The ACC Value Challenge

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Grace Glenn
8 years ago
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1 The ACC Value Challenge Reconnecting Cost with Value Frederick J. Krebs, President, ACC Timothy Corcoran, Senior Consultant, Altman Weil, Inc. Constance Hoffman, CIO, Bryan Cave LLP John Alber, Partner, Bryan Cave LLP ILTA 09 Conference August 27, 2009

2 Today Overview of the Value Challenge The Altman Weil Survey Case Studies Where Technology Has Made A Difference

3 It s All About Value In the past ten years, costs to U.S. companies went up 20% except legal costs, which went up 75% Board -- Study by Corporate Executive

4 What is the ACC Value Challenge? The ACC Value Challenge is an initiative designed to bring together law firms, law departments, and other legal community leaders and service providers to discuss how to: Reconnect the cost of legal services to the value provided; Assure better and more efficient relationships; Help improve client service; Focus on practical improvements to legal service processes that increase value to the client.

5 It s All About Value Client defines value Value-based relationships Billable hour declines Clients need new inputs to judge firms Predictability clients need reliable metrics Client must be willing to change

6 What clients want: 1. Better management; lean efficiency (two-way) 2. Certainty / Predictability (up-front budgets/scopes that stick) 3. Focus on outcomes and results, not just on process and analysis: driven by evals/metrics 4. Costs that equate with value received 5. Outside counsel and firms whose motivations and business model are aligned with the client s Common Theme: Communication/Trust/Alignment are Key

7 Driving Change ACC s Value Index Wisdom of the Crowd index is intended to be subjective Client assessment of firms, based on 6 criteria: 1) Understands objectives/expectations 2) Legal expertise 3) Efficiency/process management 4) Responsiveness/communications 5) Predictable cost/budgeting skills 6) Results delivered/execution

8 Conclusion Value is defined by the client Law firms and technology providers must recognize that fact and adjust accordingly. Web 2.0 Technology and Knowledge management can help: Determine costs/pricing Deliver services Resolve Conflicts Contribute to the Value Proposition

9 Value Challenge Resources: The ACC Value Challenge and its online community are online and open to everyone at: For specific case studies, visit the ACC Value Challenge Resources page at:

10 The Altman Weil Study

11 Has your law department reduced its work force in the last six months and/or will you be likely to do so in the balance of 2009? 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 27.4% Have reduced 2.8% Likely to in % 11.7% 36.3% Possible Unlikely No reduction in % Increase in th Annual Chief Legal Officer Survey, Altman Weil, Inc., June 2009

12 Within the next 12 months, do you plan to increase or decrease your use of outside counsel? Increase 12.6% 7.9% 17.6% Decrease Same 15.9% 26.2% 40.4% 44.3% 63.5% 63.7% Not Sure 2.7% 2.4% 2.9% 0% 20% 40% 60% 80%

13 Restating the Obvious Law departments are shrinking The use of outside counsel is decreasing Legal budgets are shrinking But the work is still there

14 Other observations Law firms of all sizes believe their size provides a competitive advantage Many have raised partner billing rates in 2009, though increases are typically smaller than normal Few firms are exploring outsourcing, offshoring, alternative fee arrangements or business process improvement programs Most firms are not revising their strategy in light of the changing economic conditions Most law firms, not surprisingly, are waiting for the clients to drive necessary changes

15 Why do law firms themselves outsourcing providers to business resist outsourcing? Legal Process Outsourcing (LPO) Providers Technology Providers Law Practice IT Finance Bus Dev & Mktg Mail Fax WP Traditional Back Office Outsourcing Providers Traditional Back Office Outsourcing Providers Specialty Outsourcing Providers Consultancies

16 Old math Billable Rate x Hours = Fees Leverage (e.g., associates) = Profits Demand is a constant Discounts are self-induced

17 New math Profits = Revenue less Expenses COGS must be lower Predictability improves retention Responsiveness improves retention COS is lower with repeat engagements

18 Business Process Improvement

19 Business Process Improvement

20 Business Process Improvement

21 Case Studies

23 Non-Traditional Delivery of Legal Services Streamline and standardize collection of information

24 Non-Traditional Delivery of Legal Services Database to manage legal review process and track progress

25 Non-Traditional Delivery of Legal Services Database to manage subsidiaries licensing information by state

26 Going Beyond the Data Room Standardized data collection for diverse and dispersed assets Ability to submit reports from remote locations

27 Going Beyond the Data Room Real-time status reports of due diligence process Who What When

28 Going Beyond the Data Room Searchable database for quick retrieval Online access to all relevant materials

29 Out There Ideas Automating simple legal advice Decision support systems

30 Simple Starting Points Understand the work Look for simple workflow enhancements Add technology slowly, but make it work Opportunities: ediscovery workflow Deal workflow ebilling Others

Understanding the Lawyer-Client Relationship

Understanding the Lawyer-Client Relationship Presented by: Risa Schwartz Head of Knowledge Management Cisco Systems, Inc. Elizabeth Broderick Partner Blake Dawson Waldron Connie Hoffman Director, Client