Year: 2017

The New Normal: Elite Clients Require Their Elite Law Firms to Compete

Posted on January 19, 2017 by - Legal Operations

“It was a growth story in the 1990s, but since 2008, it’s a more competitive world where there is less growth,” Jeffrey Hammes, Kirkland & Ellis

“Law firms today must make a persuasive case for their retention. [The] new reality is marked by hypercompetition and bears little resemblance to the world even five to 10 years ago, and virtually no resemblance to the legal industry 20 years ago.”  Brad Karp, Paul Weiss

“For every mandate, you have to prove your talents.  Our clients have the right to kick the tires.”  William Voge, Latham & Watkins.

Last week, the New York Times published a revealing piece about the business model pressures faced today by even the most elite corporate law firms.

While it may be common knowledge that there is general softness in the market, Elizabeth Olson’s story demonstrates how the pressures affect even the small corner of the practice occupied by the elite of elite law firms — that where elite clients call on elite relationship firms for work that was once thought to be absolutely price-insensitive.

Two fundamental economic trends are clashing.  

Trend 1: There is more pressure on firms and their leadership to BOOST profits per partner every year. This is due to:

  • Increased competition for rainmakers between the top law firms.
  • Greater stratification of pay and status among partners within individual firms eroding firm loyalty.
  • Consequently, rainmakers receive and will leave for better offers at higher rates than ever before.

Trend 2: There is a secular trend DEPRESSING profits per partner. This is due to:

  • Increased willingness of the top clients to make relationships firms compete for work rather than reflexively going back to relationship firms.
  • Less consistency within firms of lawyering as partners jump around further eroding loyalty to firms by clients.

In other words, at the same time that clients are demanding to pay less for their legal services, firms need to find ways to pay rainmakers more to keep or poach them through a combination of boosting overall profits per partner of the firm and increasing partner inequality.

We discuss these trends every day with our clients. Understanding the change in business pressures among law firms is essential to being a smart consumer of legal services as they affect how work is performed including through how staffing is managed.  

Indeed, the most telling part of the New York Times article is the striking commentary, quoted above, by the chairs of three of the top global law firms confirming the realities of this new world — one where the most sophisticated clients expect their legal providers to compete as never before.

To put it simply, GCs and legal departments that just assume costs and prices of legal services “work out” because of relationships in the absence of competitive pressure and analytics are quickly becoming the exception and are not getting value (in price and quality) out of their legal dollars.

Using an Inferior Legal Hold System Hurts Your Bottom Line

Posted on January 13, 2017 by - Business Process Management, Contract Lifecycle Management, Enterprise Legal Management

In the 2014 Ethicon legal hold case, the court awarded monetary sanctions against the defendant, as they had failed to implement a comprehensive and timely litigation hold notice. The court concluded that defendant’s failure to properly preserve data after it should have reasonably anticipated litigation was negligent, but there was no evidence that the defendant acted willfully or intentionally to delete evidence. Instead, the court found that the system used by Ethicon to implement litigation holds was “riddled with holes.” Part of the problem occurred when an employee left the company and a technician in the IT department unknowingly deleted or repurposed the hard drives.

A key point here is that even though a company issues a legal hold in a timely manner, other things can go drastically haywire if something is missed along the way. For example, if the issued hold was not broad enough in scope, some employees failed to comply with the order, or the company’s legal hold system was simply “broken,” severe court sanctions may result.

Some of the lessons learned from this case:

  • Litigation holds should be specific to the case at issue, but also broad enough in scope to preserve potentially relevant information
  • Companies must take all necessary steps to adequately implement any litigation hold in place and ensure compliance in a timely manner
  • Companies must institute policies and procedures for lifting the hold when the company no longer has a duty to preserve evidence
  • A robust legal hold system must be in place so the company is prepared for the threat of legal holds

In our new white paper, “Is it Worth the Risk? How to Implement a World Class Defensible Legal Hold Process” we discuss the significance of legal holds in today’s corporate environment, why you need gold-standard legal hold automation software and the strategies to fuel your company’s path toward a robust legal hold process.

Download this new white paper to discover how a cutting edge legal hold platform allows team members to gain real-time access to the status of collection requests, know when actions were issued, which tasks are in progress and which legal actions require immediate attention.

Our new white paper offers the following insights:

  • Why you need a world class legal hold process
  • A little history of recent landmark legal hold cases and why they should concern you
  • Current best practices of legal holds
  • Essential features to know before shopping for legal hold software
  • The problems associated with using antiquated or inappropriate legal hold tools

A powerful legal hold solution offers a quick and highly cost-effective way to supercharge your automated business processes, as well as your bottom line. Reduce the ever-present risk of costly court cases. The stakes are high, and the time to act is now.