Some legal departments are reactive—they handle litigation and the various legal matters that come into the inbox. Others are constantly rethinking how they work—for them, it’s constant revolution. BT plc’s legal department falls into this category. Its lawyers are constantly evaluating how they work internally and how they interact with both their clients and their legal services providers.
That impulse was bolstered last year by the hire of Sabine Chalmers as group general counsel. Among the changes under her watch was the hiring of Neil Wilson (in the photo above), who carries the lofty title of Head of Legal Vendor Management. To put it simply, he’s in charge of how BT Legal hires outside help, whether it’s from classic law firms, that peculiar hybrid we know as an LPO (legal process outsourcing), or a tech service provider. Under his guidance, BT’s lawyers outsourced two in-house functions, claims litigation and real estate to the law firm DWF. And this autumn, he’ll begin to review BT’s panel of 40+ firms, which he believes is twice the optimal number. The aim of Wilson’s needs assessment, he says, is to free BT’s in-house legal team to do the high-end work they were hired to do. MAG spoke to Wilson about the process and what he thinks about the state of legal services today.
You are head of legal procurement of BT. You’ve been there about a year, right after Sabine Chalmers came in?
Do you have a team, or are you working by yourself?
I’ve got a couple of people reporting to me day to day. I’ve got a legal project manager and a legal PMO as well. Much of what we
You were brought in to reorder the department’s relationship with outside providers, whether they’re law firms or not. Is that correct?
A lot of futurists and these new-age legal providers say that they’re the future. What’s your opinion? What do you think of traditional law firms vs. providers for specific jobs?
The best place to start is our outsourcing to DWF of two pieces of in-house legal, property and our claims litigation team. Before we did that, we met with 26 firms in the market, which included law firms, LPOs and alternative service providers to determine where the market was. And to see where everybody sits in comparison to each other. That gave us an idea, there’s a move in the market to managed services. If you took UnitedLex, for instance, Dan Reed had the right idea of having a regulated LPO [legal process outsourcing] as opposed to unregulated LPO. You can’t provide services beyond a point without being a regulated LPO and eat a law firm’s dinner.
What else is happening?
The other side of the coin is that you get people on the same journey coming from different places. Some law firms are trying to create the LPO type model within their own firm. They get that clients are looking to put work in the right place and have the work at the right grade. They want it from an efficient cost perspective. I think it’s a circle with a dot in the middle. And that dot is true managed services. All of these people are at the edge of the circle and they’re trying to get that dot in the middle. Some are further along that journey than others. We tried to see where the market was. There are a lot of people in very different places; some are just starting some are farther along. With DWF, we felt they were further along the journey.
If you had to have a perfect mix of outside providers, what percentages would you give to traditional firms and which to LPOs?
I think that an LPO is thinking about technology and process. And what’s lacking is the depth of legal advisory. So, there’s both sides of the coin here, and the ideal is to put them together. What you want to do is say to a partner, ‘we’re trying to do x, and in our claims litigation, it’s process and technology are extremely important. It’s high volume.’ You want the decent legal advice you get from a traditional law firm, but you also want a process that drives efficiency. If this is high volume, you need it to be dealt with by the right person and it shouldn’t be costing you the earth.
You want the decent legal advice you get from a traditional law firm, but you also want a process that drives efficiency.
I was going to say it sounds like they need to work together. Do they work together well? Is there tension or do you say, “I don’t care how you do it; this is what I need’?
There are more forward-thinking law firms and less forward-thinking law firms. And we see firms that use LPOs or try to do it in-house. The problem of a firm that’s trying to build it in-house is actually trying to change the attitude of the partners in the law firm and to working with an LPO or an internal group. There are a lot of partners who don’t want to change.
Which firms do you think are forward thinking?
DWF, which is why we did the deal with them. One cannot talk in the current market without mentioning the Big 4. They’re coming from a different place. They get the technology and process stuff and relate to it.
Let’s talk about outsourcing. How long after starting there did you start?
It was a long process. I didn’t want to jump in right away. I thought that the market was immature, which is why we met with a large number of firms. And that we ended up getting down to work areas that worked with DWF. There are around 40 roles in scope for transfer to DWF.
Here’s a basic question: What is the advantage of outsourcing
It allows the in-house team to concentrate on the right things. In the market we hear about business partners. HR has business partners… That’s where things are headed. Legal should be a legal business partner. It should concentrate on strategic business issues, not high volume, low density work. It’s about focus.
Legal should be a legal business partner. It should concentrate on strategic business issues, not high volume, low density work.
If you handle the scale in-house you’re missing out on certain areas. In the law firm you have very very large teams that can do that stuff. In terms of technology, we don’t have the budget to invest in the scale that you need in doing claims. There’s a definite advantage, where the law firm has the scale.
A more general outsourcing question. In the U.S. for example, there is a debate about sending high volume work overseas. Is that still in fashion? How do you maintain quality?
The market is maturing. You’ve got players like Axiom and UnitedLex and EY. There’s more depth now. They’ve been doing it for awhile. It’s a tricky question to get the balance right. For instance, we’ve got a contract with Axiom. We have a team in Poland and one in Belfast. But in terms of moving the value chain again, you have to have a mix of offshore and onshore, and you have to have a mix of qualified lawyers if you want to take on the complex work. Dan Reed at UnitedLex saw that early on, that they need to be regulated.
This year, you’re going to be looking at your legal panel. How many firms do you think are ideal for a panel? What’s the process going to be like?
We’ve got 43 firms on the panel today and that excludes some of the international work. We’ve got too many. As to what is the ideal number, we’ve got to let the process play out. I’d certainly be more comfortable with 20 firms than 43. And we have to cover the niche work, we have to have enough to cover IP and other areas. We will always need specialist lawyers.
But equally, you don’t want to dilute the spend too much. You want at least enough money going to those firms so that they’re on board, as well. And that they’re performing for you and it’s worthwhile being on your panel. It’s a balance.
What are you looking for?
They’ve got to have a bid process, have some form of bid management. It’s a silly point, but when you’re marking these responses sometimes the quality of these bids can be quite poor. And even if the firm is a big firm, if their bid is poor and you have to mark them accordingly, they won’t do very well
The second thing is you want to see that they have account management expertise, that they can manage the account well. And again, it seems like a basic point but we’ve had issues with firms in the past where communication has been very poor. And that leads to relationship breakdown. And so again, a simple point but we’ll be looking to see that firms can manage their clients well.
We’ve had issues with firms in the past where communication has been very poor. And that leads to relationship breakdown.
Third, is about the whole firm approach. It’s very easy to look at the market and find individual experts. What’s more difficult is to find a firm that offers you good service, consistent service across the board. Those firms that have processes in place that can manage the client across the firm.
Do you think, looking down the road 10 years from now, will big law firms be as profitable? Or do you think their model is obsolete?
I think firms have to decide. There will always be a role for niche firms that provide high-end advice in specific areas. But with big firms the technology, process, and firm structure will need to move on. If you want to make money, that’s where the progression needs to happen.