Page 44 - Leaders in Legal Business - PDF - Final
P. 44
5) How to Hire a Consulting Firm or Consultant
In this section, I will provide an approach that works well for most law firm clients.
Initial consultations: When you know you’ve got an issue but you don’t quite know how
to define the challenge yet, or if you know you want to achieve something different from your
predecessor but you don’t quite know how to go about it, it is perfectly legitimate to call on a
consulting firm or a solo consultant. You can sound them out about how they would approach
the topic if they were in your shoes once internal resources and the thoughts by retained advisors
are exhausted. That initial conversation, or even two, should always be free of charge, as the
consultant should be pleased to build a relationship with you. If the problem resolves itself in
these conversations, fine. Undoubtedly you will show your gratitude and call that same
consultant again when the next topic comes around for which external input may be valuable.
Defining a scope: If these informal soundings are not sufficient, it is most effective to
develop a short brief and get input from your consulting firm of choice. If that consulting firm is
an expert in the subject matter, it will be able to assist you in shaping project parameters that
help you overcome your challenge or achieve your goal. As is true for any type of project, you
then agree on a scope and a fee basis for the work to be done if it’s a project (see above), or the
terms of a retainer or indeed a combination of the two along with a success fee, as appropriate.
Defining objectives and scope is critical, no matter how the consulting firm wishes to
price the work to ensure the law firm in the end gets the value it wants.
Consulting fees: Consulting firms often charge by the hour or the day. This is
appropriate for work where the scope cannot be defined easily or if there are too many “known
unknowns” in the work to be done. In most cases, any efforts-based pricing will put the interests
of the consulting firm squarely against the interests of the law firm; the consulting firm will want
to maximize days spent, and the law firm will want to minimize the time spent to save costs.
We posit that in many cases, a clearly defined scope and a fixed fee or retainer,
sometimes coupled with a success element as appropriate, often is fairest to both sides. This is
because this approach focuses on the challenge to be overcome or the goal to be achieved, not
the inputs to get there. This approach helps establish clarity at the outset, allows both sides to
plan their cash flows, and can avoid often tedious discussions about why our team needs to
involve two or three team members.
This approach does require for both sides to be willing to have early and candid
discussions about scope changes.
Competitive bids: It may be helpful to get input from several consulting firms and to
select the firm that provides the best approach combined with the best price. This approach
works so long as the challenge and goals are well defined. In our experience, we can achieve the
best results when the client remains open to changing its approach, both on how it wants to work
with the external firm and on its selection process. Rigidity often provides a result that falls short
of what the firm hopes to achieve. I remember vividly receiving a request for proposal (RFP) to
advise a firm on changing how partners are paid; I had to go as far as advising the managing
partner that his partners would likely depose him if he insisted on the methodology provided in
30
In this section, I will provide an approach that works well for most law firm clients.
Initial consultations: When you know you’ve got an issue but you don’t quite know how
to define the challenge yet, or if you know you want to achieve something different from your
predecessor but you don’t quite know how to go about it, it is perfectly legitimate to call on a
consulting firm or a solo consultant. You can sound them out about how they would approach
the topic if they were in your shoes once internal resources and the thoughts by retained advisors
are exhausted. That initial conversation, or even two, should always be free of charge, as the
consultant should be pleased to build a relationship with you. If the problem resolves itself in
these conversations, fine. Undoubtedly you will show your gratitude and call that same
consultant again when the next topic comes around for which external input may be valuable.
Defining a scope: If these informal soundings are not sufficient, it is most effective to
develop a short brief and get input from your consulting firm of choice. If that consulting firm is
an expert in the subject matter, it will be able to assist you in shaping project parameters that
help you overcome your challenge or achieve your goal. As is true for any type of project, you
then agree on a scope and a fee basis for the work to be done if it’s a project (see above), or the
terms of a retainer or indeed a combination of the two along with a success fee, as appropriate.
Defining objectives and scope is critical, no matter how the consulting firm wishes to
price the work to ensure the law firm in the end gets the value it wants.
Consulting fees: Consulting firms often charge by the hour or the day. This is
appropriate for work where the scope cannot be defined easily or if there are too many “known
unknowns” in the work to be done. In most cases, any efforts-based pricing will put the interests
of the consulting firm squarely against the interests of the law firm; the consulting firm will want
to maximize days spent, and the law firm will want to minimize the time spent to save costs.
We posit that in many cases, a clearly defined scope and a fixed fee or retainer,
sometimes coupled with a success element as appropriate, often is fairest to both sides. This is
because this approach focuses on the challenge to be overcome or the goal to be achieved, not
the inputs to get there. This approach helps establish clarity at the outset, allows both sides to
plan their cash flows, and can avoid often tedious discussions about why our team needs to
involve two or three team members.
This approach does require for both sides to be willing to have early and candid
discussions about scope changes.
Competitive bids: It may be helpful to get input from several consulting firms and to
select the firm that provides the best approach combined with the best price. This approach
works so long as the challenge and goals are well defined. In our experience, we can achieve the
best results when the client remains open to changing its approach, both on how it wants to work
with the external firm and on its selection process. Rigidity often provides a result that falls short
of what the firm hopes to achieve. I remember vividly receiving a request for proposal (RFP) to
advise a firm on changing how partners are paid; I had to go as far as advising the managing
partner that his partners would likely depose him if he insisted on the methodology provided in
30
