Enabling our client to focus on strategy
When Mercer, one of the world's leading financial institutions, decided to re-think its approach to supporting the legal requirements of its business, it wanted a fresh perspective. Working in partnership with Pinsent Masons, it was able to develop a forward-thinking approach to legal resourcing and re-focus the in-house team on value-adding matters.
The challenge
Following a period of market change, Mercer recognised that it could be overwhelmed by a high volume of operational work, and become unable to deliver the strategic value expected of a modern, commercial, legal function.
Like many legal departments, the Mercer team faced a significant volume of legal risk issues within which there was a spectrum of complexity. Some issues could be quickly and easily processed. Others, without expert handling, could quickly escalate and create a significant financial exposure, particularly when aggregated.
In the past, a typical solution might simply have been to outsource these matters, or create a large in-house team to service the work.
However, it was clear in this case neither of those models would be efficient, cost-effective or sustainable. Something more creative and collaborative was needed.
Working together, Mercer and Pinsent Masons devised a new, progressive way of working which fundamentally re-calibrated the traditional ‘client / adviser’ relationship.
The solution
Pinsent Masons and Mercer had a relationship dating back a number of years. The two organisations worked together to take their collaborative working approach to the next level.
Working in partnership, we were able to ensure work was done by the right resource and in the right way
What was required was the certainty of a fixed fee combined with the flexibility to accommodate an uncertain risk profile. As Lisa Tolaini, Chief UK Legal Counsel at Mercer reflected, “I am not a great believer in fixed-fee arrangements…because there is always the risk that people work to the fee. On the other hand, I want the certainty of knowing how much I am going to be spending, as managing the budget is a key function of ours.”
In conjunction with relationship partner Isabel Nurse-Marsh, a new model was devised, the principal components of which were:
- A transparent service. There were clear processes and reporting via a bespoke matter management system developed here at Pinsent Masons. Each matter was categorised into gold, silver or bronze. This was based on a range of factors such as potential cost and legal complexity, and followed a relevant track. At all times, we could provide the client with management information. This included number and type of matter, cost, time spent and other key indicators.
- Fixed fees and long-term certainty. The client knew exactly what its legal spend was going to be for specific work types over a defined period.
- Comfort that the service would be cost-effective because of shared risk. ‘Bonus’ payments were effectively awarded for efficiency.
- Accurate measurement of benefits. Together we were able to accurately measure benefits and provide management information. This helped us to detect trends and pre-empt legal risk.
- A mix of legal resources. Through one point of contact within Pinsent Masons the client was able to access: specialist legal resource at the cutting edge of legal developments in financial services; a wider team of lawyers based in lower cost centres; a range of more junior resource and LPO (legal process outsourcing) providers. It ensured work was overseen and conducted at a level appropriate to the risk.
This new, distinctive way of working fundamentally moved the relationship away from hourly rates. It also provided the flexibility for creative legal thinking which can be inhibited by a strict fixed-fee model.
Lisa Tolaini
Chief UK Legal Counsel, Mercer
Isabel’s team have such a depth of understanding of our business that they understand the nature of the work they are doing, and they understand the pressure that individual is facing. Pinsent Masons is one of the most innovative firms in this area.
Impact
The programme has been a major success. In addition to driving greater cost certainty and value in external spend, the programme has freed up the legal function to take a more strategic role; it now regularly advises on issues such as new product development which really contribute to the bottom line.
Lisa Tolaini sums it up: "Isabel’s team have such a depth of understanding of our business that they pick up the phone and they know the person they are talking to, they understand the nature of the work they are doing and they understand the pressure that individual is facing. Pinsent Masons is one of the most innovative firms in this area."