2013 ACC Value Champions Introduction
Meet the 2013 ACC Value Champions
The nominations received for the 2013 Value Challenge suggest an interesting trend: In-house legal departments are borrowing concepts from manufacturing in order to increase value — that which they are providing to their internal business clients and that which they are receiving from their external law providers. Terms like analytics, resourcing, performance indicators, and process improvement appeared frequently in this year’s nominations, along with such traditional manufacturing concepts as optimizing the value chain, Lean/Six Sigma, time and motion studies, and cycle time.
“The traditional practice of law has been turned on its head by these departments. Gone are the days in which legal practice consisted solely of meetings, memos, and briefs,” says Catherine J. Moynihan, ACC’s Director of Legal Management Services. “In-house counsel are re-engineering the legal function to maximize the strategic value of their work, resulting not only in reduced costs and higher client satisfaction, but also in improved morale among their staffs.”
First, the supply chain: Numerous 2013 Champions are using interesting global legal process outsourcing models to “right-size” or “best-source” legal services. For example, BT Global Services created an India-based intake portal that evaluates the complexity of the work requested, passing complex projects to the in-house team and handling the rest — about 30 percent — within the LPO.
Working with Seyfarth Shaw, Nike’s legal department has implemented a Technology Solutions Center for contracts management that directs work to the right resource from among a choice of three, including on- and offshore options. Meanwhile, Mondelez International, working with Axiom, combined process and project management with an LPO solution to handle a contract review process that leveraged a virtual organization of 50 attorneys to review more than 6,000 documents in 35 days —saving Mondelez millions in legal fees.
“All in-house legal departments struggle with increased volumes,” says Jelich. “Seeing that there are means to deal with that without blowing the budget is helpful for others, particularly when it is done in a risk-based fashion that more effectively aligns to the needs of the business.”
Further, these moves benefit legal department staff, who are able to work at the top of their abilities, focusing on work that is meaningful and challenging.
“The most important thing a general counsel can do is assess what the legal department is doing and ensure that it is focusing on high value, high risk work. Once you figure out what you should be doing, you can go outside to determine how you want services delivered and the right-sized provider,” says Findlay.
Next, the analytics. At least two Champions, Mondelez International and BT Global Services, conducted time and motion studies to inform their efforts. Mondelez needed to understand the required staff resources and budget to review thousands of contract documents involved in the spinoff of Mondelez, Kraft Foods’ North American grocery business. BT Global Services studied tasks team members were completing and whether they were using their time efficiently. NetApp gathered robust analytics to drive the “down-shifting” of work based on type and complexity, expanding its value chain to include an LPO that handles contract management and administration management services under a hybrid onshore/offshore model.
HIROC, the Health Insurance Reciprocal of Canada, brought in Catalyst Consulting to analyze years of matters in order to understand their complexity and resulting staffing needs. HIROC then used the information to create a robust multi-year agreement with Borden Ladner Gervais that focuses on matters rather than hours, and permits great budget predictability.
Analytics also help legal departments understand and manage another concept borrowed from manufacturing: cycle time. Working with Seyfarth Shaw, Nike was able to reduce the average time for processing procurement contracts from two weeks to 2.6 days, an 83 percent increase in efficiency. ACEA Sp.A. mandates responses to requests for legal services by the next business day.
Many of this year’s Champions are leveraging technology for efficiency and data analysis. NetApp’s Instant Nondisclosure Agreement, which facilitates an electronic signature process, has decreased the cycle time on NDAs from weeks to just minutes. ACEA Sp.A. and China State Construction, based in Italy and the United Arab Emirates respectively, used technology to share information and knowledge with clients in the business units, leading to better legal outcomes and enhanced internal reputation for the legal department. Both also deployed value-based fee arrangements linked to outcomes—quite the motivator for their external legal counsel.
“What struck me was the diversity of approaches to legal department management, from the narrowly targeted to the broad-based,” says Findlay.
Marsh & McLennan Companies are using all of these techniques and more: technology, data analysis, metrics, convergence, strict outside counsel management, and value-based fees with strong top-down leadership. “MMC has attacked the issues on a broad range of fronts,” says Findlay. “The sheer variety of their simultaneous initiatives has resulted in a more client-focused legal department.”
Bank of America, Office Depot, and United Technologies Corporation were cited by the evaluators as having strong outside counsel management across the board. Bank of America has leveraged convergence with its Litigation Roundtable, which promotes collaboration and learning across 30 law firms while returning cost savings to BoA. Office Depot took a targeted approach to developing requests for proposals that have delivered the company an eye-popping 30 percent reduction in spend.
Office Depot also has recognized the economies of scale that can happen with joint defense groups. The company has partnered with other defendants on patent troll litigation that has reduced costs by 65 percent. In much the same way, multiple defendants combined to work with Shook Hardy & Bacon in their defense of the “hot fuel” litigation that saved countless hours and dollars, and in a great example of the whole being greater than the sum of its parts, yielded better outcomes.
United Technologies Corporation has implemented an outside counsel management program that emphasizes value-based billing by firms even to clients other than UTC. UTC’s relentless focus on one metric, percent of spend on value-based billing, demonstrates what can be achieved: 70 percent of external spending on value-based fees.
“UTC’s example really illustrates that value is really a journey and every point is progress,” says Jelich. “But the progress doesn’t end. Their commitment to the journey was remarkable.”
Indeed, the commitment of all of the 2013 Value Champions to the journey is remarkable, showing incredible creativity as they seek to re-engineer their in-house legal departments to bring greater value, enhanced customer service, and lower costs to their organizations. The 2013 Value Challenge drew 75 submissions, an increase of 28 percent over 2012; 20 percent were received from outside the United States.
“Our team and steering committee have worked hard to spread the word about the concepts embraced by the Value Challenge, and have provided many valuable tools and resources on how to incorporate them on a day-to-day basis,” says Veta Richardson, ACC’s CEO.
“The increase in number and diversity of submissions is evidence that adoption of these concepts is becoming more widespread, and this is important for the in-house legal profession,” she continues. “The results demonstrated by the Value Champions show that General Counsel are key strategic partners who are business savvy and can contribute positively to the bottom line.”