There is a compelling business case for collaborating in the legal sector, but why don’t we do more of it? Lyndsey Ratcliffe, head of corporate relationships at asb law LLP, explains the business benefits and suggests some practical steps to get started.
Collaboration is a common term in many industries, but a relatively new concept in the legal sector. The value of alliances, both internally (across functions) and externally (with third parties), is often overlooked. Effective collaboration can increase your competitive advantage and allow you to better meet stakeholder needs. It promotes innovation, creates capacity, manages risk, and drives quality and efficiency.
In fact, independent research undertaken by Alliance Best Practice Limited (ABP) suggests that organisations that apply best practice principles in collaborating earn significantly more at less cost – ranging from 250 to 650 per cent more in commercial returns.
So, if the business case is so compelling, why is collaboration in the legal industry not more widespread?
The truth is, because it doesn’t form part of our DNA. We’re trained as adversaries and brought up in a siloed and competitive culture which recognises and rewards individual contribution.
The traditional partnership model, billable hour and transactional mindset of private practice has become a bar to innovation and, while an increase in size and stature of in-house teams has shifted buying power to GCs, the model has undermined trust and created a disconnect between law firms and their clients.
Most legal departments continue to instruct and manage their external lawyers on an ad hoc and transactional basis, and the full service nature of many law firms has resulted in a lack of differentiation (and therefore collaboration) between providers.
GCs that are prepared to address these behavioural and structural challenges, however, can:
Research undertaken by Vantage Partners LLC found that over half of business relationships fail to meet their objectives, and that the primary reason for this is a weak or damaged relationship between the parties.
Many GCs are looking for ways to harness their experience and insight for commercial gain. Enabling the business to manage and strengthen its relationships with customers, suppliers and partners through best practice alliancing can achieve just that, whether at the outset, as part of customer / supplier relationship management, or to recalibrate a damaged relationship.
There are potentially many layers of collaboration in the legal supply chain. The legal department may collaborate between its members; the business; other support functions; and external providers. It may also require its external providers to collaborate with each other.
GCs know they want more from their relationships, but there is little guidance about the common factors that contribute significantly to a successful relationship.
ISO 44001 is an international standard for collaborative business relationships offered by the Institute of Collaborative Working which focuses on behaviours, organisational culture and management processes. Details can be found at http://www.instituteforcollaborativeworking.com/About/ISO-44001
This standard and the tools that have been developed in support, offer lawyers guidance on how to mitigate risk and increase the value delivered through collaboration.
The ABP research programme identified 52 common success factors (CSFs) which appeared consistently in successful strategic alliance relationships. These factors are made up of activities, conditions, processes and behaviours and fall into five separate dimensions:
The research found that relationships can struggle to deliver the desired commercial success if the parties focus on some, and not all, of these five dimensions. The focus is often on the commercial (is it a price both can accept?) and technical (is everyone happy with the skills and knowledge on offer?) and not enough attention is paid to the others.
Businesses manage a multitude of relationships, and not all CSFs will be present or necessary in all of them. ABP segments relationships into four categories which reflect the degree of intimacy and integration between the parties.
At entry level are transactional relationships, which are typically short-term, arm’s length relationships where the driver is price and the investment in the relationship is low.
The next tier of relationship is enhanced, in which a small degree of additional value is created for each party. This is followed by collaborative relationships, and then, ultimately, partnerships, which require a high degree of investment and a shared risk and reward model.
Being a firm that prides itself on innovation and creativity, we are keen to test the applicability of best practice strategic alliancing in the legal market and the degree of true collaboration or partnership. We are working with ABP and a group of GCs to test our hypothesis and find out which of the 52 CSFs are relevant to the legal supply chain.
Below, I offer some practical steps on starting to collaborate more effectively in your organisation.
The existence of a defined collaboration process and the effective execution of that process in practice is critical to a successful outcome.
Stage 1 – Agree goals, structure, scope, governance arrangements, and relationship management and escalation procedures.
Stage 2 – agree a memorandum of understanding which will capture the key outputs. This defines the ‘rules of the game’.
Build a governance model around three critical levels of stakeholders at a strategic, managerial and operational level, setting out:
There are usually a number of possible hurdles to a successful collaboration, including confusion over roles and responsibilities. For example:
The most effective way of addressing these stumbling blocks is to align what a person thinks their role is with other people’s expectations of that role, so that role behaviour becomes more predictable and productive. This can be achieved through the development of a RACI matrix, which defines the following:
R – Responsible: those who do the work to achieve the task
A – Accountable: the one ultimately answerable for the completion of the deliverable
C – Consulted: those whose opinions are sought
I – Informed: those who are kept up to date.
There is plentiful guidance online about how to complete a RACI matrix.
Research shows that adopting a project management approach increases the chances of a successful outcome on a large-scale project. This is particularly the case if there are several providers on the supply side, as this increases complexity and, hence, risk.
Collaboration is the next movement: make … buy … or ally.
‘The first [key issue] to appreciate is that in every relationship there are three sets of objectives: Yours, Mine and Ours. A robust relationship must recognise all three and work towards satisfying them all.’
Institute For Collaborative Working: Insight into ISO 44001
We’ll share the results of our research here in future, or visit www.asb-consult.com for details.