New Zealand Law Society - For a fee or for free? Secondments in the current legal marketplace

For a fee or for free? Secondments in the current legal marketplace

Anna Lozynski
Anna Lozynski

ILANZ president Sian Wingate looks at the traditional secondment model still used across New Zealand and Australia. To help her understand the value of this model from an operational perspective, she talked to Anna Lozynski, General Counsel and author.

The secondment model is neither new nor unique to the legal profession. Clients in many professional services such as engineering, accounting and law often request that a secondee is installed into their day-to-day operations for a wide variety of reasons.

Traditional and alternative secondment models

The ‘traditional’ secondment model is still thriving here and across the Tasman Sea. This model is where a lawyer or associate from a law firm is placed with the client for a fixed period or a fixed number of days per week.

In this model a firm may place the secondee in response to a client request for a secondee or have a rolling rotation with an established client. Or the firm may ask the client as a way of supporting the development of its lawyers. The firm usually supplies a junior lawyer or less experienced associate to a client but may also meet demand with a senior associate or partner if needed.

Then there is the ‘alternative’ secondment model where a law firm offers placements of experienced, in-house lawyers into legal teams. This is a manifestation of the legal marketplace predictions around the ‘uberisation of lawyers’. Articles featured in NZ Lawyer and on stuff.co.nz predicted this trend and used this phrasing back in March 2016. Fast-forward to 2019 and the Westpac Smart Industry Report: Professional Services towards 2030 released in August, is repeating the same theory using the same phrasing – suggesting it is becoming an embedded concept.

‘Uberisation’ is a business-model term borrowed from the Uber ride-share model. It means “a transition to an operational model which enables economic agents to exchange underutilised capacity of existing assets or human resources with close to zero transaction cost”.

The logic under the emerging uberisation model is based on supply making the best use of resource and capacity to meet the buyer demand. For legal services, it is a simple calculation. If there are lawyers around with spare capacity, the legal marketplace buyer will start to demand they are used to supply the services at a lower cost. This is replacing the long-standing seller-driven legal marketplace which may request higher costs for a human resource who may be over-utilised and struggle to deliver the same value. In addition, the buyer will expect the supplier (ie, a law firm) to offer value-based pricing which includes appropriate training of staff and utilisation of technology where possible to gain efficiencies to pass on to the buyer.

How do the models differ in their value-add to an in-house team?

In the alternative model the firm offers experienced, in-house legal counsel who can hit the ground running without any legal training or upskilling to work within an in-house environment expected to be supplied by the in-house team. An induction to that specific organisation and its legal function would still be required as well as ongoing CPD to keep the legal skills topped up.

In the traditional model it is ILANZ’s experience that the secondee, if junior, would require some legal training to be offered by the equivalent of a supervisor within an in-house team. In addition, unless the person is a seasoned secondee who has done many in-client rotations, there would also need to be a significant amount of time invested by the client in upskilling the secondee to be of value to an in-house legal team.

Secondee training in the traditional model

Is the law firm or the client legal function gaining the most value?

Anna Lozynski has no doubt that if a legal function engages a secondee, it is the legal function which is supplying a valuable service to that firm by training the lawyer in a variety of ways.

Some examples of this invaluable training and development include:

  • Real-life experience of meeting commercial, strategic and operational demands as well as looking after the legal risk.
  • A multitude of stakeholder management training.
  • Collaboration and communication upskilling.
  • Mentoring on what issues matter to clients.
  • Education on how to package up advice in a way that is “business ready” that can be used by business teams in their day-to-day roles.
  • Learning the importance of knowing the business as one of the hallmarks of being a successful lawyer (particularly in-house).
  • Understanding a different side of building and maintaining client relationships.
  • If it is a progressive legal team, exposure to legal operations and innovation cycles to improve the legal function.
  • How to execute work to a strict budget (or lack thereof for many in-house teams) and have conversations about costs.

Should a traditional secondment be free or for a fee?

Ms Lozynski suggests that traditional secondments should one day be available on an ex gratia basis to clients to round our future lawyers out as service providers. The law firm is gaining an invaluable “fly on the wall” insight into client requirements from its secondee. The firm is also gaining an additional training channel for their junior associates, associates or even partners.

However, Ms Lozynski also acknowledges that there is a value back to the client and so a fee is going to be charged for the moment. However, she counters that this should perhaps be at a far more competitive rate than is expected at present.

How can an in-house team calculate the value of bringing a traditional secondee on board?

This is about thinking carefully about what value a traditional secondee from a traditional law firm brings from a broad perspective.

Anna Lozynski says the secondee brings the law firm resources for research and targeted advice with them. In-house teams rarely have time or resource to perform the in-depth legal research needed for certain matters: this is in-house counsel engaging external counsel. Having a person in-house to delegate these tasks to with the comfort that they will check that advice via their law firm structure is invaluable.

It forces a process to be created. The induction of the secondee to a legal team means that a process needs to be documented in some way on how to induct the new team member, how to explain the value-add of the in-house function and coach on how that team manages its work. This is valuable as it can be used again for new permanent team members and the next secondee. It also enables the in-house team to realise its own value by collating the thoughts into a process of policy.

A secondment can challenge both parties’ assumptions about how to deliver legal services. The junior lawyer, associate or partner may arrive with a variety of pre-conceived ideas around how to deliver advice and legal assistance. It may be that they understand that advice is ‘packaged’ in a certain way or that only certain levels in an organisation receive or read the advice.

In contrast, the in-house team may receive their secondee with their own notions of how ‘big law’ still operates day-to-day. They may believe that they are not familiar with how to operate in a multi-discipline environment and tailor advice and help accordingly. This assumption may be completely wrong. The secondment can offer the legal team a great opportunity to learn about what their external advisers can truly offer.

The value to both client and firm is that these assumptions, whatever shape or form they come in, can be tested. A secondment is a great way to gain an inside view from both sides.

How can an in-house legal team pitch for a cost-effective secondee?

This one can be tough, says Anna Lozynski. With Big Law firms, she often feels that she needs to ‘hustle’ to arrange a secondment at a reasonable, realistic fee.

Her pitch is to remind the firm that their secondee, regardless of experience level, will receive some new learning, some professional development and curate an invaluable long-term relationship with the business. Anna says this discussion is often a good test as to the firm’s level of willingness and commitment to you as a client.

The secondment also offers a firm the opportunity to reach an understanding of exactly how much the experience improves the skills of its lawyers.

Can a law firm meet its billable hours targets and offer a cost-effective secondee at the same time?

This can be tough. If the law firm still runs this model, it is important for the in-house team to be mindful that the firm they engage may be placed in a difficult position when the in-house client is asking for a value-based pricing option instead.

The trick, says Ms Lozynski, is to convince the firm to be open-minded, “rather than applying a lens of inconvenience to the current work demands of the firm’s department because clients don’t want to sense that”. The main challenge she perceives is the mindset shift required in the calculation of how to bill the secondee’s time.

The billable hours model presents significant challenges. The best fee arrangement is one that recognises what the secondment brings to both parties and charges accordingly. She recommends firms and in-house teams be creative when it comes to exploring options. Perhaps the secondment can be flexible with some time delivered part virtual and part in person. Alternatively, the secondee could perhaps job share with another lawyer to enable the secondee to get back to their desk to progress other workload.

The arrangement could also be reciprocal: the secondee swaps with an in-house lawyer who takes their place in the traditional firm. This could be price-neutral and offer both lawyers a rich development opportunity.

There are always ways to meet both the buyer and the seller’s needs in the legal secondee marketplace if an open-minded conversation takes place.

It’s worth any law firm noting that a good place to test out new pricing arrangements is in the in-house space. Our teams are used to being creative with very small budgets as they are a cost-centre and not a revenue-generator and so are always open to new charge-out ideas.

Are secondments great value?

Absolutely, says Anna Lozynski. She says there is huge value to both an in-house client and its external firm in curating and consolidating a partnership relationship between an in-house legal team and its external advisers.

She notes that any secondee is not necessarily a resource who arrives and delivers value immediately. There is a process of induction and ongoing education about the business to realise that value. This is also imperative to ensure the secondee is well-integrated and accepted by the business.

The secondment is an opportunity in fostering partnership between service provider and client, moving the firm away from being at arm’s length and more into the trusted advisor realm or as Ms Lozynski describes it, as part of the extended legal team.

From our perspective here at ILANZ, we believe that any opportunity to create a richer experience for our emerging legal professionals which in turn drives improvement and positive changes within the broader legal marketplace is of great value.

Sian Wingate is President of ILANZ, a section of the New Zealand Law Society. She is also senior legal counsel for Ultra-Fast Fibre Ltd and director of Light Consulting. She is always keen to write about matters close to the hearts of in-house lawyers and can be reached on  ilanz.president@lawsociety.org.nz

Anna Lozynski is an executive general counsel and author. She has spent most of her legal career in-house working in the banking, automotive and cosmetics industries. You can learn more about her at  annalozynski.com. For visual innovation inspiration from Anna, follow @legallyinnovative on Instagram.

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