DHL General Counsel Mark Smolik Improves Legal Department Performance with a Business Mindset (Part 2 of 2)

DHL General Counsel Mark Smolik Improves Legal Department Performance with a Business Mindset (Part 2 of 2)

By William (Bill) Henderson – Guest interviewer

This month Qualmet is pleased to present part two of a very special Value Drivers interview. The interview was conducted by Bill Henderson, Editor of https://www.legalevolution.org and Professor of Law at Indiana University Maurer School of Law where he holds the Stephen F. Burns Chair on the Legal Profession.

Bill is a prolific author and lecturer on the legal market. His industry accolades include ABA Journal Legal Rebel (2009), National Law Journal 100 Most Influential Lawyers in America (2013), and National Jurist Most Influential Person in Legal Education (2014 and 2015). Bill is also a Fellow of the College of Law Practice Management.
In this interview, Bill continues his discussion with Mark Smolik, General Counsel and Chief Compliance Officer with DHL Supply Chain of Americas, who developed a continuous evaluation platform from scratch almost a decade ago. Since then, he and his team at DHL have leveraged the platform to undertake a significant law firm convergence project that reduced the firms they worked with to a manageable panel of 19 as well as perform annual evaluations of those firms against objective performance criteria. In part one of this series, Bill explored the reasoning behind Mark creating his law firm performance management program and how it helped enhance the value his department delivered to the company. In part two, Bill delves into how Mark has further leveraged the review platform to improve the service delivery of his external law firms and drive value and efficiencies in his organization.

Henderson:
Mark, let’s talk about the feedback you received from your team on the performance of your external counsel and how you went about sharing the results of those evaluations with the firms. Can you walk us through how those conversations went the first time around?

Smolik:
I was very upfront with the firms. I not only informed them they were being reviewed but shared with them, in advance, the key performance indicators on which they were being evaluated. I also explained our objectives to ensure the firms were aware of how we believed they were performing and to provide them meaningful opportunities to continuously improve and close any performance gaps. Once our reviews were completed, we shared individual results with each firm giving them ample time before our face-to-face sit down with them to digest the information. Doing so set the stage for discussion on how the firm can assist our team in further enhancing the value delivered by the legal department.

It is important to note that when I first introduced the law firm review initiative, the industry was nowhere near as advanced as it is today. My outside counsel was very candid with me and shared that they had not gone through this type of process before with any client. They were accustomed to their own internal processes for evaluating their own performance but those processes lacked objective feedback from the client. That seemed a bit out of balance to me. It would be somewhat similar to me evaluating my own performance as an employee.

Henderson:
So, at the time it was incredibly rare in the legal industry for the purchaser of the service, the client, to communicate performance expectations to their law firms. How are your performance evaluations received today?

Smolik:
People want to know how they are performing at work. They look for opportunities to gain insight into how people to whom they are providing services believe they are performing. I am a firm believer that the more people know how they are perceived, how they are performing and whether that performance is, at the very least, meeting expectations, the more likely they will deliver sustainable service excellence and meaningful value to your organization. The same is true of any external service provider, whether a law firm or a supplier of non-legal related goods or services. Once I started sharing with my law firms their performance data, they became hungry for more. They want to know how their performance stacks up against other panel firms. I share that data with them but do not identify the names of the other firms.

Today, I also sit down with the leaders from our firms because they want to make sure they fully understand how their attorneys are being evaluated and what they need to do in order to meet or exceed expectations. I really look forward to these conversations. They give me an opportunity to have an open discussion that focuses on both sides of the relationship. It’s not just about the law firm and their performance. It is important for me to gain insight into how my team is interacting with the firm. I want to be sure we are adhering to the same principles, in the eyes of the firm, to which we hold them accountable. Further still, I’ve had multiple law firm leaders, some of whom are not part of our panel of firms, now reaching out and asking me to speak at their partnership meetings. They want all of the partners at the firm to have visibility into the KPIs and how we are evaluating attorneys and practice groups within the firm. There seems to be a real hunger among the best law firms to make sure they understand our expectations and that they have an opportunity to identify where they are performing well and where to improve.

Henderson:
Can you tell us about a performance evaluation where you had to give negative feedback?

Smolik:
I had a firm that performed very well during the first couple of years of the evaluation program. Then, in year three, they completely missed the mark. The firm had some changes among the team, and the new team members just weren’t aligned with the needs of our business.

Sharing this feedback with them was a bit challenging. I shared with them which team members were performing well and which ones were not. The bottom line message was the firm did a poor job transitioning work from attorneys who left to the firm to new attorneys handling our matters. This led to significant inefficiencies and service levels that were below the standards to which we were accustomed. The evaluations enabled us to pinpoint where those inefficiencies were happening and have informed discussions on how to address them. The firm remains among our panel and is now performing well.

Henderson:

Can you tell me about some of the positive reactions you’ve received from outside counsel about the evaluation process?

Smolik:
For the vast majority of the firms, I can see the change in regards to their demeanor and overall approach to servicing our account. The evaluation process helps them know where they stand with us, and gives them what they need to have internal conversations about the value they bring to our organization and to their firm. Several firm leaders have told me the performance review meetings they have with us is time very well spent and among the most valued meetings they have with any client. Over time, our conversations have also taken on more of a two-way discussion. I surely understand that sometimes the performance of outside counsel can really depend on the performance and guidance of in-house counsel. I use my 1:1 performance review meetings to gain insight from our firms on my team. This is not a formal process but when I sit down with the practice group chair or managing partner, I ask for feedback on members of my team and I sometimes include that feedback in our own internal performance reviews.

Henderson:
Have any of your law firms shared that they would like to have a similar performance evaluation process with their other clients?

Smolik:
Yes! Many of them do. In fact, I continue to hear the comment, “I wish all of our clients did this so that we knew where we stood.” I believe that these types of performance management programs, will provide the data-driven analysis that many law department leaders need in order to further solidify the relationships with their law firms and enhance the overall value proposition of their department.

Henderson:
How can in-house counsel make law firm performance management a priority?

Smolik:
If you are going to apply a business mindset to your legal department, then you will need a clear understanding of the business value you receive from your outside counsel. A transparent performance management program can provide a view of that value, but your program must continuously measure, share, compare and track the performance delivered by your legal service providers.

In terms of making the effort a priority, I suggest sharing your goals with your leadership team. Tell them what you aim to do with your performance management program. Let them know that you will evaluate outside counsel and hold them to the same high standards that you have for your internal team. When you share that intention with your leaders, it becomes easier to make performance management effort a priority and to then measure the value you deliver to your organization.

In case you missed it, part one of Bill’s interview with Mark is available here.

Know a Value Driver or would like to be included in the series? Please email us at rolf.provan@qualmetlegal.com.

Follow Qualmet on Twitter: @qualmetlegal

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