By Cash Butler and James Johnson.
We recently had the privilege of interviewing Dennis Kennedy, a legal technology and innovation advisor, well-known legal technology and innovation author, podcaster, and professional speaker, and an adjunct law professor in the LegalRnD program at Michigan State University College of Law. Dennis practiced information technology law for many years before retiring as Senior Counsel, Digital Payments & Labs, at Mastercard. In that role, Dennis supported teams working on new payment technologies, including mobile wallets, APIs, and blockchain, as well as R & D, innovation, and financial inclusion.
We first asked Dennis the main question of what value means to him. Dennis says that he likes the definition that emphasizes that value is “the extent to which you actually meet a customer’s explicit and implicit needs.” Dennis believes that value should be customer-focused, looking holistically at a customer’s needs, from the customer’s perspective. He sees a value as a continuum – a “sliding scale” of value.
He says, “the extent to which you’re meeting those customer needs helps you gauge how valuable the work you’re doing and the service you’re delivering is.”
We then asked Dennis how he has looked to deliver value and to measure his delivery of value in his long legal career. Dennis begins by noting that, at Mastercard, one of the key principles in the law department was having “business acumen.” Simply put, to effectively deliver value to a client or customer, you must deeply understand that client’s or customer’s business. He believes that delivery of value re- quires a service provider to understand three key factors, especially as all business increasingly become technology businesses, and how they fit together. First, you must understand “the technologies at the root of the client’s or customer’s business at least well enough to be able to explain it to business partners in negotiations and ask the right questions about it to the business team. Second, you must understand your client’s business goals and objectives. This helps you “ask the right questions, understand timeframes, deadlines, and product launch targets, be aware of the pressures on people, and be committed to what your client is trying to accomplish.” Third, one must understand the constraints on the client’s or customer’s owners, managers, employees, and even their own clients and customers. This is what he considers a “holistic approach.” In the end, Dennis argues that business acumen requires you to know deeply how the various aspects of a customer’s ecosystem fit together with those of business partners and how legal services facilitate the success of this ecosystem.
As for measuring the successful delivery of value, Dennis first notes that measuring the delivery of value is a “constant work in progress,” with continuous improvement as an overarching goal. The legal industry appears headed slowly toward the adoption and use of metrics to measure the successful delivery of value, but Dennis emphasizes that good and actionable metrics are key to ensuring that a legal department or an outside counsel or outside legal service provider is not causing friction or delay in the client’s or customer’s business operations. For example, you might measure whether services are being delivered according to the client’s or customer’s own performance metrics, deadlines, and launch dates. This alignment is another part of business acumen. In addition to metrics, Dennis also believes that measuring the successful delivery of value requires empathy and putting yourself in the position of the business owner or manager.
Ultimately, Dennis says that measuring the delivery of value is a balance between quantitative and qualitative measurements. Dennis notes that there has been a trend over the past few years to incorporate more quantitative metrics, such as whether services providers are meeting the client’s operational deadlines, how internal and external service providers are delivering value to the company, and use of key performance indicators and OKRs (objectives and key results). He personally likes the term “deal velocity” when describing the time from deal initiation to contract signing. Although many measures, metrics, and indicators are being used outside the legal industry, it is often hard to get everyone to agree on the key metrics and numbers to measure and adoption. Dennis acknowledges that the adoption of metrics in measuring delivery of legal value is still in the early stages, but he sees the area as one in which there is great opportunity for innovative legal service providers.
We next asked Dennis for his thoughts on how value is actually communicated in the legal industry. Dennis sees stumbling blocks in the value exchange, often starting with vocabulary and language. Lawyers often don’t speak the language of business or technology, let alone get to the point of seeing value from the business perspective.
Dennis noted how outside counsel too often failed to understand the client’s sought value or the issues the business was facing and, even worse, did not bother to ask questions about the business components of the issues while they over-focused on tangential legal nuances. Dennis realized long ago that he didn’t want a “traditional legal approach” from law firms to address business issues. To illustrate what he meant, he gave an example of when his company, in creating click-through agreements for developers to use the company’s API, wanted outside counsel to use their experience to identify those contractual provisions that were “standard” or “market” in the industry to create a simple, easy-to-understand agreement, rather than a massive, comprehensive agreement under the traditional legal approach that could drive developers away. Dennis found that those firms who took the “comprehensive” approach didn’t understand the company’s technology or business and wanted to create agreements that would cause unnecessary friction.
When we asked Dennis whether legal service providers and their clients are adequately communicating with one another about value, he sees difficulties in current communication and collaboration. For example, Dennis notes how many clients fail to conduct the important step of asking key questions of their legal service providers about how the services will be provided and what innovative approaches might be employed. Dennis believes that many clients don’t ask enough question, such as how their matter is going to be staffed, how the deliverables are going to be defined, what the cost will be, how it will be billed, or even whether a prospective firm has the requisite specialized expertise.
Dennis recounted the story of how he had to teach outside counsel about Open Source licensing basics, so that the firm could do the due diligence review they were hired to do. He noted that the outside counsel was earning much more per hour than he was. A similar, and all-too-common issue, is law firms and legal service providers who merely assume they know what is important in a specific matter and what the client’s business is about, without asking the client what is important to it and its business or what the client’s approach or risk appetite is.
We moved to the topic of RFPs. Dennis is a fan of vendor management tools and technologies that enable both sides in the legal industry to communicate with one another about value. Dennis noted that more and more the discussion about value in legal services is often driven by companies’ finance and procurement teams, in some cases at the CFO level, rather than companies’ legal departments. Dennis believes legal RFPs are much too complicated and time-consuming and that the concern in the legal services industry about “pages and pages of information gathered for RFP responses that they don’t feel are read” is on target. Instead, Dennis wants RFPs to be simplified and standardized to be usable and actionable and allow meaningful screening of prospective service providers.
Dennis gave the example the Common Application now widely used for college admissions applications so prospective college students don’t have to fill out many unique, but quite similar, college applications. He would like to see at least the consideration of a similar approach for RFPs for legal services procurement – having simple, common questions for everyone to answer, on a platform that allows service providers to answer questions easily and allows clients to read and compare those answers easily.
To end our interview, we asked Dennis for his final thoughts on value in the legal industry. Dennis is a big advocate for using panel consolidation to drive innovation and collaboration in legal services. Dennis also encourages law departments to develop the discipline to punish or even fire firms that aren’t delivering the client’s explicitly sought value. No more business as usual. Dennis further argues that it is imperative that lawyers understand technology, as well as understand technology businesses. He said that it is “unacceptable and intolerable” for clients to continue to deal with lawyers who refuse to understand this point and to do the necessary work, on their own dime, to get up to speed. Dennis is intrigued by how the legal industry will respond to the movement to a platform economy where the most successful businesses are becoming both cross-industry and cross-discipline, where platforms and marketplaces play a vital role. Finally, Dennis encourages law firms and legal departments to collaborate in better ways and work together to make legal budgets more controllable and more disciplined. As he likes to say, “there is value in value.”
About
James Johnson is principal attorney of First Venture Legal, a Cambridge, Massachusetts-based law practice focused on corporate and transactional law for very-early-stage startups. James assists entrepreneurs and small business owners with corporate formation and structuring, contracts, commercial law, employment matters, and early-stage fundraising. His practice utilizes alternative fee structures to deliver value-based service to early-stage ventures. In addition to practicing law, James works with ClariLegal, focusing on building out its innovative platform and spreading the word of ClariLegal’s mission to reduce cost and complexity in legal vendor selection and management for law firms and corporations.
Cash Butler is the founder of ClariLegal. A seasoned legal technology innovator, Cash has over 18 years of experience in the legal vertical market, primarily working in eDiscovery, litigation & compliance. Cash is an expert in legal vendor, pricing and project management. ClariLegal is a preferred vendor management platform for legal services that improves business outcomes. Made for legal by legal experts. We match corporations and law firms with preferred vendors to manage the work through a fast and complete RFP and bidding process. ClariLegal’s platform allows all internal client segments to improve business outcomes across the board – predictability, time and money.