We’re one week away from the start of the Legal Marketing Association‘s Annual Conference, and if you’re a regular reader of Zen, you’ll know that my favorite session of the conference is always the general counsel panel.
This year, I thought I’d switch things up a little bit by reaching out to LMA before the conference to see if I could interview the GCs prior to the panel for a preview of their remarks. I spoke with one of the panelists on Friday, and will be speaking with another one this coming Friday, so tune in next Monday for our second preview interview!
Before I jump into the panelist’s remarks, let’s look at what LMA will be focusing on in this year’s panel, which is titled "How We Buy What You Sell – and How That’s Changing." The panel will be moderated by Catherine Moynihan, the Senior Director of Legal Management Services at the Association of Corporate Counsel, and will feature Darragh Davis, the Vice President & General Counsel for Petco Animal Supplies Inc., Virginia Sanzone, the SVP and AGC – Business Segments and Americas for CareFusion and Joe Otterstetter, the Managing Counsel for 3M.
You already know plenty about ‘The New Normal’ and how law firms are adjusting, but corporate legal departments are not standing still either. This year’s GC panel will share Association of Corporate Counsel (ACC) data and the perspective of senior in-house counsel on trends in law firm selection processes, outside counsel management, and unbundling and in-sourcing work. You will have a chance to take a look ‘under the hood’ at how legal services purchasing decisions are made and external resources are managed, including discussion of how ‘switching costs’ from an incumbent law firm are considered, the role of Procurement, how success is measured (including how the managers of outside counsel are evaluated), and more through open Q&A."
On Friday, I spoke with Virginia Sanzone, the Senior Vice President and Associate General Counsel, Business Segments & Americas at CareFusion. In her role, she is responsible for both of these business segments, and is the primary legal contact, where she supported the presidents of the two segments.
CareFusion was recently acquired by Becton, Dickinson & Company (BD), with the acquisition being completed on March 17, 2015. While Ms. Sanzone won’t be staying with BD, her almost seven years with CareFusion offers us an excellent perspective on the current state of the legal industry, the changes she’s seen since 2008, and what’s most important for law firms.
I asked Ms. Sanzone to comment on what she has seen as the most important trend for her legal department in the last five years, and not surprisingly, she observed that it’s bringing as much of the work in-house as possible in lieu of using outside counsel. She described it as inside counsel working as "business partners" for their companies by having someone inside and increasing headcount, thus offering the right support for the business.
We often hear inside counsel talk about their outside law firms as being their business partners, but this was the first time I’d also heard a general counsel speak about considering themselves to be a good partner for their companies. And of course, it makes sense.
Their goal is to become as efficient as possible, however that happens, in order to best serve the company. Ms. Sanzone noted, however, that BD isn’t operating this way yet – they’re currently conducting a survey to identify how they plan to structure their department, but they haven’t yet made a decision as to what will work best.
The Question of Metrics
I mentioned that there has been a lot more talk of metrics lately, and using those to help determine value. I asked whether she would agree that metrics have become more significant, and she said yes.
Metrics are useful for a couple of reasons, according to Ms. Sanzone – each year, she goes through an annual review, where she defends her budgets. This is done in a collaborative and respectful way, but she has to have metrics in order to defend the structure. Because of that, it’s equally important that law firms embrace metrics in order to become a real business partner (there’s that phrase again!).
I asked whether she’d seen a lot of pushback about that, and she said that there had been some, and so they don’t work with those firms anymore. They’d gone through the process about a year ago, and the majority of their outside counsel had signed up without increasing their fees, but with providing other value-adds, and all parties were happy with where they ended up.
Ms. Sanzone was quick to clarify here that she’s not looking for the cheapest service; she’s looking for the best value. She has no problem with paying more for outside counsel, if they can defend why it’s appropriate to pay more. She added that fixed fees were also not that important to her, but instead, emphasized the idea of having a business partner.
Success = Business Partner
That segued perfectly to my next question, which was how her definition of success has changed, and what’s most important to her now in working with outside counsel – and indeed, it’s this idea of having a business partner.
Ms. Sanzone said again that she wants to work with a partner. Interestingly, though, she considers this to be a firm-level mindset and not just something you find with individual partners. She observed that it’s important to learn which firms are willing to work with you, and typically, the partners at those firms will be similarly minded.
I mentioned to her that I’d recently spoken with a general counsel who felt that although the purchasing of legal services has been relationships- and reputation-based, there’s no reason for that anymore. From her comments, I said that it seemed she would disagree, and she said that was the case. We’ve heard a lot of talk in recent years that much of legal work is a commodity service, but not so, says Ms. Sanzone. Much of the work that she’s needed assistance with has required different expertise and talent, and is certainly not commodity work.
While there is some commodity work out there in the legal industry, the majority of it, says Ms. Sanzone, it much more specialized. With the right relationship partners, inside and outside counsel can come to the right solutions and prices together.
I look forward to hearing more of Ms. Sanzone’s comments next week at the LMA conference – keep an eye on this space for my recap of that session, as well as the next preview post from one of the panelists!