Sunday, 25 March 2012

Bottled at source?

Henry Ford famously claimed that had he asked his customers what they wanted, they would have asked for faster horses.  Innovation, it is claimed, must come from the supplier.

Certainly, it is true that, none the iPod, iPhone or iPad would have been invented had customers been asked what they wanted, myself included.  However, I would not be without any of them now and in some cases am on my third iteration.  Apple, having proved to me the art of the possible created new markets for products, I myself didn't know at that time I had a need for.

In legal services too, it will be necessary for innovation to come from suppliers.  The very essence of Clementi's Report and the resulting legislation was to encourage new thinking on the supplier side and therefore improve the service offering to consumers.

Simple then?  No.  

Unlike Apple products, legal services are bought on an "on-demand basis", usually as a distressed purchase, and necessitate an urgent and bespoke response.  Law firms, being partnerships, do not have the corporate structure to invest speculatively in what it guesses a client may want should they be called up when the need arises.

Increasingly, corporates and the public sector are 'procurement techniques' to source panel law firms and agree fixed pricing.  Many "legal consultants" charge on the basis of the % saved on hourly rates, the only metric that any one relies on at present, albeit that it is entirely flawed being only one of a number of components of the total cost.

New metrics are needed to provide consumers with a benchmark as to what good looks like.  However in a market that has no reliable data published, it will require respected experts (like the Big 4 accounting firms) to collate this over the coming few years.

Until then, it will require courage from consumers to commission suppliers off legal services to deliver and price in a different way, with measured and specified outputs driving savings and service improvement today.  

Buyers will need guidance from properly 'qualified' consultancies and should have the courage to invest in this to buy better and cheaper.  Failure to do so, or running the sort of tick box exercise that lead to the Applied Language Solutions deal with Ministry of Justice and you will buy less for more.

I have worked on at least 10 RFPs for legal panels from major UK companies which, in each case, they have openly declared war on the hourly rate and sought 'innovative thinking'.  I know that a number of suppliers offered such thinking yet those companies still opted to source based on the hourly rate claiming that suppliers had failed to innovate!  

They didn't get what they set out to, why - in short, they bottled it.

No comments:

Post a Comment