Importance of Convergence and Legal Partnering:
The New Business Model
Richard Brzakala. All Rights Reserved.
convergence revolution is well underway in many American corporate boardrooms.
Companies and their preferred law firms have begun to embrace “partnering”
arrangements as the great panacea to their ailing business relationships.
and convergence practices
in recent years have done to the legal business landscape what Viagra has done
to the geriatric community. It has quite simply reawakened clients and partners
in the legal and business communities and given them a new found vigour and
excitement in a stale sometimes lifeless relationship. Yet despite all of its
importance and benefits to both sides of the partnering equation one wonders
why there continues to be so many firms still reluctant to accept and embrace
this new business model?
Perhaps the easiest explanation to
resistance rest’s with understanding human nature. Lawyers, despite what many
dissatisfied clients may have to say, are people and people traditionally are
reluctant to embrace or accept change. Lawyers by their very nature are
predisposed to being sceptics and most, if not all, try to be logical and
conform to a traditional modus operandi. It is then easy to understand the
anxiety and apprehension that many lawyers face when confronted with a new,
untraditional, “business” concept that risks taking them beyond their comfort
Many traditionalists (i.e. those
firms reluctant to change) insist on holding onto outdated business practices.
These are the same firms who find themselves in a constant and uncertain
struggle of having to maintain a profile and presence in a clients corporate
boardroom. One can only guess at how much time, resources and money is
exhausted by lawyers competing against one another for want of staying on a
clients radar in the hopes of landing another deal.
In fact, the corporate legal
marketplace in recent years has become notorious for the constant and sometimes
questionable courting and wooing of business clients. But as many corporate
practices have become increasingly scrutinized by suspicious regulators,
corporate governing bodies and their functional legal groups have had to
reacquaint themselves with a number of long lost business principles namely
ethics, honesty and professionalism. Shareholders have demanded fairer business
practices while also insisting on higher profits. Fine tuning a business to meet
those challenges for many internal law departments has been a challenge as the
smart ones have turned to convergence and partnering to help them achieve this
goal. Consequently, the smart business firms these companies end up partnering
with find that their established relationships and shared business goals speak
volumes over unnecessarily having to repeatedly go through a courting ritual
half a dozen times a year.
One advantage to partnering
arrangements, and perhaps not seen in some time by law firms, has been the
creation of a level playing field where the network of legal partners are all
treated as equals and measured fairly. Standardized processes, formalized
engagement agreements, disbursement guidelines, compliance and performance
audits are all examples of how all firms have started to be measured and
evaluated in the same way.
Firms that have been successfully
selected to be part of partnering arrangements are the same firms who understand
the changes that have taken place in corporate America. More importantly they
are the same firms who understand that convergence and partnering strategies are
a direct and necessary reaction to the realities in today's market place.
Advocates of this new business
model understand that partnering is not a flavour of the month business
philosophy. It is not a business placebo like many sceptics would argue.
Instead, it is the panacea that, if executed correctly, and through a mutual
commitment, promises to enrich and create greater value to the delivery of
legal services and business relationships in the legal world. One may question a
companies motives for doing it, but it shouldn't’t underestimate its acceptance
in today's corporate environment where most General Counsels are looking to best
practices and greater effectiveness in order to minimize risk and do their part
in maximizing shareholder value. Most General Counsels have turned to
convergence and partnering strategies as the vehicles that will deliver their
Successful partnering firms
understand all of this and have begun to reinvent the way they practice,
deliver and communicate their services to better suit the changes that have
taken place in the business world. A large part of their success has to do with
their understanding of their client base and how their clients do business. If
the two are not in sync, then the relationship is in danger of faltering.
Firms wanting to capitalize on the
partnering business model need to reinvent the way they interact, communicate
and deliver their legal services to the business community. Ultimately both
parties to the arrangement must be satisfied and benefit. Partnering as many
sceptics are quick to point out does not work if only one party is calling all
of the shots. Those firms fortunate enough to be in true partnering arrangements
not only appreciate the sharing of ideas and risks but also the rewards that
Many firms involved in partnering
arrangements have had to do some internal house keeping in order to accommodate
clients needs and a closer partnering relationship.
Internal changes usually have
ranged from reorganizing priorities and responsibilities to creating new roles
or investing in new or more resources. It is not uncommon to find that many
firms now have finance and accounting people, business and relationship
managers, information specialists and knowledge managers. Some of these
responsibilities and professionals are a by-product of the technological
changes in the legal industry, but all of them in the long run bring tremendous
value to the partnering relationship.
No firm ever wants to spend money
on lofty ideas, but as most successful partnering firms have found their initial
investments in technical or professional resources has netted them a greater
marketability with other clients on their roster.
Success Stories: Dupont and Others
Companies like Dupont
forerunners in convergence practices, may have been financially motivated early
on in their partnering strategies, but the success of their models has come to
mean that they now are looked upon as the bench marks in legal partnering and
convergence. Many companies around the world have used the Dupont model in
implementing their own strategies. Both companies discovered early on that
there was much more to just paring down their lists of service providers and
imposing fixed fee arrangements on the lucky few who made their lists.
Over time both companies have
successfully managed to take the convergence-partnering model to an new level, a
partnering nirvana that has come to be the benchmark for many corporate law
departments in today's highly competitive industry. So successful has this model
become that even sceptics freely admit that in its truest form it offers the
potential to demonstrate a commitment to relationship building, trust and
quality of legal services, among other things, all before cost savings are even
What’s In It For Me?
As Dupont and other successful
partnering companies have demonstrated, companies and their legal partners, in
the long run not only have saved money and time, but also managed to create
strategic alliances with legal experts who understand their companies business
strategies and their value systems.
If executed correctly both parties
in the partnership arrangement come to share risks as they both set out to
achieve common goals. To achieve those goals some firms may be required to make
sacrifices, be it time, capital or legal work. Strategic initiatives like
standardizing processes, formalizing engagement arrangements, exploring
alternative fee arrangements, leveraging on technology and knowledge management
tools all take an investment of time and resources, but in the end all have
proven themselves in varying degrees to be mutually beneficial as greater
efficiencies and effectiveness are attained in the delivery of legal services
and the business relationship.
Firms unwilling to appreciate the
urgency of understanding and accepting this business model risk being left
behind as those smart enough to accept change have already started to win a
sizeable portion of market share from the traditionally minded firms.
Not For Everyone
However, as great a business model
as it may be, not all partnering arrangements may be suitable to all firms. One
reason which may explain why some firms have opted to forgo partnering
arrangements is that quite simply it does not fit into their organizational
culture, mindset or the way they do business.
Firms, of all types of matter
specialties and scales of size, continue to advocate a traditional approach to
practising law which at the very least is not dependent on other firms for their
Other firms, despite assurances and
engagement agreements, remain sceptical of the ‘fair playing field’ a
partnership arrangement promises. Some feel that not all firms can be treated
as equals and because some relationships between clients may be deeper and
perhaps more political then a business client may want to admit, they perceive
partnering as really nothing more then a smoke screen for backroom reciprocity
deals where one hand washes the other.
Still some firms have shied away
from partnering arrangements simply because they don’t understand them or trust
them thinking that they are nothing more then a cleverly disguised reaction to
budget constraints and fiscal prudence. Sceptical firms see convergence and
partnering as adversarial tactics of the worst kind in a marketplace where large
corporate clients are unmercilesslously exerting their clout by tightening
their purse strings.
Still others see partnering as
something that is not palatable or runs contradictory to a firms business
principles and culture i.e. we’re in the business of selling our time and not
a competitor’s strength’s over ours. This me first attitude is unfortunately
part of a cultural mindset that is stuck in the here and now and exactly what
separates those willing to commit to working in a pluralistic alliance from
those unwilling or apathetic to a few sacrifices for longer term gains.
Size Does NOT Matter
Some may argue that in a smaller or
medium sized market there is no need to create alliances of collaboration as
large business clients, or even newer companies, have always opted to select
the historical darlings of the legal marketplace. For a smaller or newer firm
this may mean that there is little chance for them to land a big deal. On the
contrary, nothing could be farther from the truth.
Smart companies who have employed
partnering strategies realize that neither size nor a firms market share
matters. What does matter to astute financially minded business clients is the
firms service level commitments, the quality of a firms work and it’s
communication skills. Successful partnering arrangements share the same value
system and constantly look for improvements and raising the performance bar.
Consequently, companies look to their legal partners for value added services
and not just transactional legal work. Law firms on a preferred list are
conscious of the need to add value to the relationship regardless of size.
Not surprisingly then, smaller law
firms have proven themselves on many occasions to be powerhouses of leading
edge technology and best practices and perhaps in some cases been the
catalysts for much larger traditionally minded firms wanting to change in order
to protect market share.
As stated earlier firms wanting to
guarantee their success for years to come, must go beyond the transactional day
to day work flow and begin to understand their clients needs.
Best practice companies look to
their law firms to collaborate and share information and best practices with
each other for the benefit of their institutions. They want firms that can
honestly act in the best interest of their business and client groups by
leveraging on one another's experiences to ultimately reduce duplication of
services and deliver the best possible advice from a tremendous legal
knowledgebase and experience while safeguarding the institutions interests now,
as well as in the future. Perhaps this last point more then any other
underscores the potential knowledge powerbase a partnering arrangement or
network of firms has over that of any one firm in today's marketplace.
Wal Mart is another example of a
company that has customized the partnering model and taken a somewhat different
approach to interacting and communicating with its external lawyers. Their
approach requires lawyers from their preferred list to work for a brief time in
their stores to better understand their people and business clients. What better
way to get to know your clients and their needs and challenges they face then by
learning what their business is about from right on the shop floor.
Unfortunately there are still many
firms, large and small, who have yet to understand these key business traits
and as a consequence have started to suffer the tell-tail signs of
disintegration or imploding. Working within an alliance or network of law firms
requires a special mindset that perhaps not all firms possess or want to have.
It requires an understanding that no one firm has swallowed all of the legal
expertise and knowledge that exists. Working effectively within a partnership
alliance may require conceding work to another firm, or the ultimate ego breaker
- working with a competitor for the common good of the business client.
Most companies who practice
partnering are savvy enough to have a very wide compliment of legal expertise on
their preferred or designated counsel lists. True, partnering at its zenith
expects that one firm will concede to another on the list for the greater good
of the client and ultimately the alliance and if that firm is unwilling to
forgo their ego’s and appreciate this fundamental sacrifice of business, they
soon find themselves on the outside looking for new clients.
Corporate clients at the end of the
day have a responsibility to protect share holder value and run their businesses
as legally and profitably as they can. The last thing they want to see is their
firms wasting valuable time and money in reinventing the wheel or worse yet
pretending to be something they are not.
Firms who assume that the status
quo will remain unchanged because they have political connections unfortunately
are short sighted and naïve. The business community has become so unpredictable
and changing that if a firm continues to grasp to such outdated concepts it
should not come as a surprise to when they suddenly find themselves under a new
marquee …or worse yet with fewer clients.
Most companies, if they are truly
honest will tell you that they initially embraced the legal partnering concept
out of necessity to be fiscally prudent. There is nothing wrong with that. The
ancillary benefits in time far outweigh any immediate cost savings as true
partnering arrangements promise to deliver on reciprocity, relationship
building, client referrals (i.e. future business), networking and technological
advancements for both the client and the law firm. Firms willing to go it alone
in many larger legal markets face an uphill battle against those within a
Firms who have opted for a
collaborative network share a common mindset for success and are prepared to not
only move forward and accept challenges, but strive to be the pace setter in the
legal market place. They understand that apathy, indifference and resistance to
change are the biggest impediments and threats to a firms existence. The legal
landscape is littered with countless firms who have failed to realize this,
firms that have resisted market forces, business and tech changes and have
either imploded or become appetizers for larger (not necessarily better) roaming
It is undeniable that many firms
have been put in a precarious position of having to be all things to all clients
while also dealing with internal and external economic pressures.
Changes to the legal landscape in
terms of technology, service delivery and convergence over the past 10 years
have been both dramatic and fast paced. Those fortunate enough to have
recognized those changes have kept pace by looking outside the legal profession
for assistance and hired such professionals as consultants, bankers, business
managers and information and knowledge managers. But unfortunately for many
more firms the pace at which this change has come has left them on the side
lines winded and feeling the effects of motion sickness.
Firms must ask themselves, what are
we doing now to better position ourselves in the legal marketplace. What is our
client going to want in the future. It is not enough to ask lawyers to begin
thinking outside of the box. Business models, technology and service delivery
vehicles have undergone such dramatic changes since the early 90’s that to ask
law firms to think outside of the box is passé. Many firms have leveraged
technology and business skills to better position themselves to anticipate what
their clients need today and in the future. In short they have gone beyond
traditional thinking and open their minds to being three dimensional in their
thinking…in short all things to all clients.
Focus on The Future
In conclusion many firms have
traditionally been guilty of focusing too much on immediate returns and
existing relationships in the here and now and have been negligent of ignoring
the future and what their clients may need.
The benefits a firm receives from
partnering in time spill over into other relations with other clients on a
firms roaster as experiences and knowledge learned from partnering arrangements
invariably are passed on to others in both the legal and business community.
Many firms have dismissed
partnering and convergence initiatives as nothing more then disguised
unilateral cost cutting measures aimed at benefiting only the business client.
Their scepticism is perhaps not totally unfounded as there probably have been a
fair share of miscalculated strategies which have fallen short of their mark
and never got past a reduced list of ‘legal service providers’ stage.
Undeniably there is a responsibility for both parties on the partnering spectrum
to understand this new business model. Both parties must understand their
arrangement, rules of engagement and be committed to the success of what can
become a truly symbiotic relationship. Both partners must look beyond
traditional thinking and embrace a more strategic business model for the
delivery of legal services…one that is based more on business principles and
less on the traditional legal thinking..
Firms who have been successful in
understanding market pressures, business trends and their clients and who
have proactively embraced new technology with a three dimensional mindset
will undeniably be the leaders in partnering arrangements and ahead of the pack
. These are the same firms which large corporate clients will want in their
boardrooms i.e. firms that not only have the best experts with proven legal
skills, but firms with lawyers that are open minded and relationship focused.
Brzakala, January 1, 2004. All Rights Reserved.
Author: Richard Brzakala is the Law Firm
Manager in the corporate law department of a financial institution in Toronto,
Canada. He shares responsibility for the management of an extensive list of
preferred counsel and is responsible for the financial reporting of external
counsel legal cost data, law firm compliance and measuring and tracking the
value of his organizations convergence initiative.
Most recently, Richard has worked with preferred counsel on implementing and
bringing web based technology such a e-billing, extranets and encryption to the
legal function of legal services at his company. In the past, Richard has
authored a number of other articles on the topics of legal convergence and law