#56 Ending the Billable Hour Chris Grant’s Mission to Transform Legal Services

Hello everyone and welcome to Pearls on Gloves Off. I'm Mary o', Carroll, your host and Chief Operating officer at Goodwin. Today I'm speaking with Chris Grant. Chris is the head of Legal Market Engagement at hsbc, responsible for developing and implementing a next generation supplier spend and relationship management framework. Chris has broad experience working across the entire legal industry, with time spent in both private practice and in house sides. The majority of his career has been focused on legal operations, bringing efficiencies to traditional ways of working. Frustrated by the slow pace of change in an industry which has been resistant to innovating, Chris has also worked with lawtech startups, building an ecosystem to support the next generation of legal services. He was responsible for building the lawtech community at Barclays Eagle Labs where he built a collaboration space for in house teams, law firms and tech companies. He was also the head of external engagement for Barclays Legal. Chris has been featured in the Financial times innovative lawyers top 10 intrapreneurs and appeared in the legal 500 GC power list. Chris is a friend and someone I admire for his genuine passion around legal transformation. He is someone who is willing to roll up his sleeves and try to make that change happen himself, come hell or high water. This episode was truly a great conversation. We get into what is happening in the legal ecosystem. Is change really finally happening? And why now will we ever see the death of the billable hour, even if we've been calling it for at least two decades? What are alternative fee arrangements or as Chris likes to call them, EFAs, effective fee arrangements that truly work. And what do we need to do as in house teams or clients to get comfortable with it? And what do firms need to do? Underlying all this is the issue of trust between clients and firms. That's the thing no one is talking about and that we need to address. I always have fun getting into it with Chris, so I hope you enjoy our conversation today. All right, Chris, good to see you.

Good to see you.

Tay, I'm a little nervous about you and I being on a podcast together cause there might be too much energy, too much passion.

I'm already trying to measure myself. It's like, don't go too big to be at the beginning, like let's wait.

But you are a genuinely passionate person when it comes to legal transformation and in particular law firm management. You've been doing this a long time and I do think that it's great to meet other people who really nerd out and are passionate like you and I are because I think you're similar where you live for this stuff, it keeps you up at night, you go to events, you learn, you share, you socialize about it, you talk about it over grid you read about. I mean, you live this stuff, right? I guess. What's the deal?

Look, ultimately it's, it's frustration that I think that that brought me to, to here because I, I started out very much in mind that I was going to become a lawyer, I was going to follow a legal path and, and that's the way it was going to work out. Within the first three days of being in a law firm and following that legal career, I was like, this is not the gig for me because of pure frustration. Everything I could just say, see how we could do things quicker, faster, smarter. And all I was ever told was no, we do things this way, this is the way that we make things happen. And it's not long before you then get super frustrated because you're sat with the workload as long as your arm, the clock is getting ever closer to midnight and one o' clock in the morning and you know that you could have had this done at lunchtime, right? It's little things like that. You feel like you're wasting your time and it's demoralizing, you don't want to continue. So if you do think about how you can do things quicker and smarter and you continually get told no, it's not long before you want to find something else to do, which is what I did. And I ended up working in house in an investment bank. And suddenly everybody wanted to work out how to do things quicker, smarter, faster with technology. So I found a home. And that's when kind of legal ops came through. And financial crisis just made it even more that we needed to do things quicker, faster, smarter and more with less was in the area that I enjoyed being in more than anything else. And that's what started was meant to be very much a legal career. It is a legal career, right? We're just in the league. It's a legal ops career within the legal for sure. But it was pure frustration. I just knew that I could do things quicker and could think of ways of doing things smarter and never had the ability to do it in legal ops. It's all you do, right? Continually thinking about that and at the.

Firm, I mean you were there a while ago, you were getting a lot of no's. Why do you think that was the case?

I mean it was simple, right? All they heard the minute I said I could do this in less time, it was then why would we do that? We will therefore bill less. Not even that conversation around. But I could bill more because I could service more clients, I could look after more. That didn't even come into the narrative. It was just a simply, sorry, you'll bill less.

I mean, I remember that being at a firm like 20 years ago, the idea of doing something faster was like, get out of the office. Why are you bringing this to me? That's our most profitable business. Like the longer it takes. Do you think that's changed?

Do I think that's changed? I've got lots of answers to this one. And having already I've been in legal lots for a long time. I did put my toe back into the private practice pool for a little while. Didn't feel like it had changed much. I'm now back to managing law firms and looking at external spend. It's changing a little bit. I'm just doing, I'm just doing a rate review at the moment with our top 18 firms. And for the first time since I've been doing these exercises with firms, I've had some that have come back and said they wanted to zero their rates because they don't use the hourly rate anymore. I've still got so many questions. But that wouldn't have happened. Right. That's not a conversation I would have ever have had before. So there's hope. Technology's being used. We are getting serious about it. We are thinking about how to better service clients. The industry's changing. It is. I can't deny that it's definitely changing. It's just not at the rate that I'm, I would want or that I'm used to.

Yeah. And okay, so the market is shifting. Finally over. I mean, how long have you been in this world? About. Same as me, 20, 20 years or so. Yeah. Let's not date ourselves.

Exactly.

I feel like we've said it's shifting for the last 20 years, but I feel like it's finally accelerating. Are you feeling that like our conversations different now?

Yeah, it's a new daw, definitely a new dawn. And I think like you, I've stood on many stages and talked about how things will change in two years, five years, six years, seven. You just add a year and lose the will to live as you keep on saying these things. But it definitely. There's a different set of people that are around this world now and I think that is the biggest shift. You are no longer now having conversations with partners, middle aged white partners that have been in the organization for 2030 years. You've got people that are now operationalizing the operations of legal, of law firms, of in house legal teams. We are starting to see a change on the tech side of things. We are focused on how to drive things more effectively, more efficiently. It's the people that are now part of the dialogue that I think is probably driving the biggest change.

Interesting. And what role has technology played in this? I'll tell you my answer. I think that AI has been a gift because it's allowed us to have conversations that weren't having before. So I don't necessarily think that AI has shifted things yet, but everyone is starting to talk about what is going to happen to this profession.

And I think that is the key bit is the conversation that is now coming out of technology being part of our narrative. Yeah. Because you know, even for me, for the hourly rate conversations, and I know I keep on going back to is literally what I've been talking about all day. But that has what helped to drive that change. Because suddenly what role does the hour and the rate, the hourly rate play when you have got technology that is providing some of that service? Law firms certainly aren't going to want to charge for that on the hour. I'd love it. I'd pay a hell of a lot less. But it's driving that narrative in a different direction because we have to acknowledge that legal services are changing. The way that we're procuring them and the way that we're receiving them are changing. Therefore pricing does have to change. That would not be as bigger part of the conversation were it not for technology that really has brought that to the fore.

And what about the talent on the in house side? I think in house teams have grown tremendously over the last couple decades as well. Right. All the work used to go outside. I think firms are competing much more. So even with in house teams now.

Yeah, you're absolutely right. It has been a privilege being in a couple of in house legal teams. So seeing how things work in different ways, there's been so much change over the last 20 years. And the people that we bring in, even from embedding our own technology, people that are part of the conversation in the change and transformation program that we put in place to being able to just think about how to run as a business, that's what certainly helped to make that change happen. We've got experts that now know what they're doing, have experienced it in different industries. We're losing the ability to kind of say, but you need to treat legal in A special way legal is special. It's not that special. It's the same stuff when you boil it down to its core components. It is all about how to make sure that you are running more effect as a business. The work that we are taking on is certainly an appetite to take on more of the strategic work, the more interesting work that has typically gone out to our law firms. We've changed the bench internally. We're starting to use alternative legal service providers. We are using our law firms in a different way to the way that we were before. We want to ensure that we retain and we attract the most talented people and we only really do that by keeping some of the most exciting and the interesting work for them to be doing and be able to create an environment where people can move, they can change, they can try doing different things. We are building out our service centers so almost starting to look at what we can do from an alsp. It's the internal ALSP that we're starting to build out. I think what we're not great at is looking at the work we do and thinking about how it can be done in a different way. But we're in legal. Lawyers aren't necessarily trained to do that. We don't look at how to do work. I'm back to my days when I was first in a law firm and I was on my own thinking about how to do things in a different way. We're not great at doing that kind of analysis or thinking about alternatives. But as we build out things like global service centers and start to use alternate legal service providers in a different way, we start to open the door to that. How can we fundamentally change the way that we're operating in house teams are becoming more sophisticated. They are changing the kind of balance in terms of the work that they're doing and. And we're really growing to bring the right people in to help us on that journey. The in house legal team has always been questioned. Right. There are always a cost center. There's this eternal kind of seesaw that we're sat on thinking about how much work we should be doing versus what work we send externally. We've now added new levers to that external into the shape of alternate legal service providers and technology providers. We're also thinking about those levers now internally as well. So can we use technology internally? Can we also start to think about other ways of using like I say, the global service centers?

Yeah. The whole idea of right. Sourcing. Right. And it's never done and you're Constantly thinking about what is the work that's coming in and where should it go. I mean, over the last 20 years or so I've seen this like the pendulum swing in, inside, outside, bring more in, take more out, but not necessarily to firms, take it to different types of providers and then oh, let's insource that and have our captive LSP like you said, so bringing it in again and maybe it's the time that it starts to swing out. If you had a crystal ball and are looking ahead, what do you think is going to look different in the next five or 10 years? Or do you even dare to make predictions I don't like?

I know because then it'll flash up in 10 years time and somebody be doing it. And here's what you said.

Yes, nothing good ever comes from nothing good.

Absolutely. But I do think there'll be some themes. Right. I think we will become much more agile and adaptable in terms of the way that we're working with things. I think we're starting to see the shift with alternate legal service providers in particular where they have typically just taken that work away and just done it. Right. We're now back in questioning, but is that still the right way to do it? Can we move some of that back to our gsc? Is that our service center's job that we can now start to do? So their role's almost starting to change where they can now take work for a bit and then bring it back in once it's set up. Or they could help us to transition that work. They could be a bit more consulting in terms of their services that they provide to us. We will become much more cost aware and we will make much more decisions around that. We're getting a better feel for how much it costs us to do things internally. We never had great transparency around that before. As we start to move away from the hourly rate and put more of our alternate fee arrangements and effective fee arrangements in place, we're building up a powerful data set that will help us to steer what we're doing and that will be what we do going forward. We will think about what, where the cheapest place is for this work to be and who is the right person therefore to be doing it. And that could be technology. That could be our service center, it could be our lawyers, it could be our law firms, it could be our alternate legal service providers. Now certainly we've been on a journey with our external work where we've been tendering it all. We have been pushing to get EFAs in place. I've now got nearly two years worth of data that tells me what I should be paying for different types of work that is no longer linked to the hourly rate. We're seeing plenty of other platforms out there that are generating this information or capturing this information across the industry. It's not a far stretch of the imagination where we have got an identified piece of work. We can just load it up into a tool and it tells us what we can expect to pay. It could probably even tell us where the cheapest place is for that to be done, whether it's internally or whether it's an external law firm. And it would probably tell us the three law firms that we'd like to approach and probably tell us what they're likely to charge us all without us having sent that work anywhere, just because we've got far more data around, what it costs to get things done. So that I think in terms of. I can't quite predict the future, but I think that will be one of the key things that we will use to make decisions, and we will be much more agile in terms of our approach so that we can make sure that we are pulling the right lever to send that work to the right place at the right price, whatever or whoever that may be.

So that makes so much sense, Chris. And, you know, I've been on the. The client side for many years as well, and that resonates really well. Now that I'm on the firm side, though, and I saw it on both sides, it's still a struggle to get clients to be comfortable with an alternative fee. I actually think that the firms are more comfortable with kind of offering something, but then the clients come back and say, okay, that's your fixed fee, but let's make it a cap so that I don't take on any risk. And if it comes in under, I win, and if it goes to the cap, I win. And is that really fair? Is that the right way to think about it? Like, how do we encourage clients to get comfortable with sharing some risk?

It's a massive issue. And again, I've just done a deep dive. We've put a pressure on all of our firms to move to EFAs. We're two years in. I asked all our firms to come back to efa. Sorry. An effective fee arrangement. So we've dialled up from the afa. So not just an alternative, one that's truly effective and doesn't have the hourly rate sat at the back of it.

Right.

I've got a GC that likes to be out there. And he is, he totally is. So we always like to be at the forefront. So anything that's got even smells like the hourly rate will not be classified as an EFA or an effective fee arrangement. So a capped fee, for example, would not sit within the realms of an efa. So as we've done the deep dive back into our firms and they've told me about their journey, the biggest problem now is our lawyers in terms of going, picking up the phone and going, but tell me what's on the clock and then fine, that's it. But can you tell me what that would cost on the hourly rate? There is this challenge where they just won't let go. I do get it right if I think about the narrative that we have and you'll be familiar with this, where our lawyers have their hands in the bank's pocket, they have to be on top of what they are spending and be very alive to that fact that they are accountable for it. They're setting what that is and they need to actively monitor it. They're defaulting to type, which is all they've ever been trained, which is to the number that they know, which is based on that hour. We've got to get to that point where it is pricing on the output. Are we agreed? That is the output that we're going to achieve and this is the right price for that output. There's no trade offs on the other side of it. We accept that's where it's going to go. And actually what we get that's more powerful than anything else is cost certainty. That's when we start to be in the right place. We have got that acceptance that sometimes we will win, sometimes we will lose, but on the whole we'll come out with the right outcome and that's ultimately where we need to get to. I'm having to pivot now. Having spent a year and a half, two years having this narrative with our law firms, I now need to take it back to our lawyers again. There's big wins in it for them too. If we agree on those EFAs or we get those AFA prices at the outset, you don't have to go through lines, but then invoice right. You don't have to go back and have those awkward conversations and try to challenge and get write offs in place. We just pay. You say we pay, that's where we need to get to. But there's a lot of ingrained behavior that really challenges. And the other piece from the law firm perspective as well is they aren't applying it consistently to all of their clients. We, as clients of firms need to come en masse and say we accept, right? This is it, we're all in. This is the way it's going to be going forward. There is bits on both sides, but that comfort level, and certainly a bit that I hadn't appreciated as much is the work that we need to do with our in house team to get them also comfortable with just one single number without having to dig into it and without having to ask for line by line items on the other side.

Yeah. Okay, so a couple questions. One, that cost predictability, how important is that to you as a consumer of legal services?

I mean, look, ultimately, and I change it slightly, it's cost certainty that matters, right? That is the piece that we're hauled over the coals for when it comes to year end. We can't be in a situation where we have been buffering all of our budgets because we don't quite know which way it's going to go and we suddenly release millions back into the bank's pocket at the end of the year. Our CFO is not going to be a happy person, our shareholders aren't going to be happy people. That is money that could have been invested elsewhere within the bank to grow, to build, to scale, to do whatever else we needed to do, and we've held onto it. So being able to get that cost certainty is the most powerful thing. So that when we at least come to managing our budgets, putting forecasts in place for the next year and signing off on budgets at the end of the year, we end exactly where we said we would, that becomes far more powerful than necessarily thinking about getting costs down and reducing them. So it is that cost certainty which then does lead onto that predictability piece in terms of, that's more around the management of the matters. So that if we have got things that are going wrong, we're putting our hands up to it quickly, we're identifying it, we're flagging it, we're dealing with it and we're thinking about what that then looks like in terms of resetting expectations, putting in place a new afa, better managing those costs, it becomes that cost management piece that matters. So it is, it's the cost certainty overrides everything else with the predictability helping us to get there.

Okay, and what kind of fee structures are you seeing in your world that are working for you?

Everything and anything. It seems to be that we've gone on a real Journey. And look, fixed fees is where we end up defaulting to. It seems to be where everybody gets comfortable with quite quickly. They're used to those. We've had capped fees become fixed fees just because we're told not to get there. They're not their hourly rate, just change the name is what we've done to a certain extent. But we are now starting to see some of the stuff that will be more linked to success. So starting to think about success fees, even looking if we're driving saves. So linking what we're paying to the saves that we could potentially get across those different matters. There is a new intellect coming to the table. People are definitely going to getting more comfortable with thinking about how we price based on that output piece or thinking about the other metrics that could help to derive what could be a nice number around those EFAs. We are still wedded too and we get comfort with the fixed fee. But there's some interesting things starting to come to the table.

I like the fixed fee. I mean, I think that's probably the way of the future. Are you guys as a client asking for shadow bills? In other words, for those who aren't familiar, like what would this have cost or how many hours have been incurred against this fixed fee so that the the client can see if they're getting a good deal?

Essentially we're tapering away from it is the words that I would use. It's fundamental to us being able to do is build up trust. And I think that's the biggest piece. Right. And that's why we spend a lot of time building out our relationships with our law firms. Because we have to get that trust in place so that we can be on an even playing field when it comes to managing all of these things so that we can get comfortable with those fixed fees, that we can get comfortable with the numbers that we're being given. And it has been a journey. Right. When we start to have a conversation with a firm around EFAS where we've not had that conversation before, we will want to understand their methodology. So what is it that's getting them to the numbers? And that's where we might start to ask for more detail that sits behind that number. Inevitably, in the first round of us asking that question, it is the hours and the hour prediction that gets put in front of us. As that dialogue matures over time, we start to shift away from that. Certainly again in the early days we will get shadow billing on the other side so we can start to build up our Comfort again, around that EFA being in the right place. But we shouldn't be doing that a year. We shouldn't be doing that six months down the line, let alone a year down the line. Once we've got to that point where we know that we are able to trust each other in terms of the numbers that are being put forward, we should completely pull back on the shadow billing. We should just have one invoice, single line item. There it is, back to you. Say we pay, we're done.

Is there any other basis for coming up with the fixed fee that you've heard of than historic billable hour?

I have had some very interesting conversations where we do now start to talk about the base costs for an organization. They don't share everything with me all the time. But the analogy I've used with firms up until now is it's a very London analogy where we've got the East End of London. It's where all the markets are. You'll go and you'll trade and do all the rest of it. There's a stall that will sell you everything from socks to knockoff liquor. You don't ask where it's come from. But I can guarantee that whoever is behind that stall know completely what their costs are. Right. They know their cost. They know for each item that's on their stall, what they need to charge to make a profit. They know their higher end and they know their absolute bottom cutoff. Yep. So that's what our law firms need to do. Right. You need to understand around that pure cost base, particularly as you start to use technology in there as well. That's what you need to think about in terms of therefore identifying what you should be charging on the other side of it. And I'm very happy to have a conversation around profitability completely and particularly on some matters, you know, having that risk conversation on the side of that as well, to then start to think about what outcomes you want to deliver, particularly around litigation. What is it you want to achieve? What is your risk appetite here? Other analogy that I've started to use to articulate around it is you used to get to the airport and you would jump in a cab, watch the meter run and get to wherever you were going and you'd pay it. And you hadn't thought about what was the quickest route to get. You might have got stuck with a traffic jam somewhere along the line, but you just had to go. You would have, in your mind, probably going to be about 80 quid. You'd get there, it'd inevitably be 120 and you'd have to have a bit of a haggle around it. You get somewhere, those days are gone. You now are at the airport, you fire up your app, you go, I could get a bike, I could get a comfort cab that's probably got half eaten sandwich in the back of it, but it'll be all right. I could get the exact one that's got a nice glass of water or I could get a helicopter, right? You've got all these options and you've got all the prices that are attached to them and you then think, what do I want to do? Do I want to get to my destination, possibly caught in the rain on the bike? No, I don't. But it's just work. I don't mind the half eaten sandwich. I'll jump in the comfort cab or I've got an interview, I need to get there, I've got to get there on time. And they've got a glass of water, they've got a bottle of water in it. I'm going to do that. I've weighed up the risk, I've looked at what outcome I want to get and I therefore paid what I think I would be willing to pay for the outcome that I get on the other side of it. Law's no different. We've been having black or yellow cabs running around town. Whichever country you are in with meters just running, we now have the choice over what cab we want to get in, whether we want to stay dry or wet, whether we want to sit in a half eaten sandwich. We can make those decisions up front with fully understanding what those prices are going to be. It's what we need to do.

For legal, it's such an interesting analogy because if you think back, if you get into an Uber or whatever you get into now and you choose, there isn't a trust issue. They're going to get you there and they're going to try and get you there as fast as they can. And you like, Totally. In the old days, you get in a cab in a city you don't know and you're a little worried that you're being taken for a ride and the meter's going on and you never.

Saw the cab driver again. He was gone.

That's right.

Now I can do feedback now. I can tell you whether I like them or not.

And the interesting point is that you mentioned it's trust.

It's totally trust.

I think that's where we're lacking in the ability to move Forward between the clients and the law firms right now. Clients have been engaging consulting services for as long as they've been engaging with law firms consulting services as I. And you have hired them before. Tell you, here's our team, here's how we're going to staff it. Here's the fixed fee, this is the six week timeline, when we'll deliver it, here's what we'll deliver over those six weeks. Sound good?

Yep. Off we go.

And off you go. And there's. If things go off the wires, you have a conversation and you re scope it.

You re scope totally.

For some reason when you bring up that model in legal services, everyone's like whoa, whoa, whoa, whoa.

Yeah.

What is really going. Why are you saying this number? There is a level of trust that we have to establish.

Yes. And that's where relationship really does become a key part. And look, some lawyers are great at it, some lawyers are horrendous at it. Some senior partners, senior relationship partners are great at it. Some senior relationship partners are horrendous at it. But it is being able to carve out the time to at the very least talk about what expectations are, talk about how we're going to measure performance, bet those expectations and maintain a dialogue around those. If one of those expectations is around pricing, then that becomes a narrative that you're able to have a very constructive two way conversation around which you keep on having. You do it for the matters. You do it across the scope of all the work that you're doing across an organization. You put it at the heart of that engagement. Make people comfortable, build up like you say, the trust.

Yeah. So what advice would you give? Let's start with the in house clients. In order for them to trust this process, not ask for the shadow bills, not continue to question if they're getting a good deal even within your own many companies that you've worked for.

Yeah. Here's the thing that we need to change a mindset of. Right. Moving to doing all the work upfront. Right. It is those initial conversations that help to get that lock in in terms of what we're trying to achieve. So specifically when we are going out to instruct. And I'm seeing benefits of us having our tendering process in place right now. It's making sure that we're putting enough on the table that means either side is getting comfortable with the numbers that are being put on the table. So we are getting better at scoping our matters as we go through this exercise which gives comfort therefore that we're getting the right answers from our law firms. And the law firms are getting more comfortable around the numbers that they're putting. Putting on the table. And because we're going through that competitive tender process where actually, and because of some of the tools that we're using, it helps to make it a better dialogue because you're bringing more to the table in terms of that comparison where you're bringing three or four different firms into tender for that work because the scoping is better, you're getting much richer information that is coming back through that tender process, which could. I mean, in some respects, what you'll see is suddenly one law firm will come up with something that nobody else has. And you're just like, you get this right, you've taken it to the next level that we didn't even see next. As they start to put those numbers around it, that's where that comfort then starts to build because you've had that dialogue and that narrative that says, here's what we think the problem is the back and forth around here's what we think you're talking about to then come to. Here's what we're actually going to be doing. And that locks in the number. You get much more comfortable having then the process, once that matter becomes live, particularly on the litigation, having the ability to put the hand up and go, material deviation is coming. Right. And we will have that at the scoping stage where this could go any which way, which ways could it go and what do they look like? I don't need the exact number, but you can tell me super expensive, kind of expensive incremental on where we are right now. And let's put those on the table at the outset so that when we get a sniff and again an alarm bell about those things starting to go in a different direction, we immediately have that conversation around what that is going to do to the price. So again, when we get to the end, we can just be. We pay. We've talked about it all the way through because it's changed. It's not you going, the meter went up. Suddenly we overran. We've got cost overrun we weren't expecting. We flagged it at the right point. That gets us to that point on both sides of just building up the trust, but also getting comfortable with the numbers that are being put on the table. So front loading. And it feels like a lot of effort. Yes, it does. But it's far easier to do that than tearing apart bills at the end of the matter, be it six months, a year, two Years down the line, whatever it ends up being, it's far easier to do those conversations up front, even though a bit more laborious. So I think the big bit is front loading. Right. It really is having that conversation at the outset that will get us comfortable with those numbers that we start to talk through.

You think about analogies to other industries where it is also unpredictable. The building of a house or housing renovation is always the classic example where, you know, the construction folks say, we don't know what's underneath the hood here. And so here's what we think. And if it's different when they pull up the rug and everything's molded and the foundation's falling apart, you're going to have a conversation about that and get to a new scope and a new price. So, yes, the price is higher than you thought, but things changed.

Yeah. And look, within legal, we do have that benefit of being able to know and have a feel for how things have gone previously. Right. So that conversation is, well, we could lift up the rug and we could see this, in which case it's probably going to be that, or we could lift up the rug and see this, and that's going to take us down this path and it's probably going to cost you this much. So at least we're starting to put things around it as we get better at our data. And this is a conversation I've had in the last week, which got me really quite excited, is we should be able to, if we're managing our costs effectively and we are forecasting and budgeting correctly and monitoring what's being charged and the invoices that are coming through, we should be able to set markers on matters that would flag where something's starting to go wrong. Like an early warning system.

That's right.

That goes. This is starting to map in the way that horrendous matter did last year, which went off by 2 million. Those indicators are showing now. Let's have that conversation up front. So if we're not thinking about it, we should, from a systems perspective, also be able to start to get to that point where it's a time to have a chat. The red light showing. Right, Right again. Data tech. We'll get there.

Yeah. So now I guess my question for you is the flip side, which is the advice for firms. If I think back to my early days at Google and trying to negotiate with firms, we are a young company. Right. This is the first time we ever faced patent litigation. It was the first time we dealt with antitrust issues. The first time we did M and A. First time we had to file a bunch of patents. So we were flying blind like we didn't know what these things should cost. And we're asking our firms. And now that I'm again on firm side for the second time, I'm looking at us and going, there's no excuse the firm. As I said when I was at Google, you guys do this all day long. Why we're hiring you, you are the experts. Day in and day out, you're doing the same work that I'm asking you to do. It is unacceptable for you to come back and tell me you have no idea what would happen and you have no idea which way things could go and you have no idea what things should cost. That's not acceptable anymore. Especially in this day and age with how much data we can gather. We may not have been structuring it and gathering it correctly or using it effectively, but now we can, we can that way.

And that's the bit where it does frustrate me with firms because they have so much data to six minute increments.

That's right.

Right. There is, there is no excuse now. And we do see data analysts coming in that are all over it. It's still not converting into the right conversations on the other side.

That's right.

And they're sat on all the power. Right. You do have all this information. That should be the core part of the dialogue that you are having with your client. It's not the talking about the experience of the matters that you've done, where it's been something that was similar like this before. And we did this kind of great. I'm really. What did you charge? I'm really happy. You did it before. What did you charge? What did you learn from it? What would you do differently in terms of that whole approach to that matter that would change your engagement and change the way that you would look at that price. You should be able to lock it in. We're going to be in a stronger position. I think this is what firms need to think about is again, as we're using tools to start to gather our information. For example, if we are using an RFP platform or we're using a tendering platform for our new matters, we're not the only ones using that platform. As they start to put taxonomies in place, that means we're able to compare our matters to another bank's matters, to somebody else in the industry's matters. We'll start to develop benchmarking information that tells us exactly that bit of what we could, should, would be paying. So I'm saying it before it gives us the ability to really assess the information that we're getting, the quotes that are coming through from our firms, probably to a greater extent with more depth than some of the firms. Because you have your view, right. You know what you've done over the years. You don't necessarily know what your competitors have been doing. We'll start to see that information. So the only way you're going to get ahead of that is by knowing yourselves better than we know you, which is that bit of what can you do with that huge powerhouse of information that you're sat on right now to be able to really guide how you price and how you bring your clients to the table in terms of we are going to charge you what you should be paying, we're still going to maintain profitability, you're going to pay no more than what we say. We're all going to come out of this in a happy place.

Yeah.

But do that analysis around what is the most powerful data set there is in the legal industry, which is six minutes increments.

That's right.

Thing that has been done since the day you opened your doors.

And then it starts to get even more interesting. Right. Because if we level the playing field and there's so much transparency about what something should cost. Now you get to the question of what is the value that you're delivering. And going back to your transportation analogy, you get everything from a bicycle to a helicopter, you get from A to B in a different way. And so what is the value that the client is looking for when you're thinking about a partner, when you're thinking about how do you want the work delivered, how do firms start to differentiate themselves and what is important to the client?

Yeah. And it will be those bits where I do want the helicopter. I'm absolutely. So who's got the helicopter? Which of you has got the helicopter that's going to take me there? That's where it's going to start to be. And it comes back to that. Law firms like to think that they're very unique and individual. And yes, you are and you can be, but you're all interchangeable. And if you want any evidence of that is watching entire teams move between law firms. Right. We just up and they will go. The service delivery is what's going to be the bit that changes the game. And it is that pricing side of those things that will be what really matters. So are you going to be the one that offers just helicopters, or are you going to give a full suite? And back to what you were saying about consultants before. You know, if things are changing and you put it on the table and go, here's what we're going to charge you, and delivery will be in two months. And we go, we want one month. We need one month.

That's right.

They will come back and they will go, fine, but here's the premium that's. That's going to cost you because I'm going to have to bring more headcount in or whatever else it's going to have to be. That's the conversation I want to have. Right. That is absolutely where we need to get to, to be able to really articulate what we want, what we think it's worth, and then ultimately pay.

Yeah. So my perspective and interesting. I was at a meetup or conference last week with a bunch of other law firm executives and leaders, and some of the clients that were speaking said, hey, look, we used to have panels of hundreds of firms, and now the model is shifting. Whereas, you know, I think the thought was, let's keep firms competitive, let's hit them against each other. Now, the idea is, look, I want a firm to know us inside and out. Right. And be able to deliver, like we were saying, a lot more value than just point A to point B. Yeah. And to do that, we need less firms who intimately know us better. Is that what you're seeing in the industry? Is that how you're thinking about it?

Oh, without a shadow of a doubt. I mean, even just from a pure economics perspective, my commercial leverage will increase if I'm focused on a smaller number of firms right now. And we're still on our journey of decreasing the number of firms that we've got the ability to use. I'm scattering my power far too broadly across a number of firms who are getting enough to get by. There's definitely a return on that time, but I can't really put the pressure on to really get what I want to get from our law firms. If I'm focusing that spend with a smaller group, it gets really interesting. Particularly if you've got things like rebate models in place where you've got money coming back based on levels of spend or access to secondes or whatever else. It's in my interest to focus that on a smaller group. You're absolutely right. The real key and the bit that all of that should be driven by is the deeper relationships. I'm far better off by having Firms that know us inside out, backwards, forwards, that don't just come with, there's been a regulatory change. Here's what it means to the banking industry that come in and go, there's been a regulatory change. Here's what it means for you, hsbc. And actually knowing you and how you're doing things at the moment, you need to change this or you need to think about doing that. By the way, this piece of technology that we've been working on with another client for the last couple of years would be really useful for you to use over there. And let me help you with that, because here's a second day that I know can help to deliver this change. And let's have them in for kind of six months. And by the way, I know there's another matter that you're doing with somebody else at the moment, but make sure you're thinking about this whilst approaching that. And if you've got anything else, come to us already, that's a different conversation. And that's just from knowing us that little bit better and being. That's right, more embedded. And I can't run relationships with one and a half thousand firms. Even running them with a kind of top 20, top 30 is challenging. And there's a whole lot of other firms that are also out there that haven't been given a good shot at being able to prove what they can do. So moving to a much more agile approach, not having to deal with panel refreshes every two, three years, forgetting about going through rate reviews because everything's over on an effective fee arrangement anyway, but assessing that effectively, but putting in place, most importantly, the structure to fully assess how you're working with law firms, getting feedback and putting that as part of the conversation allows you to control and manage that in a better way. So reducing and deepening those relationships are ultimately beneficial for all of us that are involved. But I just don't know how you could carry on without really focusing on doing that, particularly if you want to get commercial leverage.

Yeah, so that's my sense too, and what I've been trying to coach folks on here. What would you say to the partners who push back a little and say, look, I don't want them to feel like they're in a commercial relationship, so I'm calling and telling them to hire me to do more business. They know that I'm here, they know that I'm good and they can just call me when they need me. That's.

That is the default. It's being front of mind for the client. Right. I see much more coming from and give you some examples around it. So I had a change of relationship partner. So one of our law firms changed their relationship partner partner. They brought over somebody that I'd worked with previously that had worked with my GC and a number of other lawyers in another organization. And they're like, it makes sense for us to now change this person so that you've now got someone that knows certainly that team and what your ambitions are when it comes to panel. We want to bring them in first thing that they said, I don't know the rest of the team. I know you guys. I don't know the rest of the team. Can I just come and spend a day in your function and just get to know people? Just give me a desk if there's other stuff that's going on at the time that would be really useful. And they came. This is a really, a really nice ask, a really good thing to do. I thought. I've never heard anybody ask me to do it before. They came and sat for a day. They came on a day when we had one of our town halls. So they got to come to the town hall. They got to meet our GC and have 5 minutes, 10 minutes. They also heard about our strategy straight from the GC's mouth. They sat on the floor. We'd arranged a couple of meetings with with some of our EXCO members but importantly with some of our instructing lawyers who aren't all our senior GCs across the function. Right. There are other lawyers that do the instruction and just got to know everyone. They came out of that with so much in terms of a list of things to then do. They're like, we're going to put a seconde into your employment team who's going to help you straight away. I can see already those issues over there. We're going to do a little something over here. I heard a problem that was going on with this team over here. I've hooked them up with one of our other. Honestly, it's a list as long as your arm that just came out of someone saying I just want to get to know you. Can I just come and spend a day? And it is that bit of you don't know what you're going to hear, what you're going to do or what is going on conversation wise on that given day when you get in touch. There is a serendipity to a lot of these things where you just do that call and somebody will go, oh my God, I Was just thinking about an issue and I didn't even think of you. But you've just called me and you're the perfect person to help me with this. Yes, it happens time and time again. You're never going to do wrong by getting in touch. I've said to a lot of our firms on the relationship perspective, we do quarterly meetings with all of our firms. And I say to all of them, just because we do the quarterly meetings doesn't mean you can't get in touch with me in between.

That's right.

You want to drive change and you want to do stuff. Actually, what matters is the dialogue that we have in between our meetings. And I wished more of them took me up on that opportunity because I have the capacity, I have the willingness, I have the desire, and I have the team. And we will move forward with it. Those that do that inevitably do move forward and get a deeper relationship than those that kind of step back. You do have to be in it, on it and around it. And you just don't know which one of those conversations will lead to something else. If you're not having them, it's not going to go anywhere.

That's right. That's right. So I'll give you an example on the flip side. We had a couple secundis when I was on the in house side. And when they finished, I was very eager to talk to our relationship partner in the secundis and say, all right, you've been inside. Tell me what we can be doing better. Tell me where we're not doing well as a client. What did you learn about our attorneys? And they came back and said, you guys are great. You have such interesting issues. Everyone's an amazing attorney, that's it for six months to a year, and you have nothing to tell, Nothing. Ask for more work. Tell me something that is going wrong, that you guys can help us do better. And there was nothing but compliments.

And I thought, it's no good, it doesn't help. Compliments are lovely. Right. But what are we going to change? What are we actually going to change? And seconde is a really interesting one where I've only ever had it once, where one of our law firms had listened and really understood the value of a seconde. And our first quarterly relationship meeting after that, seconde had gone back to the firm. The second was sat at the table and gave us a full download. And we created trust within that environment so we could say everything. And they gave us positive and negative and talked about opportunities. And that seconde Stayed on the relationship team for the next year because they really saw the leverage and the opportunity that was there. And someone that knows the team so well, like secondes, go back in and it's never talked about again. But you just missed the biggest gift horse that there could possibly be, and there has to be. If a law firm is not thinking about placing a second D and thinking about the return on that investment, whatever that looks like. Return on investment doesn't have to be the next five matters, right? It could be invited to the next three matters. It could be the feedback, the inner workings, the ability to say their playbooks aren't good. Can we go in and just do them for them, whatever it is? Right. You've got to have that secondee coming. They're going out on a mission. Come back in with results and deliveries. Right? Make the most of every single one of those.

Yeah, that's great, Chris. This has been such a fun conversation. I feel like we could go on for hours. I'm going to ask you a final question that I get asked a lot, which is, given that you are so passionate about this and you really. I feel like you're on a mission to change the world, as I feel like my work is not done. When do you feel like you will win in what you want to do in this space?

The day that we've killed the hourly rate once and for all is probably the one that will bring so many things to the table because it will mean we've got technology sorted out. It will mean we've got trusted relationships going on. I fear it's not going to happen in my life.

Do you think the billable hour will ever go away? I mean, I think we'll need it in some capacity.

It's always going to be in there in some capacity, but it won't be the first thing that we talk about, Right? It won't. Will not be the first thing that we talk about. We will stop doing rate reviews because firms will care less about them and I will stop asking for them. That's what will start to change the fact that I've already got firms that are coming out and saying, for the next panel, period, we're not going to put a rate in place. We're going to commit instead to putting everything on an efa, to having the dialogue and having the conversation. I definitely feel like I've worked. I wish there's more of them, but there was enough in there that I feel like that's been a dramatic win. Right. We've changed the narrative and we're willing to go over the next kind of six months to a year finding out what that feels like. Right. We don't know it's right, but we'll get there. That is when we stop having that conversation. We stop going through write offs, we stop going through line item reviews, we stop going through shadow billing. That's when we've really had a win. And the other bit with technology, of course, I'm so passionate about it and I just see there's so many blockers in the way that stops, particularly us from using the technology in a bank, in a heavily regulated industry, data and parsing of data is. We're all over it. And we stop the innovation from happening when we find out a way. Because ultimately it's us that prevent you from innovating. Because of the restrictions that we place on our law firms through all our MSAs and our contracts we have in place with you, we restrict it. When we can come to a sensible position where we as an industry get together and go, this is the standard, this is what's acceptable. Because you're going to have to deal with not just my requirements. You've got another bank and another bank and they're all slightly different. We're stifling it. So I think there's also something in them and it's the bigger one that I've been talking about just as long as everything else. And I don't quite know how we get there, but I feel like the answer's there somewhere. But that will also help us to unlock real change within the industry. So it's those two things. Let's see if I'm still around when we get there.

I'm inspired from this conversation, so let's go get them.

Let's make it happen. Mary, you and I can.

We will, we will, we will. Great conversation, Chris. Thank you.

I've loved it.

Thank you and really enjoyed it. Thanks for listening. We'll check in with you, Chris, next time.