Automate, Outsource, or Own?
Insights from Legal Leaders on Resourcing Legal Work
Brightflag partnered with Stout to host a panel discussion in Chicago on March 6th, 2019 discussing the changes in how corporate legal teams are resourcing work. Brightflag COO and Co-Founder, Alex Kelly was joined by Stacie Neeter, MD at Stout, Kara Kezios, Legal Counsel for the Americas at Marel, Sam Ranganathan, Senior Director of Legal Operations at AbbVie, and Chair of Legal Operations at ACC.
The panelists provided their insights and experience on resourcing legal work. Below is a summarized version of the discussion, including some of the panelists’ quotes. Their quotes and opinions included below are their personal views and do not represent the views of the organizations for whom they work.
Changing from the traditional resourcing model
Traditionally the options for completing legal matters were either to assign a member of your corporate team or to outsource the work to a suitable law firm.
Alex Kelly set the context for the discussion by pointing out that, over the last number of years, the resourcing mix has been stirred with the emergence of Legal Process Outsourcing (LPOs) and Alternative Legal Service Providers (ALSPs) as options to consider alongside law firms.
It’s no secret that the legal ecosystem, like many others, continues to be affected by the technology revolution. Additionally, automation has been a realistic step for certain types of legal work to take for a while now.
So, what’s the optimal mix? While a “one size fits all” is unlikely to exist, are there guiding principles which can be applied?
Firstly, the audience was encouraged to think about how they source legal work. It’s important to consider the type of work you outsource to ALSPs and the technology that you integrate in order to obtain a view of what remains for your corporate teams and the law firms with which you continue to work.
The panel provided multiple examples of how internal teams have been seeking to standardize repetitive tasks, with Stacie Neeter following up to point out that “contract review has been a common area of legal work which ALSPs have been able to service”, reversing historical trends of document review and data collection sitting in-house.
Friction points for in-house legal teams
A lack of data committing the resources to carry out the supporting process work was a point which was raised, as well as the contention that data is only valuable when there are people available to carry out the necessary analysis. Having data alone will not improve your decision-making. It’s vital that you get value from it.
Deciding how to resource a matter
Deciding on how to complete legal matters can be sometimes straightforward and other times complex.
A number of factors our panel discussed which can be weighted into your decision are:
- Team capacity and geography
- Risk assessment
- The strategic importance of work
- Complexity of work
Kara Kezios noted the realities of team or organizational capacity for companies who work globally: “In some parts of the world we don’t have internal counsel, so the reality is we have to outsource”.
Alex noted a trend of teams classifying matters in their matter management system by factors such as risk or strategic importance which gives leaders greater visibility of the key matters and allows them to consider the options available to them.
Stacie asserted that “budget concerns for high stakes litigation can differ from others” and that the overall legal spend budget has to be balanced with specific case budgets. Alex said that it is “important to have focused conversations with service providers at the matter inception stage, asking the right questions to arrive at an accurate budget or free estimate.” It’s crucial for both sides to have transparency about where the spend is against the matter budget month to month.
It seems these factors should be weighted differently for different types of legal work.
In the longer term, capacity and spend reporting can combine to help inform more strategic resourcing. As Kara pointed out, “using spend data by matter type to highlight areas, it could make sense to resource internally” which helps build a business case rooted in fact to build your legal team.
Tactics for managing your panel
Establishing a panel of law firms and/or alternative legal service providers is a practice undertaken by many corporate legal teams. Creating a panel is a project unto itself and ongoing management of who you partner with is a significant job for someone in your legal team. So how would our panelists go about it?
Alex stated: “Our customers are combining objective data points like average cost per matter, average blended rate, and matter duration, alongside an assessment of the quality of the legal service delivery” when reviewing their panel.
Stacie provided insights on some specific dashboards that legal teams are using to evaluate outside counsel from consulting experience, including:
- Hourly rates by matter type, timekeeper, and region
- Staffing leverage and efficiency ratios
- Matter and portfolio level budget to accruals
- Percent of invoice adjustments
- Percent of spend which is AFA
- Qualitative law firm performance ratings
Another tactic Stacie shared for larger teams is to conduct a panel summit once you’ve put your panel in place. A summit is a chance to bring your partners together, set expectations on the working relationship and get feedback with sessions you’ll run, and of course, build the relationships which will stand to you as you collaborate to accomplish legal tasks.
An alternative view was also raised which involved trying to get the best lawyer available for the specific piece of work when you need to outsource rather than pooling all work within a few law firms. You just need to ensure that those with whom you are partnering have the expertise and skills required.
Everyone agreed that despite the trend toward using more data in the decision-making process, relationships still played a role when deciding on where to outsource work. According to Deloitte’s Global Outsourcing survey, 89% of decision-makers leverage their current providers for additional services at least some of the time when outsourcing.
There is still a balance struck by decision makers between the human and the numbers.
Do you use Alternative Fee Arrangements (AFAs)?
Alternative or fixed fee arrangements are nothing new for corporate legal teams and their partners, but their application relative to the more traditional hourly billing rate seems to vary. Our panel’s thoughts were eye-opening.
Both Stacie and Kara provided insights into AFAs in the employment arena. Kara shared that “it’s beneficial for accountability reasons and for setting context for the work”, while Stacie provided an example of six banks reviewing their spend on employment matters which helped them to “establish a formal bidding process”.
Alex added, “we’re seeing AFAs in repeatable areas to reach a fair price”, but asked if legal teams are getting increasingly comfortable with data, will that have a knock-on effect on trying to achieve forecasting accuracy for legal spend? And does that, in turn, affect how prevalent AFAs will be, or rather, should it?
An audience poll on the morning found that the majority of those in attendance were using AFAs in some way.
There was a substantial amount of data to analyze if you want to confirm the cost value of AFAs. The feeling in the room is that AFAs are useful in certain contexts but likely do not pose an existential threat to the hourly billing model.
What legal work or process should you automate?
The automation question is one that is recurring and it is currently a central point of discussion in the legal ecosystem. What should you look to automate and why?
Two panelists provided multiple examples of e-discovery, contract review, and RPA initiatives. These areas have been pioneered, with a path laid out for those who need to walk it as part of their technology roadmap. The panel also agreed that highly repetitive work, such as NDAs are the prime candidates for legal teams looking to take their first steps into automating legal service delivery.
The benefit of removing manual and non-core work by improving the processes which are part of any legal team has been immediately apparent to Kara. “It’s really important that tasks like invoice review are taken off my desk”, she said. “Hiring a legal operations team member and improving these processes has been a big help.”
Alex added to the point that automation of supporting processes can add value to legal teams as “manual tasks around spend and matter reporting can now be automated”. This frees up time for lawyers who may have those additional responsibilities on top of their core legal work. Roughly half of the audience on the day had automated or had started thinking about automating processes within their legal team.
There is a broader ethical question regarding which areas of legal service delivery automation should be given a say in, but after close to an hour of interactive discussion with our audience on the day it was time to wrap up before tackling that winding road. Perhaps this is something we can deal with in one of our future events.
It was clear from the discussion that automation and ALSPs will continue to play a crucial role in the legal ecosystem and that more organizations will continue to make greater use of data in their decisions about how they complete legal tasks. The different considerations legal teams take into account due to their scale or the industry in which they operate is something which will also remain, but there is certainly a focus throughout the legal world on getting the right work done by the right people, or by technology.
Thank you to each of our panelists for taking part in the informative discussion and to our guests on the morning for attending. It was a pleasure to host each of you.
Interested in finding out more about how legal teams are using technology to inform their legal resourcing plan? Our team can walk you through how Brightflag provides the insights to help you optimize how your legal team works.