetti Diagram
Legal Department Negotiates Master Agreement with Vendor
1.
2 4 7 9
2.
13
8
5
10
3.
4.
5.
8
11
6.
1 8 12
7.
8.
9.
Hard Copy
Electronic
10.
11.
12.
3 6 9
13.
What kinds of waste are in this process?
6
Business unit wants to use vendor;
initiates request
Contracts Administration sends info
packet with standard agreement to
vendor
Vendor reviews documents and
proposes changes
Contracts Administration notes
changes and forwards to Legal
Department
Legal Department reviews changes
and proposes new language
Vendor reviews documents and
proposes further changes to terms
Contracts Administration notes
changes and sends to Legal,
Accounting, Insurance, and / or
Business Unit for review
Reviewing Departments approve
Final version is executed by vendor
and by Contracts Administration
Paper copy is scanned
Original is filed
Business Unit gets scanned copy of
contract
Details summarized in Contracts
Database
From LSSO presentation
6
Law Firm Case Study
Time Charges
Before:
After:
From LSSO
presentation:
Six Sigma Legal
Services for Mortgage
Loans, Richard J. Sabat,
Morgan, Lewis, and
Bockius LLP
7
7
It’s All About Value
Where we are:
Major breakthroughs with both firms and clients
Use of other skills (marketing, procurement, finance,
project management, etc.)
Tools at www.acc.com/valuechallenge
Economic model
7% / 25% / 40% / higher
© M Roster 2/10/10
8
8
It’s All About Value
Firms might consider:
Alternative billing approaches and relationships
Reduced turnover and leverage
Leaner staffing
Better training and mentoring
Stop reinventing the wheel; pass along the savings of knowledge
management
Stop managing toward average profits per partner
Stop disparaging “service partners”
Learn how to price services based on skills and value
Find better ways to track matters, clients, attorneys, practice
groups, offices and firm overall
© M Roster 2/10/10
9
9
It’s All About Value
Clients might consider:
Better communication of expectations and
budgets up-front
Returning to longer-term, trusted relationships
(versus RFPs for every matter, audits, etc.)
Stop rejecting involvement of associates
Stop saying “we hire the lawyer, not the firm”
Stop focusing on discounts
Be receptive to firms’ proposals
Examine your own methods and thinking
© M Roster 2/10/10
10
10
It’s All About Value
Challenges for everyone:
Think like managers, not lawyers
Focus on value and outcomes versus process
How firms measure profitability
How both sides measure value
How to demonstrate the risk-reward trade-offs
to senior management
How to involve the next generation
© M Roster 2/10/10
11
11
It’s All About Value
Examples of what firms and companies are
doing:
Stanford project (1993-2000)
Lean Sigma
Whole portfolios at fixed prices
Consultation retainers
Fixed prices by stage
Fixed prices by matter type
Separate firm doing upfront assessment at fixed price
Collars and caps; benchmarks
Contingency fees
Maximum staffing ratios
No pay if paralegal can handle
Knowledge banks shared among all firms and client
Bundled support services, as provided by client
© M Roster 2/10/10
12
12
What you can do . . .
“Meet, talk and act”
Pick your three best clients or firms
Schedule a bag lunch with each
Talk candidly: “Working together, how do we improve
the value of legal services?”
Try out some of the ideas, even on a small scale
Periodically assess the efforts; expand what works
Share success stories
© M Roster 2/10/10
13
13
ACC Value Index
Evaluation Form
Search/Browse Form
14
14
In the end, it’s all about value. . .
. . . so where are you?
© M Roster 2/10/10
15
15
From the Law Firm Point of View:
Internalizing the Value Challenge
Value Task Force

Critical Cornerstones

COO
Strategic Partner
Marketing Partner

Financial Partner and CFO (Ad hoc)



Not Your Usual Suspects




Junior Partners
Lateral Partners
Counsel and Sr. Associate
Those having specific experience/real interest in a
specific area
16
16
What Next?
Value Task Force Focus





Education
Alternative Billing
Client Service
Technology
Matter Management
17
17
Value Task Force: Education
Presentation:


Defined ACC and Value Challenge
Defined value
Understanding
the client's business
Setting budgets and managing to them
Communication
Greater efforts at efficiency

Handed out Value Challenge Briefing
Package and Meet.Talk.Act.
document
18
18
Understanding the Client’s Business
> Strategic Plan
– Short-term and long-term goals
– How has plan been affected by current economics
> Industry
– Regulations and changes in those regulations
– Activities and market share of competitors
> Up-to-date news (press releases and news about)
> Internal politics
> What it will take to make your in-house counsel
contacts be seen as stars to their bosses
ACC Value Challenge | 2009
Industry Statistics
[BTI Consulting's 17 Attributes of Client Service
slide inserted showing our scores]
ACC Value Challenge | 2009
Setting Budgets and Managing to Them
> Budgets are critical in 2009
– 75% of in-house counsel have budget decrease
> Rate increases declined
> Focused more than ever on excellent matter
management
– Leveraging the work appropriately
– Reduction of “costs”
– Not paying for repetitive work or several drafts
– Don’t train associates on client’s dime
> Alternative fee structures
ACC Value Challenge | 2009
Communication
> Dialogue at the beginning of every matter about
>
>
>
>
>
staffing, billing, timelines, frequency of reports, ideal
outcome and other expectations
Query during matter if in-house counsel pleased;
should anything be adjusted and make adjustment
After matter – how did it go?
Associate staffing/changes is important
Waivers – don’t assume
Following appropriate chain of command
ACC Value Challenge | 2009
Greater Efforts at Efficiency
> Relationship partner who does not bill to manage the
relationship
> Use of technology
– E-billing
– Extranets
– Matter management software
– Choice of vendors
> Brief databases and form banks
> They do not want to pay to reinvent the wheel
ACC Value Challenge | 2009
ACC’s “Meet-Talk-Act” Program
> Meet specifically to discuss working together;
how do we improve the value of legal
services?
> Talk: Communication, training, budgeting,
staffing, client service, etc.
> Act: Identify next steps and ways to measure
success of changes
ACC Value Challenge | 2009
Value Task Force: Alternative Billing
Alternative Billing Handbook





Letter from the Chairman
Definitions with multiple examples of
every type of fee structure
Worksheets
PwC Survey and language about rate
comparisons
Resources
25
25
Value Task Force
Client Service:


Client feedback
Client service training
Technology:

Expanded extranet at no cost
Matter Management:



Assessment
Training on Lean Sigma
Project management training
26
26
Additional Value Challenge Efforts
Associates:
Fall
associate training program
Associate “levels”
Partner retreat
Intranet resources
Strategic planning
ACC chapter level activities
Law Firm Value Committee
27
27
Law Firm Value Committee
Managing Partners and marketing
heads from a variety of firms
Discussion and sharing of
ideas/programs
Dialogue with the ACC and Steering
Committee
“51 Ideas”
Case studies
28
28
It’s All About Value
www.acc.com/valuechallenge
Q&A
29
29