Legal Village

From narrative to value

Posted 3/06/2008 by Deepak Malhotra

The issue of law firm fees has become highly topical in the last few months - and rightly so.

Much of what I have read and heard focuses on the size of the bill. I am not sure enough is said about the value legal services bring to organisations. I think it’s time to switch the emphasis from the bill’s narrative to the value provided.

I will take a simplistic view but it goes something like this. Law firms sell time and legal skills. From the perspective of in-house counsel, we buy legal outcomes. There is a huge difference between process and end result. Until we start talking the same language, I see that this debate about fees is going to remain and its intensity will only increase. This is where the hourly rate is limited, because the hourly rate is process and it implies that it operates independent of outcome.

How do we reconcile process and outcome? By talking, understanding and creating value. As in-house counsel become ever smarter buyers, law firms must now tackle the challenge of clearly articulating the value their services bring. It’s good to talk about getting closer to a client’s business, to offer a menu of billing practices and structures and to provide value-add activities, such as secondees and training. This makes a lot of sense and does represent best practice, if done in a bespoke and well thought-through way.

But, the step-change that is needed is to be able to articulate value contribution to an organisation’s activities. Create a culture where you can measure and articulate it and a law firm has its USP. For in-house counsel, the same allows us to operate at the heart of the business and be accepted as helping to drive the business forward.

There is no easy solution to the value challenge. There must, however, be a vision for where we need to get to. In-house and private practice should challenge ourselves to really understand what creating value means. Meeting this challenge will be a hallmark of whether we can respond to change.