Alternative fees survey: An AmLaw 100 chairman speaks frankly about RFPs and project management

Last week, I posted a progress report on our alternative fees survey.  This week’s post includes sample comments from one of our interviews.

When I asked the Chairman of one AmLaw 100 firm whether general counsel could improve the RFP process. he had some strong opinions about what is broken:

The RFP process is somewhat out of control...many RFP competitions are run on the "more process is better" theory.  They tend to require firms to put in a huge amount of effort to submit a lot of information which I’m not sure ends up being important in the decision-making process.

And it doesn’t necessarily change the behavior of the in-house legal staff...you go through all this, you get on the new, smaller list, and then you wake up and realize you are getting the same stuff you had before.  The relationship is not getting deeper and firms who are not ‘on the list’ are still getting work.. 

Most general counsel and chief legal officers don’t micromanage what their people do, so you find that people down the line are still using the same firms they’ve always been using.

We’re starting to pass on some RFPs, because they’re just not worth the effort. Common sense needs to be brought to the process.

Later, the interview turned to the question of how alternative fees will change the way large firms and their clients manage relationships and projects:

I think the profession needs to start looking at some fundamental questions. What kind of relationship do you want with your outside counsel? Is it transactional, or is it relationship-based? Are you doing an isolated engagement and looking primarily for the lowest price or are you trying to build an ongoing supplier relationship that is sustainable for both parties and can be improved through "partnering" - i.e., working together to improve service and reduce costs?

I think the greatest potential for improving the value of the services that legal departments and outside firms together provide to the ultimate client is to look at the whole process and re-engineer the parts that are working well and evaluate performance on a joint basis.  General counsel are appropriately critical when law firms do not perform well. But it is very difficult for a law firm to tell a client that a matter is not going well from a cost or process point of view because of what is going on in the legal department.

Assuming that alternative fee arrangements do increase in number and variety, I think both law firms and clients have a lot to learn about how to make them work well. Other fields have developed methodologies that work.  Lawyers should be willing to learn from them.  

For example, in the world of construction, architects and engineers and contractors have been working on a fixed price or non-time and materials for a long time. There is a body of learning about how to estimate, how to contract, how to define scope, how to manage changes, how to allocate risk, and how to manage fee disputes, delays, changes in scope, and so on.  This could probably be adapted to the legal profession, without our having to go through the long history of disputes, litigation and losses that the construction industry did to get to the current state of the art.

Lawyers and their clients will need to learn to be more careful and disciplined about  making fee deals: defining scope, managing changes in scope, dealing with changed circumstances, dealing with the impact of client delay and...managing the contractual relationships. The same can be said of managing the project.  Some legal projects are massive and yet the level of skill applied to managing them - not the legal content, but just managing the project - is not at the level that is practiced in other professions....

The art of managing a large project also requires an eye on the relationships and the ultimate goals.  For example, the best project managers I have seen in the international project field understand the need for some give and take.  An ability to reach quick and practical agreements is far preferable to a consistently contentious relationship which generally increases costs and produces unsatisfactory results.

I think we’ve all had experiences over the years with in-house counsel who are too easy on us, those who are reasonable to deal with, those who stand up for what their companies need and understand what their law firms need, and those who are just not good managers....A lack of skills in project and relationship management on the part of either in-house counsel or the project leaders in a law firm can increase cost and reduce the quality of outcomes.  I believe both sides could use more training in these areas.

For more from this interview, and 36 other interviews from AmLaw 100 decision makers, order your copy of the LegalBizDev Survey of Alternative Fees or Download LegalBizDevSurveySummaryZ.  For background on the issues behind the survey, see the third edition of our free LegalBizDev Guide to Alternative Fees.