Troubles with Selecting External Legal Counsel

Modest Assessment of Skill-Sets

Wouldn’t it be wonderful to optimise a legal team’s output by offering clients the ability to pick and choose lawyers based on distinctive skill-sets?

I believe that (i) the non-technical skill-sets of lawyers should be assessed separately for different work categories, and (ii) clients should have the data and freedom to assess and compare the skill-sets of all members assigned by an external law firm for a specific scope of work. In my experience, this is rarely the case.

Legal instructions can be divided generally into one of the following four work categories:

• Category One: Providing Insight/Clarity to Drive Business Action
• Category Two: Ensuring Compliance and Risk Prevention
• Category Three: Solving Problems or Minimizing Their Impact
• Category Four: Delivering a Product (e.g. contract drafting, company set-up, etc.)

Each of the above categories require a different skill-set, and individual outputs can be optimised by law firms and legal departments by properly identifying (and assessing/developing) skill-sets and building working teams accordingly. One may even argue that psychometric tests should be developed with such work categories in mind.

For example, under Category One (Providing Insight/Clarity), the required skills/traits include understanding actual business issues accurately, having knowledge of the relevant industry/business and commercial/practical insights, showing ability to provide clarity rather than complicating matters, being responsive and available when needed, being able to provide feedback quickly, not spending time and effort on unnecessary issues, identifying various levels of risk, and understanding that the business will need to bear some level of risk and that the purpose of the requested legal insight is to guide the decision making process rather than to attempt to remove all legal risk. All these skills/traits require a certain mindset and character that may be at odds with the habits acquired at law schools. In contrast, under Category Two (Ensuring Compliance and Risk Prevention) the required skills/traits include ability to carry out rigorous legal assessments and comprehensive research into large sets of data, and to show low risk tolerance by identifying worse-case scenarios (which may be a negative trait in connection with Category One). Furthermore, under Category Three (Solving Problems or Minimizing Their Impact), the required skills/traits may also be unique and include thinking creatively, understanding the law with a view of finding ambiguities and rules/concepts that promote the position/interests of the client, having the ability to compromise and negotiate and to think in zero-sum strategies as well as win-win strategies and not being confined to one or the other, and exercising commercial acumen, emotional intelligence and some degree of empathy and political sensitivity.

Within law firms, the common career path generally includes moving through the ranks towards equity partnership. However, not all lawyers, including many of them who are technically competent, can be successful partners. This is largely due to the difference in skill-sets needed at the partner level and in connection with specific work categories. Tension and failures arise within the firm itself, such as lack of successful cooperation among partners/departments, frustrated associates who are badly managed, etc.

Opacity and Inefficiency

Law firm structures and systems lack transparency vis-à-vis clients and prospective clients, and can suffer from inefficiency on a number of levels including:

1. Lack of transparency to client on legal fees formulation and gross profit margins on each instruction.
2. Limited/prejudiced access to resource information within the firm. There is always an undeclared assumption that law firms would put forward the best available lawyers on their roster to win an instruction or perform an excellent job. In reality, the resumes put forward are usually chosen by the relevant client relationship partner for a variety of considerations that are not necessarily aligned with the interests of the client. Limitations of resource-use optimisation could be in place due to internal structural obstacles preventing collaboration across departments or offices including either (i) lack of sufficient internal knowledge of existing firm resources, (ii) technical restrictions, or (iii) financial metrics favouring certain team structuring.
3. Lack of access to lawyers’ track records and past performance data. Most processes still used by legal departments in selecting outside counsel can be considered traditional and lacking optimum tech-enablement in terms of data collection and analysis. The selection process includes mainly the submission of law firm credentials (list of past projects worked, rarely submitted in a standard form) and individual team resumes showing ‘cold’ credentials and experience information formulated in the most subjective form possible to showcase an all positively glossy image. It is common that lawyers list projects as part of their credentials without explaining what exact scope of work/role they had on such projects. And even if the exact scope of work/role is explained, there is no efficient/tech-enabled way to obtain standardised feedback/insight into how such lawyer performed on such scope of work/role.

These factors commonly lead to unreasonable fees being agreed/charged and/or client not receiving best possible service for money paid.

The above is not meant to be a professional ‘rant’, rather an attempt to highlight issues that occupy my mind in thinking of how to optimise legal services in general. Your thoughts and personal insights are most welcome. And if you are aware of any tech solutions that are addressing any of the above issues, please feel free to share.