The time to tighten one’s belt seems to be over – at least for some lawyers.
Starting salaries for lawyers right out of law school have just been raised at some firms. According to a Wall Street Journal article, New York firm Cravath Swaine & Moore increased its starting salary to $180,000, effective July 1. It was reported that the (unusual) midyear pay raise has immediately been matched by at least nine other law firms.
After breaking through the $1,000 per hour rate limit in 2011, the highest paid partners in New York have just broken through the $2,000 per hour limit. Similarly, top London lawyers now command more than £1,000 per hour.
All the more reason for Legal Procurement to stay on top of things! So what can you do to manage spend?
Insist on Business Process Management:
No business of any size can work without using some version of Business Process Management. The idea of structuring activities or tasks that produce a certain outcome dates back to 1776 when Adam Smith described the processes in a pin factory. It’s about time we’re applying the principles to the legal category: Understanding and documenting key processes leads to better matter management through better scoping, planning, and budgeting.
Here is how you can distinguish firms that are best in class:
- In your next RFP, ask firms how they will manage your work. Look for examples of business process maps that the firm has used to optimize and manage their work.
- Ask how their work on business processes has contributed to an improved customer experience and higher quality of service (and more efficiency!).
To learn more about Using Business Processes for the Legal Category, become a member and read Ian Stockley’s “Cheat Sheet” in the Members-Only area of our website.
Insist on Alternative/Appropriate Fee Arrangements (AFAs):
Firms often say that clients don’t want AFAs. Why wouldn’t you? AFAs generally aim to align legal cost with the value of the services rendered rather than how long it took outside counsel to deliver the service. However, to successfully embrace AFAs, you need to know whether you’re getting a good deal from your firms.
Here is how you go about it:
- Build your own data set of comparable matters. Know the market and understand how much different aspects cost. What are the price drivers? Introduce competition.
- Survey the market and when bidding out matters, make assumptions so firms can properly price their services. It needs to be clear to both parties how the firm should deliver its services. Who will be working on the matter? How many documents will be reviewed? How many weeks or days of trial do you anticipate?
- Define success. Are both you and the firm clear about what counts as a “win”?
To learn more about Success with AFAs, become a member and read Justin Ergler’s “Cheat Sheet” in the Members-Only area of our website.
If you are not (yet) a member, sign up today. (At currently $500, Buying Legal Council Corporate Annual Membership costs less than one hour of a partner and our Individual Annual Membership of $185 is like an hour of a paralegal. Prices are valid through August 31.)