Clients are shaping transactions like never before, providing major challenges for traditional law firms – and, I would argue, major opportunities.
Clients “cherry picking” legal services has become more widespread, departing from traditional approaches where clients would outsource an entire project to completion.
Legal firms are needing to try new ways of thinking and providing services, being open to some experimentation and hitting the occasional dead-end. Structuring legal services to cater for the cherry-picking client so it’s a commercially satisfying result for all is becoming clearer.
These clients largely result from corporates having boosted in-house legal teams in a bid to control legal costs. Legal work fluctuates by nature, creating ongoing resourcing issues. Few corporates can handle unforeseen events such as a litigation or regulatory changes in-house alone. They need to look outside to manage peak workloads, or for problems which require deep specialist knowledge, such as taxation. Secondments may fill the breach to a degree. But mostly these clients need legal teams to pick up an aspect of a transaction while keeping most of the work in-house.
By being more flexible, able to work closely with in-house legal teams, provide support when they need it, there is opportunity to provide invaluable assistance.
They may need us for due diligence on a transaction, and then only call us in occasionally. We may provide technical and compliance advice, or be called upon to document the results of the client’s own negotiations, after which the internal team will resume management of the day-to-day aspects of the matter.
The challenge for the advisor is to know the client’s business well enough and be across its developments so that when advice and assistance is required the advisor can quickly and efficiently get across the key issues and know how these issues will impact their business. This requires advisors and clients to partner more closely and for advisors to think about the client business holistically. We would often advise and internal team on issues which are then presented to a company board, meaning we must understand the bigger picture.
To speed things up we may engage multi-disciplinary teams across operational, commercial or technological issues. We can fast-track clients’ understanding via training and guidance, such as briefing an in-house team on an area where we have expertise. This is an efficient way to arm clients on certain elements of a transaction themselves, and provide follow up support.
Creating agility to respond is a big challenge for traditional firms. We need the flexibility within our own teams to react. While we may not be seeing a project or transaction through to completion, there needs to be a strong underlying partnership to pick up the thread again quickly down the line.
We see more and more client relationships going this way, so it’s important we are structured for it. This means having responsive teams of our own and the ability to access more resources at short notice via relationships with other suppliers.
Pricing also needs to reflect that clients want to extract maximum efficiency from their legal spend. By handling most of the issue in-house, they don’t need an external law firm to be their conduit to everything, and they need pricing certainty. For us to be true partners, we need to provide clients control in this area. They need accountability for costs, which means accurate scoping of the work, and regular status updates.
We increasingly need to bring clients along with us via improved communications and tech support – we may provide the technology platform for a job, whether it’s developing an application specific to an issue, or creating “data rooms” to provide a central location where everyone can jump online, collaborate and comment over a transaction or case. Making tech solutions available is more cost-efficient for the client, and enables us to get the framework up and running quickly.
It may be tempting to think that “cherry-picking” clients don’t require such a strong partnership, but often the opposite is true – the client is now shaping the transaction and is relying on us to provide the flexibility and support to go with the expertise.