Shifting Client Expectations of Law Firms: Morphing Law Firms into Managed Services Providers

It’s good to be the client. We dictate what we want from the law firms and when we want it delivered. That may have been true for decades, if not centuries, but now it is becoming more complicated. As pressure continues to mount on internal legal departments to do more with less, and as legal professionals are functioning more and more like business professionals, we have to think differently. Legal departments need to ask for different outputs from their outside counsel firms, and the law firms need to deliver legal services in a different way.

It is no secret that in-house lawyers love their jobs because we get to be close to the business and contribute to how the company works. We have first-hand sight of how businesses operate and how businesses outsource their non-critical work. So why are we not learning from our business partners about how to operate the legal practice? It is a business, after all. Well, we are learning, and that is forcing a change in how legal services are delivered in-house and in the expectations we have of our law firms. We are learning that we can expect operational excellence from law firms, just like we expect it from our professional service providers in other parts of the companies we work in.

It is time for a radical shift… It is time for law firms to deliver services with the quality of a law firm but with the operational excellence of an outsourcing company. Besides doing away with the billable hour, in-house teams need to get more back than we have gotten before from the law firms for the same amount of money. In addition to high quality legal services and advice, we need to get insight into the work of the law firms in a way we have never had before. The law firms are full of valuable information and data about the legal services that we procure from them, which could inform in-house teams about the business of the company they work for more broadly. Yet, that information is not being harvested and business is continuing as usual: deal by deal, legal memo by legal memo.

Slowly, change is happening. At Microsoft, we have stratified our legal services for procurement contract review in a way that allows us to optimize our external and internal resources and learn about our legal transactional practices in a way we have not done previously. The most radical change we made is moving our law firm support for contract review and negotiation into a managed service engagement. Like the IT managed services that have been around for decades, we are now beginning to engage law firms to deliver to our department as a managed service, the contract review service they had been doing for us for years, but in a very different way. Let’s dive in deeper.