2017 was transformative – to say the least.

In the world of Enterprise Legal Management, discussion ricocheted from issue to issue:

  • from data analysis to business intelligence to AI;
  • from security breaches to “10 step” cybersecurity programs;
  • from diversity/equality initiatives to strict enforcement of sexual harassment policies

Despite all the noise, one of the core topics prevailing year over year is the relationship between corporate counsel and the law firms/vendors they employ. As we turn the corner into 2018, let’s take a collective deep breath and assess which of these issues truly affect that core relationship.

To get started, we’ve identified the top 8 questions you should be asking your firms and vendors in the upcoming year.

CYBERSECURITY

The confidential information you share with outside counsel is only as secure as the law firm itself. All ethical obligations aside, what processes/ procedures/ technology/ risk mitigation steps have your firms put in place to secure your information? With the breaches of Target, Equifax, Verizon, and Uber hitting the daily news, this was a dominant topic in 2017 – one your firms cannot ignore. More and more corporate entities are vetting their vendors carefully with detailed security questionnaires, requiring proof of insurance to cover breach notifications. And significantly higher investment is predicted in this area in the upcoming year: Cybersecurity Spending at Law firms, Legal Departments is Predicted to Increase in 2018. See also ACC Model Information Protection and Security Controls for Outside Counsel.

SEXUAL HARRASSMENT

What do you do when your “bet-the-company” litigation is spearheaded by your “go to” law firm relationship partner – one who is suddenly sidelined by allegations of sexual harassment? #metoo revelations are popping up in all industries, and law firms are not exempt. See A Look Back at Sexual Harassment Claims Against Legal Leaders ; Sexual Harassment in the Legal Profession. Your firms should be proactively determining internally how to prevent such scenarios, how to handle the PR when it occurs, and how to counsel your own company on prevention measures. In other words, what steps are they taking to address this issue, both internally and externally to prepare their clients on this risk?

INNOVATION

This is not a new topic but one that has seen more focus in the last year. Recent news indicates that firms, especially big firms, are increasing their investment in innovation efforts – from R&D labs to innovation committees to think tanks. But as one commentator suggested, smaller incremental changes can be more effective than “big ideas” that go nowhere. Why is Law Firm Innovation Failing? How to Push for Success Firms need to be willing to experiment and iterate to determine which ideas provide the best results. Questions to be asked of your firms:

  1. What innovations did you actually implement in 2017 and how are you measuring their success / or failure?
  2. How do such innovations enhance the services you provide, and what benefits are passed to your clients? For example, are you open to AFAs or risk sharing arrangements and how can they be a win-win for both of us?

ARTIFICIAL INTELLIGENCE (AI)

Speaking of innovation, does the term “AI” send you into economic bliss or strike fear into your heart of hearts? How are your firms – and vendors for that matter – reacting to this new technology? “AI” has been defined as anything from predictive analytics to a replacement for human intellect (including the provision of legal advice). While recent surveys found that 50% of legal departments were not at all interested in bringing AI on board, there are specific areas that may gain useful ground more quickly, such as e-discovery, cybersecurity monitoring, contract management, and invoice auditing.

METRICS

Business Intelligence, Dashboards, and KPIs were also popular buzzwords in 2017. Metrics can inform anything from cybersecurity compliance and innovation opportunities (above) to values (such as diversity goals below). What measures are your firms tracking to identify successes, failures and areas for improvement? As one astute commentator suggested, if your firm’s main KPI remains the number of billable hours (over other values such as client satisfaction and retention), it is unlikely that the firm will be focused on increased efficiency or innovation.

DIVERSITY

This recurring issue has also seen a recent resurgence, especially considering the #metoo movement. What are your firms doing to foster diversity in their attorney and leadership staff? One GC this past year laid her cards on the table: “In order to emphasize the business imperative to make meaningful strides in diversity among our law firm partners, HP has implemented a ‘diversity holdback’ mandate. With this we can withhold up to 10% of all amounts invoiced by law firms that do not meet or exceed our minimal diverse staffing requirements. … I am counting on your courage and vision to support both the letter and spirit of the ‘diversity holdback’ provision. We hope it will serve as a meaningful tool to improve diversity in our organizations and on our working teams.” —Kim Rivera, chief legal officer and general counsel of HP Inc. in a letter explaining the company’s plan to withhold fees from law firms that don’t meet diversity requirements.

CLIENT – FIRM RELATIONSHIP

All of the above issues relate in one way or another to the client/ firm relationship and the opportunities for both client and firm to come together on common ground for the mutual benefit of both parties. Perhaps the most meaningful step to advance these initiatives is one of collaborative dialogue. Thus, I end with two questions to be asked of both the client and the firm, and a quote:

  1. Can you, as my business partner, articulate my company’s (or my firm’s) top business drivers?
  2. What can I do to help you with the above and help strengthen our relationship?

“While large clients spend millions of dollars and thousands of hours a year working with their law firms, firm leaders are making structural, growth, technology, and market-entry decisions that turn on assumptions about what clients want. We believe that, working together, we can provide a helpful road map, suggesting which practices and innovations lead to positive results and strong relationships. Through better information, we hope to move the profession forward.” — An open letter from 25 general counsel to collect data on the relationship between law firms and legal departments.

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