Ken Crutchfield, vice president and general manager of legal markets with Wolters Kluwer, talks about ongoing shifts in the legal industry, from the changing dynamic between in-house counsel and outside firms to the impact of technology and COVID-19.
CCBJ: How are the dynamics changing between in-house counsel and the outside law firms and other legal services providers in the industry?
Ken Crutchfield: If you look at it broadly, there is a confluence of events. You’ve got additional focus from groups like the Corporate Legal Operations Consortium (CLOC) and a bit more attention from the chief financial officer, who is looking at budgets, and specifically at the technology that’s being applied broadly within a corporation, and asking, “All right, where else can it be applied? What about the legal department?” And the technologies that are right for the work that attorneys do are being embraced by corporations more so than by law firms, at least right now. Profit motivations, because these corporations are publicly traded, are potentially really big driver. As a result, with legal operations, you’re starting to get into a situation where the ultimate business reasons for working through a legal issue are becoming more important, and that causes a change in dynamic, because now corporate legal departments are expecting more out of outside counsel. They want more context than they had in the past, and they want to be able to more readily relate the work that’s being done by outside counsel to something that benefits the ultimate business goal.
So the general counsel and senior legal executives have become business advisors as much as they are legal advisors, right?
Yes, that’s definitely true, to a certain extent, but there’s a balance. General counsel is the face of legal, but they also are part of the business.
You’ve talked a bit about why this dynamic is shifting now. Going back to the last financial crisis, a lot of changes that were already underway in 2008 and 2009 accelerated after that. Do you see that same dynamic playing out in response to COVID-19 pandemic crisis? It’s too early to know for sure, of course, but is it possible that things will continue to accelerate and that even more power will be shifted to in-house counsel, which is what happened in 2008 and 2009?
Necessity is the mother of invention, and when any group or organization goes through a crisis like this, it causes people to rethink those key orthodoxies and beliefs about what’s important to how your business operates. Those entrenched beliefs get questioned, and some may have to be changed or addressed in some way. If a legal department is being told, “We’re limiting outside spend to protect head count,” for example, it’s not just the corporate legal department, now everybody is looking at contractor spend and outside services too. We’re going to cut those before we do anything to employees, because we want to retain human capital in these difficult times. I think it forces a change in thinking about how you are going to get certain tasks done.
“General counsel is the face of legal, but they also are part of the business.”
You talk a lot about metrics and data-driven decision-making, which strikes me as a real opportunity, but it’s not necessarily something that’s been easy for in-house legal departments or outside law firms to embrace. Do you think that will change now?
Yes, there’s going to be more emphasis on looking at places where you can apply data to the decision-making process. There’s a lot more that’s measurable nowadays than there ever has been in the past, which managers are increasingly able to use to make decisions about which outside counsel can best represent the company on a particular case based on their previous track record. The data is there, and it’s more and more possible to pull that information together and look at it and make meaningful decisions.
Also, the internal key performance indicators (KPIs) that are developed by a corporate legal department are necessary to understand what the goals are for a particular year, whether it’s an initiative around going green or managing expenses or containing headcount or growing overseas. When you have specific goals like that, having metrics and KPIs that the legal department can use to score itself and outside counsel are crucial. Let’s say that coming out of this era of COVID-19 there’s a new emphasis on digital and paperless work, does that cause corporate legal to look at collaboration differently, and does outside counsel to need to be more proactive in terms of how they how they deliver or work on drafts of content?
Also, another thing I’d like to say about COVID-19 specifically is that we quickly went through and did what we call a Smart Chart, which is basically an inventory of the 2,000 executive orders that we were able to find related to COVID, plus specific laws and regulations. We’ve been updating that chart regularly and making it available at no charge to anybody in the community, without any registration or anything, through our marketing web pages. It’s a simple productivity tool that we’ve made to help law firms and corporations respond quickly to the changing dynamics of this crisis.
Lawyers value close relationships with their clients and their coveted position as the go-to expert. That status, however, has been slipping away as others, including in-house legal operations professionals, get more involved. With people working remotely, it seems it may get even harder to stay close to clients. Can you talk a bit about that?
Historically speaking, if the general counsel has had an issue, they’ve been able to pick up the phone and know just who the necessary person is to engage about it. I’ll go back and put my tax and accounting hat on for a little bit. All of the decisions that came out of the Sarbanes-Oxley Act – the controls and managing and being able to make attestations about policies that could affect financials – I think they’re kind of swinging back at law firms now, because law firms are a supplier, and so you have procurement and you need to make attestations to the market and to customers about how you conform with the policy and support it when you affect their financial controls too.
It plays back into the procurement of legal services. When a company has, say, a policy around diversity, and they only want to work with vendors that have a policy that’s consistent with what they’re doing – well, that bleeds into law firms now. Maybe it wasn’t part of the first group of organizations that they looked at, but when you go down the list of all of your suppliers, you have to ask, what about law firms? So that’s one of the places where I say there’s probably been a significant change in dynamic – that and cybersecurity, since there is a lot of sensitive information that passes to a law firm, and if there’s a breach, how do you make sure that’s addressed?
You’ve spoken about the need for law departments to work faster to embrace technology. Talk about the embrace of technology by both inside and outside counsel.
I’m going to keep it slightly high level here, but I would say that when adopting technology, make sure it’s not just the shiny new thing. Look at it from the standpoint of what it does for improving the quality of relationships and services – making things better, faster, cheaper. It comes down to productivity and profitability. To your point, there are plenty of technologies out there. I’ve heard that there’s something like 1,200 legal technology companies out there right now, and obviously there are going to be winners and losers in mix. So you have to be mindful of what corporations are gravitating toward and what your clients are gravitating toward, because you want as much consistency as possible. If you have three different practice areas serving the same clients with these different technological approaches, and that client is working with numerous outside counsel firms, you can easily see how this fragmentation creates challenges, since there isn’t that harmonization that’s necessary for things to move slowly.
“Be mindful of the technology that corporations are gravitating toward, and what your clients are gravitating toward.”
CCBJ and Wolters Kluwer are going to participate in a webinar together for the first time. What can you tell us about that?
The value of webinars and webcasts has certainly increased in recent weeks, given how many legal professionals have moved to remote work settings. There’s an opportunity to involve a larger audience in virtual events, and an opportunity to address some of the same pain points that the industry is experiencing right now. We’re looking forward to working on our first webinar with CCBJ in the coming months.
Is there any guidance you’d like to share – advice from people who’ve done really well on panels with you in the past?
Our last big event in the legal space was a couple of months before this crisis hit. It was a legal operations event, and the panels were very popular. That was a live event.
Webcasts have to be thought of differently than a live event. With a webcast, you don’t want too many people involved, because the panels get hard to manage. It’s not like sitting on a stage, where you can cue each other just by looking at somebody and knowing that they want to say something. Without that ability, people can step all over each other, so I think it helps to keep the panel on the smaller side. I also think it’s important to make sure that the webinar isn’t just informative, but also actionable, so we’re looking forward to presenting content that will be interesting but also truly useful to the corporate counsel audience.