#84 - Resetting the Relationship with Outside Counsel

People process data, tech in that order. Tech is the enabler. We shouldn't lead with that. I fear there's a bit of that happening with AI at the moment as well. It might be evolution, it won't be revolution. As a profession, we're nearing the edge of a thief. There is a narrow bridge we can take to go to the other side, but most people are getting closer and closer to the edge and not taking action.

Hello everyone and welcome to Pearls on Gloves Off. I'm your host Mary o', Carroll, Chief Operating Officer at Goodwin. Today I'm speaking with yet another dear old friend and someone who's been at the forefront of transforming how legal teams operate and collaborate. I'm delighted to be hosting Stephanie Hammond, Global Head of Legal External Engagement at hsbc. Stephanie has built a career on helping legal functions run like high performing businesses and she's done it across the uk, Europe and Asia Pacific. She led the award winning legal ops team at Barclays, helped launch Norton Rose Fulbright's legal operations consulting practice, and now at hsbc she's shaping how how one of the world's largest banks engages with its external partners and the broader legal ecosystem. In our conversation today we go deep into what external engagement really means and why it's an emerging strategic focus area for large legal departments. How Stephanie is rethinking the law firm panel model, moving away from transactional relationships towards true partnership, collaboration and mutual accountability. We talk about the evolving role of in house legal teams and how to balance innovation, cost and risk while maintaining strong relationships with law firms and service providers. The mindset shift needed to drive transformation from operational efficiency to cultural change and what she's learned leading major programs inside global organizations. Finally, we touch on how technology, data and transparency are changing how we measure value, build trust and deliver impact across this entire legal ecosystem. What I love most about Stephanie is her practical optimism. She doesn't just talk about transformation and innovation as a buzzword, but rather she makes it approachable, actionable and realistic. She thinks about progress over perfection and finding ways to make the system work better for everyone in it. So settle in and join me for a smart, insightful conversation about the future of legal services delivery and the power.

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Hi Stephanie.

Hi Mary. Nice to be with you. In London.

Yeah. Thanks so much for taking the time to come to our offices today. I rarely get to do the podcast in person and so it is nice to have a face to face conversation with you.

It is nice as well. It's not that often you're over that.

You've been at your new role at HSBC for two months now.

Yeah. Week eight. Week eight.

And what your role is what Legal ops and outside counsel management and yes and no.

You know it's one of the things where things evolve from the get go. Your job description is almost out of date from when I were in so I initially joined to be what is called the head of legal market engagement. So if you think of in house and how they look at their financial and their budget, you've got the internal cost. They have to and then you've got the external spend that is with the entire ecosystem. We've got great people, business manager, CEO, Chief administrative Officer looking at the internal cost. My goal is to look at what are we doing with that money we're spending externally. Do we have the right type of partners? Law firm, lsp, other. How are we leveraging this relationship? Are we really getting them to act as true extension of their. So that's really interesting. Day one, about an hour into the job I was told about a reorg internally. So now I'm going to do that for legal which is about 600 vendors in total but also for what we call PGMC people, governance and communication. So it's a nice testament to how the team legal has been approaching it. The model works and the bank likes it so they want to now pilot it into a broader area.

Okay.

Which has 1800 vendors so I'll be looking after all of that. Okay.

And you have just recently come from the vendor side. Right. So tell us a little bit about your role that you had at Norton Road.

Gatekeeper turned poacher a couple of times around. I started my career on the private practice side for 15 years. Different law firm, different part of the globe. Moved hen house at Barclays for a few years doing similar things around the ecosystem and then realized that every in house team is struggling with the same challenges, facing the same transformation requirement. Not everybody can hire a large team to do it. So I decided to set up a consulting practice for six years. I set up and run a legal operations consulting practice within a law firm but it was fully fearning really to accompany and support in our team on their own journey. So anything from strategies through to people process data and tech. I've therefore seen it from pretty much all sides in the industry now, except tech I guess, and back on the client side now.

And so even as a consultant you saw a lot of different organizations where they were in their departmental journeys, life cycle, maturity of assessing, you know, how they're set up, how they're using technology, outside counsel, has it changed over time or what are some of the big themes you saw?

It was fascinating because the smallest client we worked with had one lawyer and it was a company that wanted to get ready for ipo. So it was maybe about time they got a lawyer involved all the way to large organization with 13, 1400 lawyers, everything in between, across sector, but also across jurisdiction. That is one of the beauty about legal ops. It is not jurisdiction bound. And as a team we ended up working with clients in Japan, in Australia, in New Zealand, in Hong Kong, punched into Europe, the uk, some in the us, even Canada, Africa. Fascinating. Often I was asked what is your typical client? Is there a profile, is there something in particular? I have to say it's always down to the leadership. It was really down to the vision of the GC and how she or he wanted to have their function position and what they wanted to do with that role. You could tell a real difference between the one that really wanted to have a seat at the table B that true strategic business partner to their organization really being a strategic enabler and not just a risk manager. And that was very much a common theme in a lot of pitfalls, very common. People jump to the tech, they go for the tool, they think it's going to solve everything and then they backtrack or they're disappointed because it's not solving the problem. It's not the silver bullet they were hoping for. And that's why, you know, we talk about people process, data, tech in that order. Tech is the enabler, we shouldn't lead with that. I fear there's a bit of that happening with AI at the moment as well. Everyone really keen to onboard new tools. But if you haven't re engineered your processes, if you haven't upskilled your lawyer, it's not going to give you the change you want. It might be evolution, it won't be revolution.

Yeah. And were most of the clients that were hiring you, were they clear on what their root cause problem was that they wanted to solve for that they wanted technology to come and fix?

I think it's fair to say there's a big spectrum of clients, like there are big spectrum of law firms and some that are maybe more educated than others. Often the reality is the same amount of pressure and they need to be able to change something quickly because there's a massive workload.

Just do more, do more.

Yeah, it's, you know, the demand of legal services is not. Yeah. And it's increasing, it's increasing. There's new risk, there's, you know, a number of them would say to me, they now have to operate at 80% capacity for BAU to be able to have that flex capability for new things coming. You know, whether it's Covid, whether it's conflict in Ukraine, whether it's any of the things coming that suddenly massive, you have to absorb and you're not set up to do it. Yeah. And often, indeed, a lot of part of our rule was to say, hold on a second, you come to us because you say you want an intake tool or you want a contract management tool. Can we back up a moment? You come to us and already made your decision. Could we spend even just one hour validating this is the right problem. You're trying to Sol. And more often than not, it wasn't. It's just that. And it's a very human being thing. Right. You know what you know and you don't know what you don't know. So when you're faced with a problem, you can only conceive a solution within the realm of what you know. Yeah. A lot of lawyers will have heard about CLM tool because there's been the talk of the industry for a decade or more. So they think it's going to solve the problem or they think they understand what an intake tool does and say, oh, that's my solution. So they're jumping straight to it. Part of our role was around doing that education and, well, let's go back to basics. Let's understand what are the pain points, what is a problem you're trying to solve. And what I find fascinating in an industry that is based on words is how we speak the same language, we use the same words, but we have very different meaning for what they are. You know, the number of clients we would say, or even lawyers on the private practice will keep telling you about a knowledge management system or a clm. And like, okay, in your mind, what does a tool do? What do you expect it to do? And then you realize that's not it, that's not it. So a lot of the rule, it sounds simple, but it was really around almost translating and articulating and validating.

Absolutely. Knowledge management and matter management were always the ones that I was like, what do you mean a knowledge management system? Yeah. What are the best ones out there? I don't know what you mean by that. And sometimes they just meant like the intranet site.

Sometimes it's just a place to store the document systems.

Yeah.

Like. Okay, and it's fine because that's what you hear. Right. I strongly believe in diversity and if anything else, diversity of skill set. Because the problems we're trying to solve are more and more complex and the times where one person could find the solution all by themselves are gone. You need that diversity of perspective and skill set to come to the right solution. Lawyers usually, and I was discussing with Professor Dan Enter last night around education in the legal system. Lawyers are only trend about the black letter of the law. You can't expect them to therefore know much about business management. And it's actually really interesting to me to see that hasn't evolved much because we're talking about AI and tech. But you could be saying the same thing around financial literacy, basic accounting and economics, stakeholder management, communication, people management. You know, everybody that goes through law school eventually will have to have some sort of business acumen because they're either going to run their own small practice, they're going to join a bigger firm, they're going to join a big corporate. You need to understand how these things work. There should be a level, a basic level of understanding of this.

That's right, but it's not really taught, I don't think.

Yeah, not that I know of.

Right, right, right.

Okay.

So, so many general counsel legal leaders are trying to establish a robust legal ops function. Many of them now, like you mentioned, have more options than just hiring a legal ops person. There's consulting firms, there's fractional sort of legal ops people. What do you think is the right route? You know, when is the consultant the right thing versus hiring someone?

Well, first I think, and maybe you'll disagree with me, but I think legal ops is a mindset rather than necessarily a role in itself.

Okay.

And by that I mean thinking about what is a role you want your legal function to do and how you can perform it. It's about having the right approach to solving a problem or a situation. It'd be awesome if every single team could have a dedicated legal ops person. But even when you start decomposing legal ops, it's so many different rules potentially. And I've seen many people trying to find the one legal ops person that is the jack of all trades.

Yeah, doesn't exist.

It doesn't exist. Oh, and if that could be cheap as well. And if they could also be a.

Qualified lawyer and have 20 years of experience doing this at various companies in the same industry.

Exactly. So it is really complicated. And that for me was one of the premises of building my business is to say it's not one person you would need in an ideal world you need a combination of skill sets. You can't find that in one person and therefore you either start with a very clear area you want to make improvement in or you're big enough to be able to hire an entire team and have the combination. And that's probably where the consultant can become interesting is that interim phase. Because often in our team they know they've got lots to do, but it's almost too much. Where do I start? I've got all of this and this is not their skill set, it's not their expertise. Most of the time they do it side of the desk. One of the first things a consultant can help you do is create a roadmap. Help you see the wood from the tree, help you prioritize. And not just prioritize in a vacuum I should say, because there's what the legal function thing is a priority and then it's what the business expects from legal. So good engagement will involve talking to the key stakeholder of the legal function, making sure that frustration at the end where the legal function feels they've done lots, they've invested, they change things and the business is like we're not seeing the difference. So really the first part is understand what is your three years roadmap? What are the projects you need to undertake with a good mixture of long term project and quick wins, otherwise you're going to run out of steam. Some projects will take time to embed and change so you need those interim quick wins to make you feel good about it and want to keep going. And once you have the roadmap, maybe that's a point where you can hire one headcount because you know you've got an hour skill set you might need. Maybe it's about onboarding a piece of tech, maybe it's about looking at your org design, maybe it's about more of a sort of chief of staff type role. But you'll be clearer on what you're looking for.

Right?

That's probably what I would say.

Okay, so I hired your predecessor from HSBC away indeed. Created an opening there and then you have stepped into that role which is very exciting. So now with all the experience that you've had seeing every other client you know, what has it been like? What are your, you know, quick wins or quick immediate focuses? And I've got a million questions, so let's do.

There's a reason why I wanted to go back on the client side and in that particular organization. And we alluded to that when we were chatting before. You need three things, and I'm going to quote you here, you know, to make a success here, you need the leadership, you need the broader team booting, and you need capability to execute. That's not me saying it. That's Mary at hsbc. You've got that leadership where he's not just a clo, Bob Hoyt, but his entire leadership team. They're really bought in Bo, wanting to change, wanting to transform, wanted to lead the industry in where we're going and seeing there are, you know, we are the hedge of the beef we were talking about earlier. And they have a vision, and they.

Have a vision where they want to go.

Right, exactly. And you've got the broader team bought.

In, willing to take risks and change and try things and.

Yeah, and I'm hoping I'm bringing the execution capability in the mix. Having been on the consultant side, knowing the law firm side, with probably the exception of Goodwin, I think it's going to be really hard to transform the law firms. And I think it's more likely to be able to drive change on the client side. I like to be part of that movement and influence transforming where the legal function is going. And I also strongly believe that you need strong clients with a vision to help law firm change at pace.

Absolutely.

So that's why I don't need do.

Need both sides and it needs to be that trusted partnership. And you know, we've all talked about this at length. This industry is built on a structure where the clients and the law firm's incentives are not aligned. And so there's, I think, inherently some trust that gets eroded by the pricing model. But it's such an important partnership where trust is so needed. Because you're a trusted advisor, really, by definition. Right. And so having now, I mean, I think you and I uniquely have sat in both seats on the client side and the firm side. You know, what are you doing to tell your firms? How do you get them to see how important this is and what the clients want? So tell us, what does the client want?

Well, I think your point around trust first is really important. It always surprised me how we use a lot of those terms around strategic advisors, extension of the he and house team, strong relationship, and then you sit in some of those relationship meeting and you're like, you're not really having the right conversation. You're shying away from having the difficult conversation as well. Also, you know, again, like with any relationship, it's a two way street. You can't expect as a client to have your law firm, your lsp, your consultant, understand your risk appetite, understand your strategy and advise you in a commercially astute way. If you're not sharing with them where you want to go, what is the vision, how you're maybe changing yourself. And conversely, we need the law firm to come to the table with ideas and suggestions. I'll give you an example which is. And a firm that said to me we'd like to get feedback after each of our mandate with you. Sure. Why are you asking me? It's completely within your gift. Go and ask it. Actually, it should be part of the hygiene of after every single, at least major transaction that you go and ask for the feedback. I can help you if you feel maybe things haven't gone really right and you're not sure you're going to get the right or objective feedback, constructive feedback, I can step in. But why are you waiting for me to come and give you the feedback? It should be like completely within your gift. You have to come to the table.

Why wait till the end?

Yes. As well, you know, like, why are.

You not checking in along the way to make sure things are going well?

I genuinely, truly believe that we can only change this industry for the better if there is a collaboration. Yes. You know, as I said earlier, problems are complex. We can't solve it in isolation. We touched earlier and we might come back to it on the education and creation of the future talent pipeline. Not one law firm, not one in house team can solve that. Yeah.

Because the answer is not obvious. I mean, I think we know where things need to go, but how do we get there? And it needs every part of the ecosystem working together and being educated and aligned. None of us can solve it ourselves, otherwise it would have been solved by now. Because everybody recognizes there's a challenge ahead of us.

Yeah. And we're lacking this kind of forum where less talk, more action. And when we share, there's no competitive edge to be gained by just not sharing around some of the topic. It would be in everyone's benefit to try and design what that looks like with the academia, with the firm, with the elsp, with the client. And no one has the answer. But there's enough brain power in the industry that if we were to Put it together, surely we can, you know, at least take baby steps in the right direction.

And there needs to be a willingness to admit that we don't have all the answers, which is not always easy.

It's not always easy, but especially when.

You'Re presenting to a client and the client expects you to be their advisor and just say, no, thanks.

Right.

I'd like to think that these days are gone though. Right. I'd like to think people are more sophisticated and I think a client would respect much more someone who says, you know what? I don't have the answer right there and then. But I'm sure if I go back home, speak to my partner, speak to my team, we can come up with solution. I'll come back to you on that.

Or we don't know and you don't either. Wouldn't it be cool if we came together and tried to solve it?

Exactly.

Let's experiment. Let's try something crazy.

And that is a spirit of what we're going to try and do with our firms. So eight weeks in and I'm articulating at the moment, I'm going through what's called our quarterly relationship meeting. We have a number of firms that are on our global panel and we meet with them quarterly. I'm sharing with them what my roadmap is going to be. Three pillars. One is around that expansion of my role around the people, governance, communication side. Less relevant for them. Although I'm always curious to see what's happening in other industries because I think innovation isn't necessarily about creating something that doesn't exist somewhere else. It's about best practices that you can import and implement. There might be things that I discover in that world that would be helpful for legal and vice versa. But the other two pillars are very legal oriented. One is continuous improvement on what has been HSBC commercial management strategy so far. And it's pushing more of the same around moving away from the Harley Rate into efa, looking at how we can improve the tendering side of things. How do we do better relationship management? How do we really build that kind of common and shared understanding of where we want to go? How do we align people more around that? That's more of the same. What's really interesting is a third pillar which I call future proofing, our engagement model. And we think, I think you agree, that AI enablement and technology enablement will have a big impact in the short term. And when I say short term, it's not five or ten years, it's two to three In a sense that he and our team will be able to do a lot more internally. It will change the allocation of work between what's being done internally, what is being briefed externally.

Yes.

And, and we're getting ready for that. And we're not the only one. A lot of people are. We're getting up that curve. It's the right thing to do for us. If only from say a retention and people point of view. We are going to be able to make our lawyers life easier with all of this productivity tool, you know, all of the boring stuff and the drafting and the summarizing. You don't have to do anymore. Right. Time save. We're going to make their job more interesting by allowing them to start touching more strategic work, you know, getting of that value chain. It's going to make their job a lot more interesting. But the right to do for the bank as a whole, from a risk management point of view, from a cost management point of view, that means less work will be briefed out externally. What does it look like? We need to start designing it together. It doesn't mean we won't need law firm or LSP anymore. But the interaction will be different. The endoff point will be different. The service delivery model will need to be different. We'll need our partners to be a lot more integrated into our ways of working our processes. Because it won't be the usual model of I'm doing this internally, then I'm giving it to you external. You do your thing and then it comes back in. It will be a lot more fluids. It might be involved from the beginning and we share the way we do the work. We have to come back together. It's desegregating and then re putting together it will have an impact on pricing. We need to get ready for that and we want to help our law firm get ready. It's fascinating to see the thinking, the reaction or lack of sometimes from your.

Inside or from the outside.

From the outside, from the law firm I'm explaining this to.

So you are telling the law firms your goal. What you've just stated, I'm going to restate it to be clear, is that you are intentionally trying to bring as much work back in house so that it does not go to expensive law firms anymore. So it's that. Right?

Right.

Sourcing, as we always say it.

Just make sure. And you know Chris, who you work with now we're using that sentence 10 years ago already. Right work, right place, right price.

Yeah.

We'll always need law firm that's NLSP and others. But how much and to do what is going to change and evolve. Yeah.

So an example I heard from in house team or client yesterday was, you know, we might do it ourselves and we might use AI, but we still would love to have the law firm look at it and just basically sign off. In that case it's not a lot of time. You know, you used to be buying time and in this case you're buying sort of expertise and judgment, years of experience, industry knowledge and risk mitigation. So that you can say to your leadership team, we had at night counsel look at this, you know, and we're good with it. Even though we did 99% of the work and they basically looked at it and said looks good.

Yeah.

So to your point, that type of advice needs to look differently from a, you know, if it took them an hour to check that box that it looks good, is it only worth an hour of time or you know, what's the value? We always go back to outcome and value based pricing and there's way more value than one hour of time.

Right.

That might finally be the days of the billable hour. Yeah.

Is it possible?

Look, there will always be billable hour. It's never going to go away. But it shouldn't be the bedrock.

Yes.

It shouldn't be the basic foundation everything that you do. It shouldn't. The only way law firm will be able to stick still make profit would be around value based output based price per unit. And it's just to be honest, I'm always fascinated about that metric which is the Harley rate and how that comes in some sort of way in consideration into how you look at profit. Any business just look at the cost of providing the service and your profit is different between how much you bill and the cost. And the cost will be salary and overhead and maybe investment in tech now and use of the tech. But then for some reason in the law firm industry we kind of add that weird layer in between fees built and the cost of the Harley rates and you that becomes your compass. That's weird. It's not how other industries work. And if you stick to that six minute increment model. Indeed. Well it took you, a lawyer, six minutes to do that. So I'm paying for six minutes and.

It always comes back to that. So I think that's the challenge.

Right.

If everybody sees that this is where it's going, why hasn't it immediately moved there? And it's because everyone grew up in this world. Right. Whether you're in house or whether you're at a firm, you grew up in the six minute increment. And when we had new pricing, let's say, hey, we can do this for you for a hundred thousand. Everyone goes, let me do the math. How many minutes is that? How much time is that? And it's like, let's get away from the time conversation. But they can't. And they say, well, can you give me the bills at the end of the day so I know if I.

Got a good value.

Yes, if you spend more time, the less time on it. But does it really matter? That's not how we look at it for any other thing that we buy.

But it goes back to the trust point.

Yeah, that's right.

It's almost like you're not trusting your partner to really be a partner because you think they're going to do you one over.

Right.

And I, in my role as a consultant, I became really interested in neuroscience and research and how that can influence change management and help with change management and changing behavior. I wish I'd taken an interest in that earlier. It would have avoided so many eggs in my face type scenario. But it's normal. Lawyers don't know what they don't know. And as you say, everything they know has been based around the time and materials basis. It's really hard to, you know, it takes someone really creative, really innovative to be able to think outside of the box without any external help. I go back to my diversity of skills points. If you don't get someone else to come and tell you, well, this is how you could do differently. What would you go to bed one night thinking time and materials is the end, or bill and then wake up the next morning and say, I had an epiphany moment and now I'm going to do things differently. And your brain is wired to react to what is perceived as a threat unknown. Is a threat uncomfortable? You fight or you flight? You fight is like, no, I'm dead. Going to remain on the billable hour. That's all I know. Or you flight as in that case, it's a lot of those blinkers. Moment on. I am flabbergasted by seeing how as a profession we're nearing the edge of a cliff. There is a narrow bridge we can take to go to the other side. But most people are getting closer and closer to the edge and not taking action.

And everybody who sees it, I feel.

Like it's very obvious, right.

Unless you're hiding under a rock. The disruption that is happening in this Industry is crystal clear and the clients are asking and saying things and the AI is putting pressure and we're all seeing it and feeling it. So yes, to your point, we're all marching towards the end of the cliff and there's a gift, there's a bridge, but it's hard to know how to cross that bridge.

It is. And that's why we need the collaboration, we need the trust and we need to design that together. It's an ecosystem in house team cannot deliver without external help. If you look at the kind of company I work for, the geographical footprint, the diversity of products we're selling, you can't have an in house team that covers everything everywhere. But it's about that efficiency and it's about understanding how legal plays a role in supporting a business. We want to reshape the role of legal internally. It's not just about getting more work done for the sake of it. It's around how do we empower our lawyers as well. So that re engineer where legal is getting in into the deal. We don't just want to be coming in at the end where all the conversations are begun and dusted. We should be there from the outset by empowering our lawyers, by giving them more knowledge, more access to information, they can have those articulated conversations. Yeah.

So we saw with CLOCK and the organizations and the conversations and forums that we were all part of when we were all in house that that accelerated a lot of the development of legal operations and maturity models and understanding technology and right sourcing and all these kind of fundamental things that we talk about how to work with outside counsel. So I think we did a good job there of getting people together and talking openly and to the point. Now law firms need to talk to each other. Law schools need to get involved. The training and development of the future. Right. Every part of the ecosystem needs to be talking now and it doesn't, it doesn't seem like there is that forum. I think people are willing, but it's not easy. I think there's trust issues too, competitive issues.

I think it's the only way the profession can transform being on the client side. We are definitely going to try and drive that. One example I gave you earlier is that in Q1 next year I want to get all our global panel firm together with our ALSP to share some of that first vision strategy and they can understand where as a business we're going towards what does it mean for the legal function and therefore what should it mean for them. But I want to have a working session There that will be around the future talent pipeline and I'm going to get people from the academia to come and give us a talk to bring that education piece into it as a bit of a keynote. But then I want table discussion and not just discussion actions coming on the back of it and might be small baby steps around what is the impact these new tools are going to have on training education. None of us have got the answer. We all know that's going to be a challenge. How can we maybe collectively start developing paying solution? I'm very worried when I hear some firms plan on hiring zero training next year. That worries me. I'm thinking legacy. I'm thinking longer term is how you know and selfishly as a client we recruit from law firm where is our recruitment pool is going to come from and maybe will be the reverse in a few years where we take the people on, we train them and you approach from us to get the seniors because they also will have that business acumen. But we need to start working together on on this and design the solution together and we won't solve it in one working session. But if there's just small baby steps that we can take that would be already better.

I think it's really interesting what you just mentioned and I want to go back to that because I heard that now a couple times just from conversations this week alone. Potentially the future model is that junior attorneys get hired from law school into in house corporate legal departments because they no longer need to rely on the training that they get law firms. And you can sort of get them up and running tools with mentorship, all the things you can in house, learn the business side of things and then who knows? Eventually like you said, law firms will recruit. It's going to go the other way around.

Right.

Law firms will recruit from in house teams when they're ready to sort of have that judgment and be legal leaders and advise others.

And I'd like us as an industry to do more of that blue sky thinking. Yeah, let's reinvent how we're doing things so that it works for everyone. I think up until now the royal path was to make it as a partner in BigLog. I think that now it's going to probably change and actually having a he and house rule would become a lot more interesting because you will have access to the knowledge, access to the tool, access to the business side of things and getting that exposure in a very different way.

Well, it's so interesting. So two quick anecdotes. Somebody I know who has run the summer program at their law firm, not ours, a different law firm. And that person has run the summer program for, I don't know, at least a decade. And every summer he asks the pool of young lawyers to say, how many of you want to be partners at this firm one day? And it has gone from everyone in the room raising their hands to over time, literally, he said this summer, nobody. And this is in front of the firm. So you know, you would think you would at least pretend, but it is so okay or clear that this isn't the path they want to choose and this is sort of a stepping stone for them. Interestingly, I spoke at a law school just this last month and one of the questions was asked of them, you know, how do you choose the law firm that you're going to go into? And the number one response, exit opportunities.

Oh wow, that starts to tell you a story.

Where do they want to go is partnership. You know, that's what everyone used to want to be that, you know, having the big corner office was dream. And we have to ask ourselves why? What has changed? And it's, I think a lot of it's the lifestyle, the grind, the six minute increment, you know, that you don't have to have in an in house, Is that it?

I think everyone, when you're choosing your role, there's a number of criteria you look at and those will have different weights throughout your life. Sometimes it's the curiosity or the ability to do something new, sometimes it would be salary, that is a driver, sometimes would be work balance and so on and so forth. Those criteria are being added to with technology enablement and they get different weighting and I think that probably shows our age, but we probably need to keep in sync with what do the new generation want, where do they want to go? And I think what I'd love to see is maybe less cynicism from the existing leadership on the law firm side around. We're still a big brand name, we still attract the best talent and you know, the creamers will rise to the top and they'll come to us type thing and I don't care about the others.

And you literally heard that?

I literally just heard that. And more around legacy and those people that are in position where they can influence what the future of the legal industry will look like. Thinking about how do they want even their firm to survive five years, 10 years, what does it look like?

Yeah, that's the question we need to be asking ourselves is what does legal leadership of a law firm look like in the future, what are those opportunities? What would make someone feel purpose and meaning in those roles? How does that look different than it does today? What are the paths that we want to create for young attorneys and how do we best train developers, develop and give them the opportunities to choose? And maybe there are off ramps that are wins for both sides.

Indeed. I like to see the half full glass. But the challenge, of course, and you will know that very well as well, is the inherent business model of a law firm. You know, everything pinged around the six minute increment, all profit distributed every year. So that just when you have a one year horizon, basically it's really hard to make some of those decisions that require material investment before you see any roi. And that's where your three points around leadership, partnership being bought in and execution capability are critical. And this will be the firm that can really make it through.

Yeah, and the clients have a really big role to play here again to the partnership because do we start to develop talent together? You know, is there a deeper relationship between the firm and the client such that an attorney who's servicing the client plays both sides?

Yeah, I think that that's definitely the kind of scenario we need to put on the table. How are we looking at doing this? It would be awesome if in house team could hire more and maybe you do your training in house and you can now in the uk, you know, with the new SQV reform and everything, you can do your training in house. I feel, I think few and far between. The reality is that when you're in house team you're a cost center. You're not the revenue generator that you are when you're on the law firm side. You've got pressure on headcount and everything. There's other parameters to look at. There might be, I don't know, something creative that can come out of that where maybe they're recruited by the firm but trained by the henous team. I don't know, maybe there's some sharing here.

So we actually do that. We have a first year secondment program which I learned about. I didn't put this in place. I thought it was brilliant. Although I think was met with some skepticism of like a, you know, first year.

They've never worked.

What could they possibly contribute to the client side? But they come back to us after you're having completely contributed. I mean some of them done a lot of meaningful work for the client and then they come back to us. You know, after that first year we start working as a firm and they have insights and industry expertise and understanding of what's meaningful to the client. So they have a leg up immediately.

Well, as long as you're making sure you make the most of them when they return. On the client side often we see there's so many second deeds that are being sent to us. We need second deeds and then they tend to disappear when they go back to the firm. They don't work on our transaction anymore. Like that is wasted knowledge, wasted relationship, wasted network. If you don't do that.

Interesting.

Yeah. But I think really, you know, going back, what is going to change? We mentioned the three buckets of work that goes out to external provider and I think law firm need to think around those three buckets and what they can do there. The three reasons why we go externally. Capacity, capability, strategic insurance. I know that's a bit flippant to reduce it that way for lawyers and that's not meant to be, but that is a reality if you're trying to take everything out of the equation. That is why we go externally. Capacity. There is a surge in demand. We need to deliver more. Historically, what would we have done? We would have thrown bodies at it. Your bodies, our bodies. But it was just putting more people on it. Capacity is completely the place where AI can really help address.

Interesting. Yeah.

Because the moment you've got volume, you're ripe for deploying a tool. Might not do everything, but it will definitely matter for a big part.

And we've seen this already with the evolution of like E discovery tools and systems where it was a manual. Right.

And you see it with other tools coming in the market where some of those can really do the task of a paralegal one or two year pqe. And I'm not saying that law firm should fire all of those by definitely not do that, but that is a reality. So we need to think around how that's going to work and impact capability. This is what most law firm pride themselves on, is their deep expertise. Specialists, Specialists. What makes a good lawyer is his or her deep knowledge about that subject matter. There was one way only to acquire it until recently is putting in the hours, reading the books, knowing the precedents, doing deals, transaction cases, all of that. And that knowledge was more than often implicit rather than explicit. But you now can start tapping into that knowledge a lot more easily with those tools. It doesn't mean a hearing house lawyer can suddenly overnight become as proficient, but they can be ready, get up that learning curve, which means a lot more can be done internally. In your example earlier they can do the first draft and maybe the second they can understand, you know the direction of travel and the structuring. So we do more internally. Is that 20, 50, 70%? I don't know. And it will depend from area wherea. But we'll do more and we'll come to the law firm for the last month. Yeah. Interesting. How do we plan for that? Or we have a scenario where instead of having this as a described like he now does this hand it over externally, things being done on that side and then come back in. You create hybrid team from the get go. Internal, external working together, looking at the structuring and the strategy and the planning then allocation of work stream with the view that we can do more. That changes service delivery. That changes the fact that you know, you need to be more integrated into our processes and our ways of working. It changes pricing. We need to prepare for that.

Yeah.

And that's your second bucket. Yeah. That leaves you with the third untouched so far.

The third, Remind me what the third one?

Strategy insurance.

Well the risk mitigated issue. Yeah. And does that change? I guess it probably does in some ways too.

Yeah it will.

How are you using ALSPs? And just for the listeners, those are law companies or sort of non traditional law firms that can deliver some level of legal services.

They're playing a very interesting part in developing a hybrid model and carving typically at the moment for that capacity element but they getting up that curve and.

What right now it's low value, sort of high volume.

It tends to be surge in demand as well as high volume of low value. What they have which is really interesting is new ways of working because they're bringing that almost consultant hat with them. The way they will look at it is what needs to be done by whom, when and in work order, a process and then they develop the right playbook and guidelines around that and then you overlay technology enabled in order to deliver and they've got mi. So those guys, they're pricing you on a output base on a. What did you say? Mi MI management information. They've got metrics, they've got all of that data that law firm tend to miss. So when you're talking pricing they say well this is volume we're expecting. You know these are the assumption and is the price per unit and you know where you're heading. And then they can be like and the more you give us and the more the unit price will go down and that is business pick that everyone can understand. It's transparency. Yeah.

And assumptions. So this Came up again. So many conversations this week. People say, oh, well, okay, we're going to work with this firm and we're going to get pricing from them. And I, how do we know that it's going to stick? And I said, well, that's why scope, you know, is very important. And it's the same with any project. Building a house, right. You have to know, here are my expectations, here's the scope of the work. Be very clear. But assumptions, and that's another word that like, doesn't come up enough. Like, what are the assumptions that have gone into this price and this proposal? So that three months, four months, six months, one year into the project, you can say six. Yes, the assumptions are still correct or have changed. And we need to talk about that.

Yeah, as soon as it happens, not two months later, 100%. Another reason why we go to law firm is you're doing many of those transactions. You have the knowledge, you have the data or you should have.

And shame on you if you don't.

Right? Yeah. So you should be able to tell us one thing. We do, for instance, and I remember vividly when we tried to deploy lpm legal Project management on investigations and everyone was like, you can't do that. It's so unpredictable. Yeah, it might be unpredictable with the three years horizon, but you can tell me what's likely to happen in the next six months and then in the next months you can definitely tell me. And there are different outcomes. Let's do scenario planning, let's see where it's going. And then you've got, well, if we follow this scenario and we settle quickly, this is what it might cost. If we don't settle, we go down that path and therefore that's what it looks like. I have the visibility and then it's really clear. Yeah, you know, settlement, yes, no, Yes, I know the price. No. Okay, I'm going now down that path. And let's now look at what are the next steps and let's plan for that. It always worries me when a law firm, and we've got the case at the moment, you go through one and the law firm gives you a price based on certain assumption and those assumptions change. And then the law firm says, oh, yeah, that was to be expected. Well, but if that was to be expected, why didn't you bid in the first place? That's a challenge.

Clients do not want surprises.

No, we don't want surprises. No, because we are accountable, not just about the outcome, but about the financial that goes with it.

Very much so. It's so great to see and to do this in person. And I feel like we could go on for another hour. But both of us have things to do and places to be, and this was such a gift. So thank you for being here.

Thank you for having me.

Mary, we'll see you next time.