Why Microsoft is Hosting Their Law Firms in Redmond This Week and Why it Matters for Everyone Else?

Microsoft has asked its top external legal service providers to share two innovation stories at a Trusted Advisor Forum to be hosted at its Redmond campus this Thursday. In brief:

1. Tell us one way have you have gotten better in the last year
2. Tell us one way you will get better in the next year

The initiative flows directly from General Counsel Dev Stahlkopf. A few weeks after her elevation in April 2018, Stahlkopf set expectations with outside counsel during a relationship-partner lunch at Microsoft’s Corporate, External, and Legal Affairs Global Summit. One of her concluding slides read, “Our Ask of You: Partner with us to continuously improve and innovate.”

A manifestation of Stahlkopf’s ask, the Trusted Advisor Forum on September 20 will begin a formal continuous improvement cadence between Microsoft and select outside counsel partners, including several members of its Strategic Partner Program.

At the Forum, each partner has twenty minutes to showcase two innovations, one retrospective and one prospective, that “demonstrably improve legal service delivery to Microsoft.” Forum participants will present to Microsoft Legal brass as well as the other participating law firms and representatives from select law departments.

Earlier this year, I had an opportunity to walk the exhibit hall at CLOC with Jason Barnwell, Assistant General Counsel for Legal Business, Operations, and Strategy. Since then, we have corresponded semi-regularly by email and on social media. Regardless of the medium, Barnwell is never shy about what he expects of Microsoft’s panel law firms, but he is not alone. Justin Ergler at GSK has gone on the record about their reverse auction process and Vincent Cordo at Shell has been very public about the impact of their convergence program. At CLOC I addressed the publicity issue with Barnwell. If Microsoft did, indeed, have better processes in place around the delivery of legal services, then why share the secret sauce?

Barnwell quipped, “Microsoft does not want to be the only one making these requests.”

Microsoft, like any huge global enterprise, is able to make certain requests of their outside counsel because of the high volume of sophisticated work they send to their law firms. Put simply: Microsoft can ask because, well, they are Microsoft (the same could be said of Shell and GSK). On the other hand, a general counsel of a company with $5-10 million in annual legal spend, is going to have a harder time creating unique alternative fee arrangements or demanding innovative approaches to legal service delivery. But, as it turns out, the fact that others do not ask creates a problem for Microsoft, because it enables law firms to push back with “None of our other clients ask for this.” For Microsoft, then, hosting and publicizing their Trusted Advisor Forum helps everyone in the ecosystem, including Microsoft.

Moreover, Microsoft did not exempt itself. Microsoft Legal will present at the Forum, answering the same questions as its strategic partners. Barnwell explains, “We serve the same end customers. We support the same business outcomes. We are links in the same value chain. The more we share, the more we collaborate, the more we integrate, the better off we will all be. Co-prosperity is at the core of our approach to our relationships. To create alignment, our partners should understand we hold ourselves accountable to the same standards we impose on them.”

Barnwell emphasizes that Microsoft has reasonable expectations for partner innovation. This is a new ask and a new approach to telling their story. Towards that end, Microsoft is ensuring the providers are on the right track or have an opportunity to course correct. In August, the providers began submitting a preliminary one-page project canvas and a one-page narrative story for each innovation, with final submissions due in September. In the interim, Microsoft is supplying individualized feedback to crystalize its expectations.

In addition, Microsoft has procured time for each strategic partner with consultant Casey Flaherty. Flaherty, a former inside and outside counsel, worked with Microsoft on the program design and will assist with Microsoft’s feedback on the participants’ submissions. As the author of a manual, Unless You Ask, that introduced these types of continuous improvement initiatives to the legal market, Flaherty was an obvious choice for Microsoft. What is not obvious, at first glance, is why Microsoft would have Forum participants work directly with the same consultant they themselves have hired—it’s like publishing the answers to the test. But Barnwell emphasizes, “This is not a test. We want our strategic partners to succeed. The best outcome would be for each strategic partner to wildly exceed our expectations. We intend to afford them every opportunity to do so.”

Whether the forum will create the intended effect remains to be seen. Will law firms see the forum as a means to creating better lawyer-client relationships or, alternatively, will law firms begin to resent the extra homework? And, if Microsoft’s goal is not only spur innovation with their panel firms but create ripple effects throughout the entire industry, the impact of the Forum will be a key determining factor.