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Shell Legal – RFI

Law Dept. Management Column
E conomics is the study of how people make choices under conditions of scarcity. Scarcity is separable from necessity. There have been very few markets for oxygen and sunlight in human history because, despite the fact that they are essential to sustain life, neither has been scarce. That markets have developed for both oxygen and sunlight in a few places, like Beijing and Tokyo, but not the remaining 99.9 percent of the world’s occupied land mass is a testament to the fact there is no such thing as The Market but, rather, different markets in different places under different conditions.

Top-flight legal services are scarce like nice cars are scarce. Not everyone can afford them but those who can have options. At the very highest end (think a Bugatti or Paul Clement), there is true scarcity. At the low end, there is a price floor under which something serviceable is currently hard to find. But, in between, there is abundant supply. The challenge is in the choosing. The focus therefore shifts from quality to value. That is, from asking whether or not the service provided will be sufficient (the threshold consideration) to whether we are maximizing the purchasing power of our finite resources and how the investment will perform in the short, medium, and long term relative to the other available options (the differentiators).

When Shell selects a panel firm, it is making an investment in a relationship. Awarding multi-year and, in many cases, multi-million dollar supplier contracts are major fiscal decisions with significant downstream implications. Thus, heuristics such as brand or personal friendships that might work well in acute situations of uncertainty are insufficient for a sophisticated consumer making a studied selection. That is why the panel firm selection process described in the previous Shell series post was designed as a structured dialogue between Shell and its potential panel firms. A key step in that process was the Request for Information (RFI) that included an entire section dedicated to value services.

Value services are services provided to Shell by its law firm that Shell does not pay for directly. Rather, value services are bundled as part of the overall relationship. Value services include access to the firm’s resources such as knowledge management, project management, training, and support staff (e.g., word processing). Value services include alternative means for sharing expertise like an advice hotline, CLE’s, and updates on key developments in areas of interests (e.g., statutes, regulations, case law). Value services also include actual services to Shell like temporary secondments and assistance from the firm’s pricing professionals.

That Shell does not pay directly for value services is not to say that firms are not financially rewarded for their provision. The value services offered — which differ from firm to firm — are an explicit part of Shell’s selection calculus. Being selected for the panel is financially rewarding. Moreover, as part of the firm’s annual performance review, Shell requests that firms track and submit their financial investment in providing value services, as well as in Shell-mandated vendors.

Value services are also additional touchpoints between Shell and its firms that extend the relationship beyond the management level. Value services are an opportunity to better integrate firms into Shell’s legal value chain and achieve alignment on multiple dimensions of legal service delivery. When Shell lawyers are working alongside firm lawyers (secondment), learning from their firm counterparts (CLE), utilizing the firm’s infrastructure (knowledge management), or relying on the firm’s support apparatus (project management), Shell is not only receiving direct, measurable value but also insight into how the firm operates and how well the firm meshes with Shell Legal’s pursuit of superior business outcomes.

Legal expertise is mission critical. But legal expertise is not scarce. Strong working relationships between client and their law firms, however, are both scarce and fragile. Strong working relationships require consistent and continuous investment in time and resources on both sides to achieve integration and alignment that extends beyond technically proficient lawyering. How do you get your law firms to provide something more than technically proficient lawyering? You start by asking.

About the Authors

Vincent Cordo serves as the legal team's Global Sourcing Officer for Shell. He is a member of the ACC Legal Operations section.

Casey Flaherty, a former in-house counsel, is the founder of Procertas. Casey consults with law departments and law firms on legal operations, service delivery, and technology. He is the author of Unless You Ask: A Guide For Law Departments To Get More From External Relationships, written and published in partnership with the ACC Legal Operations Section.

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