Robert Waldman, Co-Managing Partner at Venable LLP, and Drew Lewis, eDiscovery Counsel for Recommind, discussed the challenges for a law firm in reducing costs while still providing the best-in-class services that clients increasingly expect in this new environment.
Drew Lewis: Is this competition and the selective procurement of legal services a good development for law firms? That is, does this push lawyers to think differently and re-examine how they approach their own practice to the ultimate benefit of the client? It seems we have moved past the days where doing good work was sufficient – clients seem to expect something exceptional when it comes to delivering legal services.
Robert Waldman: I counsel younger lawyers that being just a generalist or a Jack-of-all-trades is very difficult today. You really need to be the best at something; you need to figure out not just how you can be a good lawyer, but how you can be the best at something. How can you be the lawyer that people want, that when problems come up, your name is on the list of people that they’re thinking of? So I think it has forced us to become better lawyers; it has forced us to re-examine how we deliver our services and realize we’ve got to bring our “A game” every day to work. I don’t think it’s unique to our industry, I think we all feel like we’re running twice as fast to stay in the same place. But that’s not a bad thing. I think that complacency just won’t cut it in any business, and it shouldn’t cut it in our business either.
So if the challenge is to deliver better services in new and engaging ways, what are the key things that you look for that will help set you apart beyond just hiring exceptional people who do exceptional work? What are some ways Venable is leveraging technology or different firm-level initiatives that helps Venable keep a competitive advantage?
I know this sounds a little bit corny, but I think it’s very important to our firm that we maintain our culture. I think our culture – and we hear this from lateral partners who join us – is somewhat unique in the practice of big law in that we put a real premium on our civility and concern for our clients. I think sometimes we feel like we care about our clients more than they care about themselves. We care about our communities where we live and where we practice. We maintain the Venable Foundation which is funded by our partners and pumps about $2 million a year into the communities where we work. That’s essential to our culture because we want to be a firm that cares about its clients, about each other and cares about its community. That’s going to be very important to us going forward because as law firms become more commercial, the practice of law becomes more competitive. It’s going to be tougher and tougher for law firms to keep the values that they hold because all the economic pressures are out there to “cut corners” and deliver less than a perfect product. But Venable’s culture of professionalism and concern for our clients is going to take us the other way, and while we need to keep figuring out how to balance those two tensions, I think our ability to maintain our firm culture will distinguish us from other law firms. Our clients tell us that they like working with us. And it’s very important to how we operate as a firm that we can bring our best people to any project at the drop of a hat without any internal impediments or tension.
"I think it’s very important to our firm that we maintain our culture. I think our culture – and we hear this from lateral partners who join us – is somewhat unique in the practice of big law in that we put a real premium on our civility and concern for our clients."
On the AFA (Alternative Fee Arrangements) point, how do you think that is going? I’ve examined a lot of data that suggest it’s not being used as much as was expected. What do you think it’s going to take to maybe push AFAs to become more commonplace, and how much of Venable’s work is on a fixed fee or otherwise?
I think a lot has been written about AFAs lately, some of which makes me wonder are they real or just something interesting to write about? Part of the dilemma here is that in-house counsel are struggling with the same real issue that law firms are, which is that they’re used to hourly billing. I think what will drive this train will be when in-house counsel tend to push more for it. I think probably about 15 to 20 percent of what we do has some sort of feature of alternative billing in it these days. When people talk about alternative fees, most times they’re talking about getting a discount off of the hourly rate or doing something on a contingency. That would be the two most common models but there are others.
We’re looking at more risk-sharing-type arrangements where we’ll bear the risk at certain points and then the client bears the risk at other points. And when we present and are developing a full panoply of these types of options, then at the end of the day, it’s the client’s decision about what makes sense for them. I think many clients have not yet gotten comfortable with accepting these types of fee arrangements because they’re still new, but over the next couple of years you’re going to see more and more of that.
It almost feels that in order for AFAs to become more commonplace, we need more data to help build better models. The risks for both law firm and client are understood in such arrangements, but is it simply a matter of needing better data to help build a pricing model that evolves over time based on different factors?
I think that’s exactly right. And we’re in the process right now of hiring a “director of pricing” to do exactly that for us and to help us evaluate whether or not a particular fee structure makes sense for us and for the client. I think part of what you’ll see over the next five years is a move to decentralize some of that analysis into the fabric of our practice groups, so that the people who understand a particular area of practice best will come at it with a pricing-profitability mantra that they don’t currently employ. You see now that a practice group might take on a matter that they probably shouldn’t, knowing full well that the client can’t afford what that particular project involves. But they’ll do it anyway for a variety of faulty reasons including keeping people busy or keeping a team intact. That’s not a good model. So we need to get on-the-ground people thinking more strategically. And you’re right that it’s an area where we don’t have enough data yet. We’re going to mine the data as we do more and more of this and get better at it.
"The pressure for cost-effective, high-quality legal service will continue. What we’re focused on now are things like new staffing models, greater use of staff attorneys and outsourcing work to try and push work down to the lowest cost level of where it can be done well and managed closely."
What I find appealing is that if you want to be creative this is a good time for you in the business of law, because the challenges are greater than ever and we need new solutions to old problems, albeit the problems are occurring in different contexts than they had before. What do you think the next few years hold from an economic perspective, and how is Venable going to meet those new challenges?
There are certain things that I think are given, and the pressure for cost-effective, high-quality legal service will continue. What we’re focused on now are things like new staffing models, greater use of staff attorneys and outsourcing work to try and push work down to the lowest cost level of where it can be done well and managed closely. So with work that might have been done by an associate at a relatively higher billing rate, we just try to keep moving that down to provide better value to our clients while maintaining the same high quality.
Before we conclude is there anything else you would like to add?
One of my interests that has proved of greatest value to me and that has in many ways shaped my career is my passion for learning. I’m a voracious reader and I love reading about new ideas. Creative thinking has never been needed more and of greater value in our profession.
Robert L. Waldman, Venable's Co-Managing Partner, also leads the firm's national representation of tax-exempt organizations. Mr. Waldman's practice includes general representation of numerous foundations, hospitals, educational institutions, trade associations and other charitable entities. Mr. Waldman also practices extensively in the areas of philanthropic and estate planning, employee benefits and taxation. Mr. Waldman is included in The Best Lawyers in America in the fields of Employee Benefits Law, Non-Profit/Charities Law and Tax Law.
The Daily Record, the newspaper serving Baltimore's business and legal communities, honored Mr. Waldman with its "Leadership in Law" award. The award recognizes those individuals whose leadership, both in the legal profession and in the community, has made a positive impact on Maryland, and who have demonstrated outstanding achievement in the practice of law; involvement in the profession, and support of the community. Mr. Waldman was also recognized in the 2012 edition of Legal 500 and was selected for inclusion in Maryland Super Lawyers, 2010 - 2013 editions. Mr. Waldman is an Elected Fellow of the Baltimore City Bar Foundation.
Mr. Waldman is a member of the Board of the Association of Baltimore Area Grantmakers (past Chairman) and serves on the Boards of the Enoch Pratt Free Library and the Downtown Partnership of Baltimore. He has also served on the Board of the Maryland Association of Nonprofit Organizations and is a member of the Best Lawyers Advisory Board.
Mr. Waldman is a member of the American Bar Association Committee on Tax-Exempt Organizations and former chair of the Employee Benefits Subcommittee of the Maryland State Bar Association.
In his role as eDiscovery Counsel at Recommind, Drew consults with outside counsel and in house legal departments about effective discovery strategies and the benefits of implementing advanced review strategies to reduce the volume of data subject to review, and to also discovery more strategically valuable information earlier in the case. Prior to joining Recommind, he worked as a commercial litigator with Baker Donelson out of the firm's Nashville office, and tries to bring that perspective towards matters with current clients. Drew is a strong believer in legal project management and the ability to automate many of the litigation functions through partnership with advanced technologies, and has developed a streamlined approach to discovery that has been successful for many clients to resolve their litigation favorably while still keeping costs in alignment with budgetary expectations.