By Cash Butler, founder of ClariLegal and James Johnson, principal attorney of First Venture Legal.
We recently had the privilege of speaking with Jeffery Kruse, founder and President of Kruse Consulting and Dispute Resolution, LLC (KCADR). An attorney by training, Jeff graduated from Washington & Lee Law School in Virginia and went into private practice with the law firm Shook, Hardy & Bacon. Jeff represented pharmaceutical and medical device clients in the firm's product liability and tort practice. After eleven years at the firm, Jeff became Senior Corporate Counsel at Guidant Corporation shortly prior to its acquisition by Boston Scientific Corporation (BSC). While at BSC, Jeff helped build an in-house team responsible for the eDiscovery process at the company. After ten years, Jeff left Boston Scientific to join the pharmaceutical defense practice at the Kansas City firm of Baker, Sterchi, Cowden & Rice. Eventually, Jeff started KCADR (www.kcadr.com), where he provides dispute resolution services and serves as an efficiency consultant for law firms and legal departments.
Through KCADR, Jeff helps firms and legal departments improve their client services with the ultimate focus on the value received by clients. Jeff particularly helps firms run RFP processes to secure technology products and services to help those firms deliver greater value to their clients. We started as always by asking Jeff what value means to him. To Jeff, value is “receiving the best results for the best possible price.” Jeff notes that because clients are paying for results, everything that law firms and legal service providers do should be viewed through the “client's lens and focused on the client's interests.” Jeff also says that value can be viewed as “finding the most efficient and cost-effective solutions to reach the ultimate project goal,” or as getting “the ideal results in the quickest time.” However, Jeff also points out that “cost-effective” does not always mean selecting the cheapest option.
We also asked Jeff about how the concept of value has been defined by the firms and companies for which he has worked. Jeff notes that law firms and legal service providers often define value differently from corporate clients. For corporations, value has meant “being able to get the best results possible in the least time and most cost-effective manner.” Jeff's team often conducted RFPs to ensure their vendors and law firms continued to represent the best value for the company. In his career, Jeff notes that his team rarely chose the lowest-priced provider when selecting an outside service vendor. Instead, they would focus on selecting the vendor that promised to deliver the best outcome in the shortest period of time. For their efforts, Jeff's team at Boston Scientific team won back-to-back corporate-wide Platinum Value Improvement Project Awards for RFP projects, unprecedented for in-house legal at the time. The Platinum Value Improvement Project Awards were the highest honors for continuous improvement projects at BSC at the time.
On the other side, Jeff notes that law firms will often define value by the billable hour. However, Jeff believes the billable hour creates “disincentives for increasing efficiency and continuous improvement” at law firms. This disincentive for firms to improve efficiency runs counter to continuous improvement culture at most corporations, especially in the pharma, biotech, and medical device industries. Jeff also notes that, for law firms, much of the focus in providing value to clients is centered on litigation mitigation. But Jeff points out that companies don't see themselves as having “legal problems.” Rather, for companies, they have “business problems that have legal aspects.”
We next asked Jeff for his thoughts on how the COVID-19 pandemic might shift perceptions of value in the legal industry. Jeff recalled the difficulties that followed the 2008 recession. In particular, Jeff says that law firms and in- house legal departments had to “learn to do more with less” as a result of layoffs and headcount freezes. The same thing is happening again for corporations, who now must do the same work as before with fewer people, or in the case of some companies, more work with the same number of people as before. Jeff believes the business world will see an uptick in legal matters and litigation, especially with respect to the renegotiation of supply chain agreements and commercial real estate contracts.
As for how legal departments prepare for an increase in legal activity, Jeff has been helping his legal department clients to develop “processes and procedures for an influx of litigation, renegotiation of contracts, etc.” For his clients, Jeff is guiding them to create strategies for what to do if customers and suppliers refuse to renegotiate contracts. On the law firm side, Jeff has been assisting his clients about what to do if clients insist on rate freezes, and how to handle issues created when the law firm's service vendors can no longer provide the same level of service due to layoffs. Jeff's advice to law firms and legal services vendors is to consider adopting appropriate alternative fee structures during the economic downturn. Jeff notes that AFAs are not just about saving money, but can also provide clients and the firms with financial predictability. Jeff believes that companies may start using more RFPs to make sure they are getting the best value for their money during these tough economic times. He notes that RFP platforms such as www.ClariLegal.com make the RFP process substantially faster and allow clients to define what the costs of services should be.
We next asked Jeff how, during his career, he has measured the delivery of value. Jeff says that, when he was in-house, he would look at metrics such as time from inception to conclusion of a matter, and the “total cost of delivery.” Jeff says that although the goal was to use data to determine how services were be- ing delivered, in his experience, it was easier to measure legal service vendors using metrics than it was to compare law firms. Jeff notes that historically vendors have set benchmarks for their performance, and law firms are just now beginning to do this as well. Jeff believes that the difficulty in measuring the delivery of value from law firms stems from the fact that litigation matters are considered hard to quantify. However, Jeff says that once you have data from multiple law firms' performances, clients can start to determine “what those services should cost.”
To conclude, we asked Jeff whether he thought RFPs and vendor management tools contributed (and contributed well) to legal stakeholders' understanding of value and conversations about value. Jeff begins by noting that historically this is a tough question to answer because of the old way of conducting RFPs through Word documents or spreadsheets.
That traditional RFP process was time-consuming, resource-intensive, and often frustrating because there was no automated way of comparing the different pricing models proposed by the prospective vendors or firms. Specifically, Jeff notes that “the traditional way of doing RFPs posed difficulties in getting apples-to-apples comparisons and being able to evaluate whether you are getting the best value.” Because “service providers have been creative in using different pricing models there was no easy way to compare [prices or bids].” As a result, Jeff often found it difficult to get a straight answer on what a service offering would cost. Jeff says that the industry is beginning to move toward universal pricing metrics but isn't there yet. Jeff believes that some vendors still try to hide the final price. Ultimately, Jeff says that emerging RFP tools like the ClariLegal platform will help clients and customers reduce the gamesmanship in the RFP process and will help them get the best value for their legal service dollars. These new products and services provide great ROI with a minimal time commitment. Because helping clients conduct RFPs has been a big part of his consulting work through KCADR, Jeff is excited to use these cloud-based automated RFP tools to streamline clients' RFP procedures to help them save time, save money, and reduce frustration in the RFP process.
About the Authors
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.