The Less for Less Challenge

Since the 2008 economic downturn it has been a general focus on cost savings on the legal market, especially for general counsels seeking to meet budget restraints and yet handle the increased legal complexity, compliance and risk prevention, to demonstrate value in-house. Professor Richard Susskind coined the now generally established concept of “the more for less challenge” to describe the problem. But lately, as described by Stephen Gold in “The day of minimis is here”, a new phrase has entered the debate, “less for less” – a catchy way of stating that the best response to pressure on price is to make the process more effective.

Ron Friedmann and Timothy B. Corcoran have also elaborated the topic in several articles about “doing less law”, where they explain how value is not the same as efficiency. “Corporate law departments face budget pressure and demand more value from their law firms. Yet they cannot clearly define value. Many think that value means efficiency. Efficiency alone, however, misses many other ways to control cost and create value. Working efficiently on an unnecessary task still wastes money.”

The way Ron Friedmann has defined doing less law includes gearing work to the risk. After all, avoiding legal work altogether reduces expense far more than doing it at lower cost. Saying “match legal effort to risk” sounds so sterile. Perhaps less kind but more apt is “stop over-lawyering”. “There is nothing so useless as doing efficiently that which should not be done at all,” as management guru Peter Drucker once said.

You can read more about this topic in “GCs Now Do Less Law”“To Reduce Legal Spend, Do Less Law” and “Do Less Law – Redefining Value in the Delivery of Legal Services”.

This year’s Altman Weil Law Firms in Transition survey also showed a clear decrease in general counsels spending with law firms. In line with the “do less law-concept”, Altman Weil principal Jim Wilber concludes in the report that “some of the decreases will come from work that Chief Legal Officers have decided is simply no longer necessary.”

We have summarized the report in “Profitability clearly linked to strategic changes”, where a key finding is that increases in law firm profitability are clearly linked to strategic changes in lawyer staffing, efficiency of legal service delivery and pricing approaches. An example of a successful strategic transformation is the Chicago-based international law firm Seyfarth Shaw. In “A new order for law” McKinsey provides insights on how lean management can transform even the most complicated, tradition-bound, and intellectually demanding of businesses. Since 2005, the 800-lawyer, Chicago-based international law firm Seyfarth Shaw has been rethinking how it practices law, applying lean-management principles to create greater predictability, transparency, and collaboration – even in highly complex specialties. That experience has enabled Seyfarth to expand the scope of its advice beyond the resolution of legal problems, and now includes improving workflows within clients’ law departments and providing training on high-risk compliance issues. Over the past four years, the firm’s revenues have grown more than 20 percent, and profits are up more than 25 percent.

Still there seems to be more talk than actual innovative new ways of providing legal services and/or pricing methods being used on the market. David Cambria, Archers Daniels Midland, even compares AFA’s to teenage sex in Casey Flaherty’s interesting blog post “The Sky is Falling for Law Firms (or Not)”:

“More people are talking about it than doing it, many of those doing it are not doing it well, and the consequences for making a mistake while doing it can be catastrophic.”