Flaherty Argues for Analytics at Prague Conference
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D. Casey Flaherty, corporate counsel for Kia Motors America, told attendees at the LawTech Europe Congress 2014 keynote this morning that corporate legal services are not “credence goods” (“products whose utility impact is difficult or impossible for the consumer to ascertain,” according to Wikipedia). Legal service can be measured by sophisticated analytics, he said, but corporate counsel are locked into a dated model of reviewing law firm performance by approaching each case is a special event—a “unique snowflake”—and looking at retained counsel’s performance on a case-by-case basis. The result is an underperforming, overpriced legal market, he said.
Relatively consistent law firm pricing, and modest differences in price between a “30-year lawyer and a 30-minute lawyer,” is evidence that the legal services market is broken when it comes to pricing, asserted Flaherty. In-house counsel have not implemented appropriate metrics that would allow visibility into the true costs of legal services, he said. Why? One answer is that in-house attorneys “prefer to do business with who they know and who they like,” he said. This “gentlemen’s agreement,” however, is not providing adequate visibility, notwithstanding the fact that proper analytics have been shown to reduce law firm bills up to 80 percent, Flaherty said at the three-day Prague conference that has drawn 500+ attendees. The event, held at the Clarion Congress Hotel, wraps up today.
In-house counsel tend to look at law firm bills on a case-by-case basis instead of using appropriate analytics to see the larger picture from new angles, said Flaherty, a frequent contributor to Law Technology News. If one attorney bills a client for reviewing a file for .3 hour, that might go unnoticed. However, if that attorney bills .3 hour to eight different files every day over the course of a year, the “marginal gains can have enormous impact,” he said.
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