The lawyer’s rate war will not take place… it’s not what matters!
The new world has aroused. And you just have to observe clients-lawyers relationships to be sure. But “observing” does not mean “understanding”. And those who believe that the hourly rate war is about to explode, I’d say they are living in another world (or: the belief of those who think that the hourly war rate is about to explode is irrelevant!)! Actually, the problem is much more complicated, it’s about value and value pricing for a specific client in a specific situation. Some will say that it is still the same issue. Of course not! Because hourly rate is dead and a lawyer who is not aware of that (or any lawyer ignoring that) is dead too!
Actually, the problem is much more complicated, it’s about value and value pricing for a specific client in a specific situation.Olivier Chaduteau
General Counsels increasingly have to explain and value the role of the legal department to CEOs, and demonstrate the value they bring in improving business exchanges security and risk anticipation, in working closely with and through business lines, though independently, in controlling and managing their budget… They need to map and segment their value to their internal stakeholders and demonstrate how they optimize the use of available human and financial resources, like any other department in the company.
When it comes to these challenges, external lawyers are one part of the value equation, but not the only one! In-house lawyers are becoming “project managers” rather than only “legal expert” in order to optimize the “lawyer – internal client – law firm” equation. In-house lawyers need to identify the best resources among all stakeholders with whom they interact and organize the internal value they create through the best use of law firms (the best value for the best price, not the best rebate by playing with rates or number of hours). They need to find the best use of knowledge sharing and knowledge management (there are today inside the company many competencies and fields of expertise available which already have the answer or the experience, the best use of other in-house lawyers within the company wherever they are located, and sometimes at a better cost (legal departments develop Legal Process Outsourcing (LPO) internally or externally), and the best use, because the increased understanding of the needs of their internal clients.
The best value for the best price, not the best rebate by playing with rates or number of hours.Olivier Chaduteau
Thus, the question is not whether to increase in-sourcing or increase outsourcing but rather to find the best way of “mix-sourcing”, while delivering the best value at the best cost. This could be done by preparing more in advance what the real needs are, what the problem/opportunity the business line is trying to solve/accomplish, by defining precisely in advance with the internal clients the type of deliverable they are looking for, by establishing a true, transparent and predictable dialogue amongst all stakeholders, by teaming with internal and external resources, by managing budget and deadlines, by optimizing the time spent with law firms on topics where they really have expertise and not on end-less unstructured meetings…
These issues are a reality today and should be on General Counsels’ top agenda when it comes to their relationships with law firms. Answers will be found if everyone finds his or her place and understand the value the other brings to the relationship. A systemic analysis should be undertaken. These issues are way too important to be postponed so again, the rate war will not take place because the value battle has just started and it will involve everyone!