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Demonstrating Value, Transparency And Diversity In Legal

Demonstrating Value, Transparency And Diversity In Legal
Demonstrating Value, Transparency And Diversity In Legal

What does value, transparency and diversity have in common in the corporate and commercial legal sector? According to three leading Australian-based General Counsel and Legal Operations experts, they all relate to the way in which law firms are engaged for legal matters, and they each advocate for matter RFPs (Request for Proposals) as a way to facilitate meaningful change.

In November 2020 at the Association of Corporate Counsel Australia’s annual conference a group of innovative and forwarding thinking leaders in the legal industry discussed their experiences using competitive Request for Proposals (RFPs) for legal matters as a way to demonstrate value-for-money and control legal costs. The discussion also incorporated the use of RFPs to support buying decisions based on diversity and inclusion principles.

Valuable contributions and insights were received from Salam Saffarini, Head of Operations, Transformation & Strategy at Westpac’s Legal & Secretariat group; Jo Keen, General Counsel at Queensland Rail; and Dion Gooderham, Director of Legal Services at Uniting Church in Australia (Vic. & Tas. Synod), with facilitation by Warwick Walsh, CEO & Founder at Lawcadia. This article examines some of the key insights that were highlighted.

Matter RFPs shifts focus to value and outcomes

RFPs are predominantly associated with the identification and appointment of law firms to an organisation’s panel, a process that is used every three to five years and considered quite an onerous project for both the client organisation and the law firms involved.

In contrast to this, matter-based RFP processes are used on a more routine basis for set types of matters or matters over a certain value, are significantly less time-consuming and can benefit from automation and digital workflows.

According to Dion Gooderham the use of matter-based RFPs is a great way to build competitive tension into the process of engaging with law firms and to shift the focus toward value as opposed to time.

“My aversion to hourly rates probably goes back to when I was in private practice. Even though it is a way of measuring your output, from a client-side point of view it doesn’t measure what I want to get out of the service – and that’s the value. It really just talks about how many units of production go into something,” said Mr Gooderham.

“We try to encourage [our firms] not to use hourly rates as the benchmark and to instead, try to scope work really, really effectively – especially significant work,” he highlighted.

Gooderham emphasised that for more significant work, [firms should] treat it like a project with stages and steps and talk about the resources and the assumptions behind that as well.”

“Even though the objective is to try to reduce or minimise the costs, it’s not just about costs, it’s about value as much as anything,” he said.

Law firms as key strategic partners

The traditional way of engaging law firms is through personal relationships and whilst some legal teams may have shifted to a cost or price focus, it seems that the best solution is more complex and multi-dimensional.

Salam Saffarini shared that it is important to shift the focus from just price or relationship to “be more focused on the whole package that the firms can put together around solving the problem”.

Mr Saffarini highlighted the importance of the client-firm relationship in delivering excellence in legal service and in facilitating change.

“The way that we view our firms, or panel firms, is they are very important as key strategic partners for the bank. The firms service our customers every day and they help us solve very complex legal matters. And with that view, when we look at transforming or driving change, we look at our firms as partners in that transformation journey – part of that ecosystem,” said Saffarini.

The role of matter RFPs in transformation

When reflecting on the use of RFPs for changing behaviours and processes, Mr Saffarini shared that some of the drivers that they wanted to change was automating the engagement or tendering process for legal matters.

“Step one, was get the transactional process right – it’s digital, it’s efficient – and through that we get very rich data around engagements, scopes, the demand that’s coming into the legal teams and into the firms, which becomes insights for further opportunities for improvements down the track,” said Saffarini.

“The second part of it is changing, or if you like, moving the maturity of the relationships from being [focused on] very personal relationships between particular individuals and firms to complementing that and having an organisation-to-organisation relationship. It’s much more strategic. The discussion is around how the firms can help the Westpac Group at a strategic level and also to have a very transparent, commercial discussion with the firms, because it is a commercial relationship as well,” he continued.

Warwick Walsh welcomed the idea of using the RFP process to get a lot of data around the engagements and the overall relationship between the client and the law firm, not just looking at it from a costs perspective, which was sometimes the perception that law firms can have.

Upholding procurement principles

Within Government organisations the structured process of procuring goods and services in a transparent manner is highly valued and as such utilising RFPs for legal matters can be quite attractive.

According to Jo Keen, Queensland Rail is a statutory authority and they are bound by state procurement policy and also Queensland Government’s commitment to social outcomes including diverse and inclusive workplaces.

“Like many organisations we need to continue to demonstrate that we are driving value-for-money. That is really important, particularly in the instance of a statutory authority where we are using tax-payers’ money to connect our communities across our city and across our state,” said Jo Keen.

For Ms Keen and her legal team at Queensland Rail, partnering with their law firms means driving value-for-money, but they are also seeking to align their procurement practices with getting valuable social outcomes as well.

One of those objectives is creating diverse and inclusive workplaces.

Shifting the needle on diversity and inclusion

According to Ms Keen, Queensland Rail and the legal team are very committed to diversity and inclusion.

“We also want to make sure that the firms we’re partnering with, obtaining legal advice from, are also aligned with our values and our commitment to diversity and inclusion,” she said.

Keen highlighted, that this is why they believe in the process and include diversity and inclusion in their RFP criteria to make sure they are delivering value-for-money whilst supporting change in the legal profession by partnering with firms that are aligned with their values.

Queensland Rail’s focus on diversity and inclusion with their law firms involved three steps. Firstly, a questionnaire went out to firms to gather information and effectively notify them of the intention to include diversity and inclusion principles in procurement practices. Secondly, major tenders for valuable work included diversity and inclusion as a 25% metric criteria. Third, Queensland Rail’s legal team proactively reached out to female law firm partners to invite them to be their lead relationship partner across the transaction.

“We really wanted to send a clear message to the firms that diversity and inclusion was a great business decision,” said Keen.

She explained that the experience and feedback from the firms has been fantastic.

“What we’ve seen is an absolute commitment now from our firms to actually not just talk about diversity and inclusion but to really implement it as well,” said Ms Keen.

RFPs level the playing field and promote transparency

Aside from using RFPs to drive change on diversity and inclusion metrics, they can also be highly effective in promoting those law firms that deliver excellence, consistent outcomes and value regardless of firm size or relationship.

“We want there to be a level playing field – very fair, very transparent,” outlined Mr Saffarini.

“Relationships are very important but when [firms] bid for solutions or for an RFP they are all starting from the same level point. Then there is a merits-based process to grant the work,” he said.

Saffarini also highlighted the importance of providing feedback to firms as to why they have won the work or not won the work.

“It is a really transparent process that way”, he said.

Reflecting on the transition to matter-based RFPs and change management processes with their law firms, Mr Saffarini shared some key insights.

“It’s brought structure, it brought transparency, and then through the data which comes, it’s not anecdotal, it is fact-based for both parties to have those meaningful discussions. And the insights again for both parties to be able to have that very clear outcome-base and solution-base for any piece of work that we want,” he said.

Saffarini also outlined that the process is very evidence-based and that there is an emphasis on them as a client to “provide very clear instructions, very clear scope, and where we don’t, we learn from that as well.”

Looking to the future

Across Government, not-for-profit and financial services organisations, matter-based RFPs are used to address various organisational drivers from diversity and inclusion through to reducing costs, demonstrating value and managing law firm relationships.

With transformation, digitisation and automation firmly on the agenda for many legal teams in 2021 it will be interesting to see if the uptake of competitive matter RFPs will continue. Fortunately, most law firms across Australia are becoming more familiar with these processes and are also seeking to align and strengthen their relationships with their clients.

Further, it is likely that success and sustainable outcomes will require partnership, openness to new ideas and collaboration as well as innovations in systems and digital processes.

We are grateful for the generous insights and experiences shared by Jo Keen, Salam Saffarini and Dion Gooderham – thank you.