Lawyers must show their work

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Law firms need to clearly demonstrate their value through data collection and communication. Lavery’s new chief client officer, Jean-François Denis, has years of experience with both

WHILE MANY in the profession continue to wring their hands over the nearly-here AI revolution, Jean-François Denis, new chief client officer at Lavery, foresees a bigger issue on the horizon, of which artificial intelligence is just one part. This problem touches on data analytics and on equity, too, but at its most basic level, the problem the legal industry faces is about respecting the client. “You’re constantly going to hear that legal services are expensive. It’s a black box – we don’t know how much it’s going to cost us,” he says. “It’s crucial for external law firms to help their clients demonstrate the value that is generated by the services that they’re buying.”

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“You want our services to go beyond the mere execution of a mandate. We need to take a step back and go a little bit beyond that”

Jean-François Denis, Lavery

According to Denis, law firms could stand to learn a few things from the automotive industry. He worked as in-house counsel at SNC Lavalin where he oversaw the procurement of legal services. “And you can imagine that for a multinational corporation the need for external services is pretty broad.” He read an article in Harvard Business Review called “Building Deep Client Relationships.” The article – written by Jeffrey Liker and Thomas Y. Choi nearly 20 years ago, but still entirely relevant – breaks down the differences between how Toyota and Honda treated their suppliers and how the Big Three American automakers handled theirs. Whereas the latter developed adversarial relationships with their suppliers by focusing entirely on cost, Honda and Toyota took a different tack. According to Liker and Choi, first the Japanese automakers took the time to understand how their suppliers worked and cultivated a sense of opportunity with them, instead of a rivalry. Then, by supervising their vendors, they could help develop their technical capabilities. Finally, they maintained quality by sharing the data they collected and by conducting joint improvement activities.

“Experts agree that American corporations, like their Japanese rivals, should build supplier keiretsu: close-knit networks of vendors that continuously learn, improve, and prosper along with their parent companies,” the article states. Denis saw clear parallels between the way Honda would partner with their suppliers and how he, as in-house counsel, could work with the teams of lawyers supplying legal services to his company. “Basically, you have fewer suppliers, you know them better, they know you better, and you can mutually influence each other. At the manufacturing level, a supplier can go to his client’s facility and say, ‘Listen, when you’re assembling this system, why don’t you change your equipment this way?’ And when they make that change, they find they end up doing a better job,” he explains.

As in-house counsel, his suppliers were other law firms, but the dynamic at Lavery is similar. Just as vendors of tires or mufflers would listen to Honda when they made suggestions, because they knew Honda understood their process, vendors of legal services should do the same. “‘Is there anything that you see that I can improve?’ We want our clients to be comfortable to say that to us. And at the other end: You want our services to go beyond the mere execution of a mandate. We need to take a step back and go a little bit beyond that.”

Understanding and sharing data is part of taking that step back. “It’s lots of structured dialogue between the firms. And I’m a strong believer in quarterly assessments of our performance insights that the law firm provides. We can help a lot of clients with the data that we generate. There are trends that we can see. And the data can tell us a lot of stuff.” As an example, Denis talks about a rockstar associate at one of the firms with whom he worked. “One day, I sat down with him and I said, ‘Listen, you’re not comfortable with what I’m explaining to you. But when we look at the data, you’re right on top of the stack. You’re the most efficient of our lawyers because you’re a senior associate, you’re not as pricey as a partner. You have a high level of autonomy, and the files in which you are involved are the ones in which I get most of my money’s worth.’” It’s an approach that has shades of Moneyball, the film (and the Michael Lewis book upon which it was based) about how the Oakland A’s built a winning team for less money by signing players based on specific data points. The comparison was apt when Denis was working in-house, building teams of lawyers for different matters, but now that he’s in private practice, do the same incentives still apply? Why would law firms want to bill less?

So much of that focus comes down to communication, both with clients and internally. Collecting data isn’t meaningful until it’s shared. Part of that is knowing who does what at the law firm, and who could be doing it just as well for less. “It’s smart for firms to involve paralegals and junior lawyers, because the junior lawyers and paralegals are cheaper but also they’re expanding your firm’s footprint with the client. The younger lawyers are probably going to have some common interests with younger in-house lawyers or younger clients,” he says. But it’s also about knowing what the law firm is doing in general to find redundancies. He recalls one year when he saw three different branches of an organization hire the same firm three times, through three different employees, all to answer the same question. Naturally, the firm charged the client three times. “And the odds are that the law firm probably did the same work three times, even when they didn’t have to, because they didn’t share the data internally,” he says. “One thing I really want to be on top of as the chief client officer is to make sure our people talk to each other.” Before joining Lavery, Jean-François worked for six years at SNC-Lavalin, where he became one of the first professionals in Canada fully devoted to managing legal operations as director of legal affairs, global operations. Prior to that, he practised law for several years as a litigator in a firm and went on to serve as legal counsel to two Bombardier entities, namely BRP and Bombardier Aerospace.

Data isn’t meaningful unless it’s shared

Published 05 June 2023

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“It’s a free market out there and if you don’t pay attention to what your client is telling you, that’s unfortunate, but you’re going to lose a competitive advantage very quickly”

Jean-François Denis, Lavery

Understanding data

As described in “Building Deep Client Relationships,” American automakers thought similarly. Short-term or long-term, profit was profit. “They jumped to the conclusion that the immediate benefits of low wage costs outweighed the long-term benefits of investing in relationships.” Denis puts it succinctly: “It’s a free market out there and if you don’t pay attention to what your client is telling you, that’s unfortunate, but you’re going to lose a competitive advantage very quickly.” This is especially true when it comes to a firm’s commitment to equity. “We, as a firm, should start measuring diversity metrics and be able to say, well,

out of the X amount of hours that we've sold to your firm, 40 percent or 20 percent, or 25 percent have been made by equity partners that are either women or members of a marginalized group. We should be able to make sure that our clients look good by dealing with suppliers that not only provide high-quality legal services but also do it in an efficient way, and that they live values of diversity and inclusion,” he says. “We need to be able to help clients at that level by saying, ‘In your industry, we’ve observed those trends. Here they are, here’s where you need to be.’” “Resistance to change is probably our worst enemy,” Denis says. “There will always be lawyers. Will our role evolve? Yes. Should we exercise our role in the same fashion we did 20 years ago? Absolutely not. The legal market hasn’t evolved quickly enough. There are still a lot of gaps in terms of the adoption of technology that can make us more productive, more efficient, and more accurate. We need to embrace that. But we better have a lot of focus on people, too.”