Briefing 5P conference 2016 report: Ps and Qs
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This report was originally featured in Briefing November 2016 to read the issue in full, download Briefing.
At our last conference – Briefing Transformation – we kicked things off with a quote by Friedrich Nietzsche. We’re pretty intellectual like that. At the second annual Briefing 5P conference, in September 2016, things were taken up just a notch, with a nod to none other than the Marquis de Sade.
Let’s not forget that the traditional way for law firms to make themselves profitable was “bill them until they scream, and then bill them some more,” said Ori Wiener, head of the business development practice at Møller PSF Group (and before that global head of BD at Linklaters) in a colourful keynote address.
The point – of course – is that instruments of persuasion are now being used to apply more and more pressure in the other direction – on to a rather shaken group of law firms. Clients might experience a certain sense of schadenfreude.
“Further margin erosion is inevitable,” warned Wiener. And 2016 is hardly doing its bit to help. Even pre-Brexit M&A was “on ice,” he said – and now the world (apparently) waits for March 2017 when formal negotiations will, allegedly, begin.
On top of that, while a flurry of firms are signing up with artificial intelligence suppliers in 2016 in a bid to boost their internal efficiency, don’t imagine that clients haven’t cottoned on to that fact as well.
“The in-house department will take advantage of artificial intelligence to drive costs down even further,” said Wiener – in a world where about half of the typical lawyer’s workload, he suggested, was the sort of information extraction exercises in which AI happily specialises.
Give Ps a chance The very worst thing to do in this environment is to automatically discount rates to keep clients happy – although this is partners’ apparent preferred reaction to the shift in their power base, said Wiener.
“Lawyers take on discounted work because they want the hours,” he explained – perhaps understandable when their number-one fear is having too little work. “But partners also need to understand the true impact of a write-off on their profitability” – that a 10% fee discount can take a 30% bite out of profits.
The upshot? “Pitching before pricing is a form of madness,” said Wiener.
That’s two of Briefing’s five Ps down. But then, after effective negotiation – and standing your ground at a fair price – you’d better manage to deliver to it. That requires the three remaining Ps – a deep understanding of work as ‘projects’ and ‘process’ and the impact of ‘people’ on the price you pitch at. Managing a consistent and predictable experience using these variables are key requirements in the increasingly challenging days ahead.
“Surprises are bad for any relationship – positive as well as negative,” said Wiener.
“If you deliver at a lower price, there could well be a perception by the client you’d resourced the work poorly – risking quality– or perhaps that you priced too high at the outset.”
Clients speak
So assuming the price is right, what would impress clients in a pitch scenario or as work progresses? We next heard from several representatives of client organisations about the management practices that may – or may not – bear more fruitful relationships.
“Don’t give the standard response to questions about what makes you ‘different’,” said Bjarne Tellmann, senior vice president and general counsel of Pearson. “Today we have lots more tools internally, such as contract management and e-billing, and we’re looking for people willing to be business partners.
“The thing that would most impress me is probably a firm pointing out a clear inefficiency in the way we’re currently working. Also, pick apart your underlying assumptions – the idea things always have to be done in a certain way. And disaggregate the price you’re charging from inputs into that service.”
David Bateson, Canon senior vice president, legal, IP and sustainability, proceeded to confirm firms’ worst fears.
“Law firms cost more – so sending them work has to be the last resort. That’s just a fact, and it means that I expect something quite special,” he said – and that might be something more than an ‘innovative’ price. “Alternative fee arrangements actually take a lot of time to manage,” said Bateson. “Time is the really big challenge for us, and that means a law firm relationship needs to deliver at the time it’s needed.”
And Howard Landes, chief counsel, corporate, at BG Group said that risk-sharing could present a competitive edge in a client pitch. Could firms, for example, share some of his business’s pain in a low-oil price environment? “It helps to show that you’re thinking about what we’re thinking about,” he said.
On the same theme of putting yourself in the client’s shoes, he recommends taking the time to research the people who’ll be in the room at a pitch. “Find out who present has which decisionmaking powers. Don’t assume it’s all about the relationship partner – there could also be someone who manages procurement to impress.
“And especially staggering is when it’s clear that people on the pitch team don’t even know one another – never mind the people they’re pitching to win over.
The outsider world
The ‘learning from legal’ panel echoed the clients’ concerns. Matt Holt, partner for digital strategy at OgilvyOne, said: “Mine social media profiles to understand business backgrounds when casting the right team for a pitch. But remember that we also pour data into social networks – so it’s equally important not to get lost in that.”
Also, consider the makeup of your delivery team. “Transformation isn’t a future one-off event – it’s the norm, right now. We find that the right people to have on-board are those willing to ‘have a go’ at things – who are flexible about all aspects of work. It’s also important to have shared responsibility across teams, so we invest in commercial skills training for all staff.”
OgilvyOne also scopes its projects in the ‘sprints’ that will be familiar to those with ties to the world of software development. “Don’t spend two weeks taking a brief,” said Holt. “Be creative and collaborative from the outset.”
Jeremy Nicholds, strategic adviser, Yoyo Wallet (previously VISA and Mastercard) said: “Success begins and ends with the customer, and understanding priorities and pain points. Invest ahead of time in understanding client price pressures, and price in a way that shows you have skin in the game.”
Quentyn Taylor, director of information security at Canon, added: “Remember that clients won’t always know exactly what it is that they want – but if you can’t manage to standardise processes internally, you really can’t innovate around that to deliver something new.
Taylor also recommends rigorously questioning the processes that really do need to be done internally – appropriate at a time when the trend to outsource services represents not only an opportunity for legal businesses to identify new grades of process efficiency, but also a possible risk that firms themselves are found surplus to requirement.
