Backstory: What Happens in Vegas …

Wednesday, April 5, 2017 - 20:32

Picture this. It’s the cavernous main ballroom at the Aria Hotel & Casino, just off the strip in Las Vegas. It’s an early Wednesday morning in late March, the last day of the annual meeting of the Legal Marketing Association. There’s a buzz of anticipation. It’s GC day!

The LMA – I am a card-carrying member – includes more than 4,000 members, most of whom work at big U.S. law firms. It is a little-known subculture that mixes generalists carting amorphous titles such as marketing manager or business development coordinator to functional specialists in everything from PR to event planning to CRM.

Though LMA has been around more than 30 years, it is a work in progress. Even today, few legal marketers have meaningful contact with the buyers – corporate clients – they are paid to reach and influence. That’s changing, but slowly – way too slowly, many would say.

That’s one reason the annual meeting’s GC panel is such a draw. For many members, it is a rare opportunity to get the skinny straight from the buyer’s mouth. Longtime attendees may be jaded. How many times, after all, can you listen to a GC say she hires lawyers, not firms, or that Chambers is not her Bible for choosing outside counsel? But LMA’s many junior members hang on every word of these rock stars of the industry as if from the burning bush.

This year’s panel sported a typically bloated title – The Rapidly Changing Legal Buying Cycle: What Law Firms and Vendors Need to do to Respond: General Counsel Panel. Turns out, however, this was not a GC panel at all. Rather, the hundreds of attendees got an unexpected and exhilarating reality check from the in-house trenches. Call it: Legal Marketing Meets Legal Ops.

Three of the panelists were legal operations professionals and members of the executive leadership team of the Corporate Legal Operations Consortium. CLOC is sort of the LMA of legal ops. Connie Brenton is co-founder, CEO and president of CLOC and senior director of legal ops at NetApp. Jeff Franke is CLOC’s corporate secretary and chief of staff to the GC of Yahoo! And Steve Harmon is VP and deputy GC at Cisco. The fourth panelist, George Milionis, representing smaller, private companies, is not an ops guy but an actual GC of PetersenDean, a roofing and solar company based in San Jose.

The legal ops role, which has been around at least since GE’s legendary GC, Ben Heinemann, tapped one of his lawyers to run his massive in-house operation more efficiently about 20 years ago, has exploded in the last few years. That means LMA member firms increasingly face more sophisticated buyers as ops professionals, supported by pricers and procurers, take control of in-house budgets.  

“The model is changing,” Franke said. “You’re no longer selling to the person you have the relationship with like in the good old days.”

Ops may not yet be the default, but more and more companies are getting there. “We have reached a tipping point,” Brenton proclaimed.

Harmon of networking giant Cisco (a company known as an in-house trailblazer) flashed a color-coded chart titled, Core vs. Context Resource Allocation Model. As the audience snapped screen shots, he explained how the four quadrants help Cisco evaluate business/legal activities based on contribution to competitive advantage (core) or mere necessity (context). The takeaway for the wide-eyed audience was just how little high-end work Cisco earmarks for big firms after all its in-sourcing, out-sourcing and automating is done. Table scraps.

“Don't tell me you want to be there for the bet-the-farm work,” Harmon said. “There isn't that much of it, and it’s highly competitive.”

Franke did not need a chart to deliver his message. Our budgets are not increasing, he said. Persist with lockstep rate increases, and you’ll force us to bring the work in-house.

“You want a 6 percent increase,” he said, “show me 6 percent more value.”

Milionis, who oversees an in-house team dwarfed by the mega-shops on the panel, is on the same path. For example, facing a big litigation issue in California he created a law firm within the company and brought 90 percent of the company’s litigation inside, including high-stakes disputes. “We brought in technology and contract lawyers, and we cut legal spend by seven figures,” he said.

As in-house teams strive for greater efficiency and cost certainty, such changes will accelerate. “We're measured on budget predictability, like all other business functions,” Brenton said. “Fixed fees have not taken hold because we don’t know how much it should cost. Once we know what something costs, we will move it to a fixed fee.”

Harmon agreed on the importance of cost certainty. He railed about outside counsel whose default answer to questions about cost is: “It depends.”

“That was the law school answer we all got away with,” he said. “That doesn’t work anymore.”

By now, the LMA audience may have been wondering about their career choices. Clearly, the ops folks holding the purse strings are fed up. As Harmon put it, “We pay for outcomes. We don’t want to pay for inputs. That doesn’t fit our business model.” 

Still, it wasn’t all tough love. In-house teams want to collaborate with outside counsel – on their own terms. Given the Silicon Valley tilt of the panel, it was a little surprising that the opportunities they see for firms arise from, of all places, technology. For example, they said, don't come to us with glitzy, bio-packed pitch books. Come armed with data and good questions. Tell us something we don't know, such as the trajectory, risk and cost of deals and disputes. Law firms, they said, are in a good position to offer data and technology solutions, especially to smaller in-house teams.  

“At our size, we’re not rolling out big things,” Milionis said. “We’ll rely on our providers.”

Brenton picked up the theme. Law firms have different technology than in-house departments. What if we can get a few technologies to work mutually well in both environments? “We have efficiency-geared tech in legal departments, but for outside counsel it’s profit-geared,” she said. “We need to see those tool suites combined. If you know our business, you are far more valuable to us as partners. Tech can help that.”

She drew an analogy between LMA, a relatively mature organization, and CLOC, a much newer group. “These networks – marketers, CIOs, GCs, Ops directors – are tight organizations,” she said. “Our roles are difficult. The change management inherent in our roles is extreme. Nobody appreciates it unless you're in that role. We will accelerate the speed of change when we start to collaborate across silos.”

Important messages. Let’s hope what happens in Vegas doesn’t stay in Vegas.