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Defining and Delivering 'Value' in Pricing and Client Relationships (2 of 4) - "What is Value ? A Law Department Perspective"

By Stuart Dodds posted 01-21-2014 16:13

In our last blog, Patrick Johansen gave us a great overview as to what was meant by 'value' from a law firm perspective.

Now let's get the perspective from a corporate law department, with John Thompson (of Purdue Pharma LP) kindly sharing his insights on this topic below.

How does a legal department define and deliver value? The answer is subjective; however can drive expectations for planning and pricing services and strategies, by a law firm for its corporate client.

A successful “win” by the law firm is essentially how value is defined by the legal department. How that win is achieved, successfully or unsuccessfully, is how value is measured and reported upon to support the value definition of the legal department, as well as the claim of the law firm for its proposed value.

A legal department is like any other business unit within the organization and as such requires metrics and performance standards to realize the organization’s goals and objectives; essentially internal value to the organization.

Legal matter management by the legal department is a measure of how internal value is measured by an organization. A legal department sets its expectations of value to the law firm in order to obtain its internal objectives. A common value most organizations are tasked with is cost containment (high reward for service/investment and low impact to the bottom line). The impact is usually, “what is the bottom line,” which then translates for the legal department – how can a legal matter be managed successfully at a low cost and high quality? The definition of value is essentially, how can the law firm provide success?

Value is attributed to the performance driving matter success. Successful value is realized and measured by some of the high level examples listed:

  1. Effective cost management for legal services in achieving a favorable outcome on a legal matter
  2. Realistic expectation setting on both sides for performance delivery, such as project/matter budget and timeline adherence
  3. Transparency in actions and communications by both sides to realize the intended goal of succeeding
  4. Utilizing the knowledge sought and sharing expertise leading to a positive outcome

Defining value within the legal department is an exclusive and subjective definition to the individual organization. However, what is the expectation of the legal department when delivering value externally to its law firm business partners; essentially how does the law firm benefit from the value it provides to the client? The key benefit is building and maintaining a business partnership between the legal department and law firm, promoting mutually beneficial coexistence financially and market profitability. This key benefit can take the form of several deliverables:

  1. Share financial rewards of outcomes – either through AFAs or appreciation bonuses
  2. Rely on knowledge area and utilize accordingly – expert knowledge areas a firm provides are essential in fostering business relationships and business process advice for future organization workflows and prospects
  3. Share success stories publicly - advertising and marketing for a law firm future business partners.

Building upon some of John's themes above, in our next blog post we are going to hear from Deliliah Flaum, a partner at Winston Strawn, where we will get a few hints and tips on how law firms can successfully meet the expectations of our law daprtment colleagues.

Until next time!

#KnowledgeManagementandSearch #ProfessionalServices #ProjectManagement #Large(251-500) #VeryLarge(over500) #BusinessandFinancialManagement #Medium(151-250) #Small(under151) #Firm #CorpLegalDepartment