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In Search of Perfect Client Service Why lawyers don't seem to get it

Justifying shadow billing as promoting diversity? Much better ways exist.

Posted in Commentary, General, Leadership and Management

Earlier this year, Vincent Cordo, the Global Sourcing Officer for Shell, and Casey Flaherty, a consultant to law departments, wrote an article for the ACC Docket, Shell Legal—Shadow Billing. Let me begin by disclosing that I have enormous respect for the work Vincent Cordo has done at Shell and that Casey is a friend whose work I also respect greatly.  However, respect and friendship do not translate into complete agreement on all issues, and this article presents an area where I disagree. I know Casey won’t be surprised.

The authors identify the value Shell places on diversity and the role of shadow billing in promoting diversity:

Shell is committed to diversity — internally and throughout its supply chain. One of the many ways in which Shell Legal pursues this company objective is to track and report on how much of the business sent to outside counsel is distributed to women and minority owned firms, as well as how much of the actual work is allocated to diverse attorneys and allied professionals. Shell measures not only the general diversity of its law firms, but also the actual diversity of timekeepers assigned to Shell work down to the percentage of total billing for which they are responsible. Measurement is central to management.

Although we will later write a full article on Shell Legal’s diversity efforts, this article focuses on a form of cost accounting that is sometimes referred to as “shadow billing.” There is a common belief that companies like Shell that have moved to appropriate fee arrangements (AFAs) should no longer concern themselves with billing data. The diversity imperative belies that belief. Indeed, there are many reasons why Shell will continue to be interested in as much data as is available.

Diversity as a chosen value is laudable, but I believe there are superior ways to measure diversity if one really wants to promote the development of diverse lawyers.  Hours measure the quantity of time spent on a matter, but not on the importance (value) of one’s contribution to the matter.  If you want diverse lawyers to be involved, why not activities performed by diverse lawyers, such as:

  • The number of depositions taken, both alone and as a percentage of all depositions on a matter
  • The relative importance of the depositions taken
  • The number of depositions of client personnel defended
  • The number of expert depositions taken and defended
  • The number of court appearances
  • The number of court appearances where the diverse lawyer was the primary speaker
  • The number of motions argued
  • The number of client meetings led
  • The number of trials first or second chaired
  • The number of witnesses taken at trial

And so on.  It isn’t hard to identify easily measured activities that are far more indicative of the actual role diverse lawyers play on a given matter or for a given client.  Measure things that are actually substantive.

If a client wants to truly promote diversity, there are other actions that will have far greater effect.  These things will help diverse lawyers develop as important players in their firms, which will have ramifications for diversity beyond just one client:

  • Require, as other corporations have done, that the relationship partner be diverse. If not immediately, then within one to two years
  • Require that the lead lawyer on important matters be diverse. And if the firm cannot accommodate that requirement, find a firm that can. The first firm knows how to hire people laterally.  Make it important for it to do so.

And if a client wants to promote diversity generally within the bar and not just at a few firms, why not require firms to report on things such as:

  • Number of public speeches given by diverse lawyers, or things like publicly available webinars
  • Number of committees or bar groups diverse lawyers are both active in and have obtained a leadership position
  • Number of committees or groups diverse lawyers are active in that are involved in selection of judges or judicial review.

External activities such as these involve diverse lawyers in the broader legal community and enhance their stature before the bench and the bar.

Recent data has shown that firms have done a miserable job developing and promoting diverse lawyers.  If it was a handful of firms, such a failure could be chalked up to happenstance or something specific to a firm.  But the failure is too broad and too consistent to be anything other than systemic.  And while I am heartened when clients say they are committed to diversity, few have really taken the steps available to them that make a real difference. Relying on hours instead of seeking more important data is missing a valuable opportunity.