ILTA ‘09 Conference August 27, 2009
The ACC Value Challenge
Reconnecting Cost with Value
www.acc.com/valuechallenge
Frederick J. Krebs, President, ACC
Timothy Corcoran, Senior Consultant, Altman Weil, Inc. Constance Hoffman, CIO, Bryan Cave LLP
Today
• Overview of the Value Challenge • The Altman Weil Survey
• Case Studies—Where Technology Has Made A Difference
It’s All About Value
In the past ten years, costs to U.S. companies went up 20% …
…except legal costs, which went up 75%
-- Study by Corporate Executive Board
What is the ACC Value Challenge?
• The ACC Value Challenge is an initiative designed to bring together law firms, law departments, and other legal community leaders and service providers to discuss how to:
– Reconnect the cost of legal services to the value provided;
– Assure better and more efficient relationships; – Help improve client service;
– Focus on practical improvements to legal service processes that increase value to the client.
It’s All About Value
• Client defines value
• Value-based relationships
– Billable hour declines
– Clients need new inputs to judge firms
• Predictability – clients need reliable metrics
• Client must be willing to change
What clients want
:
1. Better management; lean efficiency
(two-way)2. Certainty / Predictability
(up-front budgets/scopes that stick)3. Focus on outcomes and results, not just on
process and analysis: driven by evals/metrics
4. Costs that equate with value received
5. Outside counsel and firms whose motivations and
business model are aligned with the client’s
Driving Change
• ACC’s Value Index
– “Wisdom of the Crowd” – index is intended to be subjective – Client assessment of firms, based on 6 criteria:
1) Understands objectives/expectations 2) Legal expertise
3) Efficiency/process management 4) Responsiveness/communications 5) Predictable cost/budgeting skills 6) Results delivered/execution
Conclusion
• Value is defined by the client
• Law firms and technology providers must recognize that fact and adjust accordingly.
• Web 2.0 Technology and Knowledge management can help:
– Determine costs/pricing – Deliver services
– Resolve Conflicts
Value Challenge Resources:
The ACC Value Challenge and its online community are online and open to everyone at:
www.acc.com/valuechallenge
For specific case studies, visit the ACC Value Challenge Resources page at:
Has your law department reduced its work force in the last six months and/or will you be likely to do so in the balance of 2009? 27.4% 2.8% 6.1% 11.7% 36.3% 15.6% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Have reduced Likely to in 2009 Possible Unlikely No reduction in 2009 Increase in 2009
Within the next 12 months, do you plan to increase or decrease your use of outside counsel?
2.9% 63.7% 15.9% 17.6% 2.4% 63.5% 26.2% 7.9% 2.7% 44.3% 40.4% 12.6% 0% 20% 40% 60% 80% Not Sure Same Decrease Increase 2009 2008 2007
Restating the Obvious
• Law departments are shrinking
• The use of outside counsel is decreasing • Legal budgets are shrinking
Other observations…
• Law firms of all sizes believe their size provides a competitive advantage
• Many have raised partner billing rates in 2009, though increases are typically smaller than normal
• Few firms are exploring outsourcing, offshoring, alternative fee arrangements or business process improvement programs
• Most firms are not revising their strategy in light of the changing economic conditions
• Most law firms, not surprisingly, are waiting for the clients to drive necessary changes
Why do law firms – themselves outsourcing providers to business – resist outsourcing?
Law Practice IT Mail Fax WP Bus Dev & Mktg Finance Traditional Back Office Outsourcing Providers Legal Process Outsourcing
(LPO) Providers Specialty Outsourcing Providers Traditional Back Office Outsourcing Providers Consultancies Technology Providers
Old math
• Billable Rate x Hours = Fees
• Leverage (e.g., associates) = Profits • Demand is a constant
New math
• Profits = Revenue less Expenses • COGS must be lower
• Predictability improves retention
• Responsiveness improves retention
Non-Traditional Delivery of Legal Services
• Streamline and standardize collection of information
Non-Traditional Delivery of Legal Services
• Database to manage legal review process and track progress
Non-Traditional Delivery of Legal Services
• Database to manage subsidiaries licensing information by stateGoing Beyond the Data Room
•Standardized data collection for diverse and dispersed assets •Ability to submit reports from remote locationsGoing Beyond the Data Room
• Real-time status reports of due diligence process ―Who ―What ―WhenGoing Beyond the Data Room
•Searchable database for quick retrieval •Online access to all relevant materials“Out There” Ideas
• Automating simple legal advice • Decision support systems
Simple Starting Points
• Understand the work
• Look for simple workflow enhancements • Add technology slowly, but make it work • Opportunities:
– eDiscovery workflow – Deal workflow
– eBilling – Others
