Legal Procurement Metrics: What Value-Adds Are Most Important to Clients?

In part one of his three-part series, Matthew Prinn, RFP Advisory Group, took a deep dive into the minds of legal procurement professionals and discussed key metrics from the Buying Legal Council 2021 Marketing Intelligence Report. In part two, he discusses which value-adds are most valued by legal departments and how law firms should incorporate these services into their new business proposals.  

Value-Adds

Before we dive into the results, it’s important to understand how the word “value-add” is being used in the legal industry. Merriam-Webster’s definition of value-added is “relating to or being a product, whose value has been increased especially by special manufacturing, marketing or processing.” In the legal industry, value-add could translate to “how law firms/lawyers can improve or worsen the clients overall experience — beyond the performance of the legal function of the service.”

For example, a law firm may deploy the use of a matter management dashboard software that allows the client to view the budget, status and progress of the matter in real time. The client is not charged for this, and it’s considered a value-add benefit that the client receives as part of the overall experience. On the flip side, consider if the same lawyer performed excellent service in litigating the legal aspects of the matter, but the budgeting and billing process was a nightmare. While the performance of the legal function was great, there was a negative value in the overall experience.

Value-adds are often discussed and negotiated via the request for proposal (RFP) process or included in the outside counsel guidelines that accompanies the RFP. Savvy legal procurement and legal operation professionals have moved the discussion from “What complimentary services can we get?” to “By selecting your firm for legal services, how can that help our legal department operate more efficiently, get better results and obtain the most value for our dollar?”  

Offered Versus Preferred Value-Adds

Since we know value-add is a metric being used by legal procurement professionals, what service offerings are being ranked as providing the most value to the legal department? The report identifies the five most frequently offered value-adds and compared the data to the clients’ preferred value-adds. Based on the results of the report, there seems to be an opportunity for law firms to better tailor their offerings if they want to stand out.

Most Preferred
 

Innovative Technology. The use of innovative technology ranked as the most preferred value-added service. Technology can impact so many areas of the delivery of legal services, so it’s hard to pinpoint a specific product or area of work. What this really means is that they value a law firm that is constantly looking to incorporate new technology in any and all parts of their legal services delivery model. This ranges from the basic advancements like an e-signature to the more complex issues, such as incorporating artificial intelligence (AI) and machine learning into large-scale document review.

Legal departments make this a priority because they too are being asked to incorporate innovative technology in how they manage their operations. (See the Association of Corporate Counsel’s Legal Operations flyer on the top 26 legal technology tools being used.)

Buying Legal Council’s report notes that the largest areas of spend by legal departments for legal technology were:

• eBilling
• Contract lifecycle management
• Matter management
• Document management
• IP management
• eDiscovery and AI document analysis
• Records management
• Enterprise legal management
• Litigation management
• Legal research
• Legal spend management
• Reporting and analytics
• Legal document templates and generation
• Virtual data rooms (VDR)

The most frequently used legal technology tools included:

• Contract management software
• eBilling software
• Matter management software
• eDiscovery/eDisclosure software
• Reporting and analytics tools

The less frequently used legal technology tools included:

• eAuction software
• Workflow automation
• Knowledge management and sharing tools

The legal technology tools that indicate growth in the future included:

• Workflow automation
• Reporting and analytics tools
• RFP software

Law firms that want to pitch their approach to technology as a competitive advantage should be able to reference:

• How they use technology in the delivery of their legal services for the client
• Their knowledge of the latest new legal technology products or best practices
• When possible, their ability to allow the client direct access to technology tools

Most Offered
 

Secondments. A secondment is the “detachment of a person from his or her regular organization for temporary assignment elsewhere.” In the legal industry, that often means sending an associate or counsel from the law firm to work out of the client’s office. It benefits the client with an infusion of resources and benefits the law firm by cementing a deeper relationship with the business and legal team.

Secondments ranked as the most frequently offered value-add from law firms, but that can be misleading without further context. Law firms typically will offer secondments, but rarely at no cost, which many consider the true definition of a secondment. Complimentary secondments are typically only expected if you are working with a legal department with hundreds of millions of dollars in outside counsel spend, such as global financial institutions or manufacturing companies. What we see more frequently in the middle market is that the client and the law firm negotiate a secondment at a very discounted price.

Most Offered and Most Valued
 

Hotlines for emergencies or ad-hoc questions. Clients have ranked this as a preferred service and this has become a common request accepted by law firms in RFPs. While most law firms agree to this term, some do a much better job of implementing a formal process. One strategy is to use this as a differentiator and lay out exactly how the process works and site past examples of how it’s benefited clients. It’s hard to imagine a law firm successfully pushing back against a hotline request in today’s market.

Pre-matter planning sessions. It’s no secret that legal departments have always looked at the budgeting and matter management part of legal services as an area that needs improvement. In fact, two of the top five items listed on the preferred list relate to matter management.

Procurement professionals prioritize the value in having pre-matter planning meetings to discuss staffing strategies, budget perimeters and business objectives. They also find additional value in firms that have dedicated complimentary resources to ensuring the matter is executed as planned. Many of the larger law firms who have these resources tout this as a differentiator.

Smaller firms that may not have these internal resources need to communicate how they have trained their lawyers to incorporate the latest technologies and best practices in project management.

Developing Value-Add Areas

Business Insight/Root Cause Analysis
 

As corporate law departments have grown more sophisticated — in conjunction with the rise of legal procurement and operations professionals — there is a strong appetite to track or identify root cause analysis, preferably in business terms rather than legalese.

This is data that was not historically collected by a legal department, at least not in a coordinated approach with data analytics in mind. Think of the value of having root cause analysis data from all your legal service providers and the benefit of that data to your decision-making process. Providing additional insight about the causes of legal issues in easy-to-understand business language allows some lawyers to really separate themselves from their peers in how they provide legal services. Look for law firms to put more focus on this area in the coming years.

Horizon Scanning
 

A new value-add trend that we are seeing is more “horizon scanning” questions. These are questions posed by the procurement or operations team through the RFP process that asks for the law firms’ perspective on current and future issues impacting the client’s business. The topics could be about broader litigation or regulatory topics, or could highlight a specific priority for the company (for example, cybersecurity). The benefit of getting organized data and insight from dozens of legal service providers on the legal issues most likely to impact your business at no cost could soon rise to the top of the preferred list.

Tip: Legal departments are focusing more on tracking what law firms offer in terms of value-adds in RFPs against what they actually deliver over the course of the panel period. If you commit to providing a customized continuing legal education (CLE) luncheon, you should be aware that data is now being tracked, and it’s expected that you will proactively work with the client to implement these items.

This article is part two of a three-part series that focuses on trends in legal procurement. Part three, focusing on spend management tools, can be viewed here.