Corporate legal departments are adding legal operations functions, automating work to make time for higher-value projects, and harnessing technology to allow real-time access to metrics.
WASHINGTON AND MELBOURNE (May 17, 2017) — Corporate legal departments are adding legal operations functions, automating work to make time for higher-value projects, and harnessing technology to allow real-time access to metrics in order to reduce legal spend and improve department performance, the Association of Corporate Counsel (ACC), a global legal association representing more than 42,000 members in 85 countries announced today.
ACC recognized 12 law department and law department/law firm collaborations, including two companies based in Australia and one headquartered in the Netherlands, as 2017 ACC Value Champions. Their strategic approaches increased client satisfaction, enhanced the value of legal service spending, reduced turnaround times and costs, and improved results. The ACC Value Champions program is part of the ACC Value Challenge, which promotes adoption of management practices that drive value — controlling spending and yielding better outcomes.
Many of this year's honorees started by reviewing historical data to gain insights into where their efforts could make the biggest impact. Some departments chose to focus on a particular practice area, including contracts, IP, or employment litigation, while others looked for department-wide solutions, including new ways to mitigate risk. One winning legal department created a "Legal Innovation Forum" where legal staff participate on a rotating basis, and others implemented software to make complex processes simple.
"This year's ACC Value Champions focused on sustainable improvements to ensure the law department is a strong contributor to the business and its goals," said Amar Sarwal, ACC vice president and chief legal strategist. "The companies we recognized reset the conversation about the role of the legal department, then demonstrated how they could turn it from a cost center to a value center."
This year's group of Champions features a noteworthy collection of deep and innovative partnerships. One law department engaged in design thinking workshops with its law firm, finding a myriad of ways to improve efficiency; another partnered to create an extranet, taking knowledge management and client-firm collaboration to new heights; while others pursued multifaceted partnership innovations, improving how people, processes and technology are deployed holistically to improve value. Reflecting the evolution of the legal services ecosystem, these Champions include a managed services provider and a technology company that helped integrate the use of data and workflows to extend the reach of legal service innovation. Restructuring fees was another integral component of successful collaboration, with one department taking an unconventional approach by tying legal fees to the price of a barrel of oil.
The 2017 ACC Value Champions also focused on insourcing work in order to ensure better budget predictability and higher client satisfaction. They made time for higher-value projects by automating processes, and started legal operations programs within the department to track progress and optimize resource allocations, internally and externally.
ACC recognizes the following 2017 ACC Value Champions, selected by a panel of in-house counsel judges:
- Archer Daniels Midland Company (Chicago) with Onit (Houston) — Undertook an operational process initiative with the goal of reducing legal spend, enhancing its client service delivery, and improving its ability to manage the company's risks. With assistance from Onit, an enterprise legal spend management provider, ADM designed and implemented sustainable processes and systems to "make the complex simple." ADM's global rollout allowed real-time access to legal spend and offered predictive metrics and reporting dashboards. Overall, the company reduced its outside legal spend by more than one-third and reduced volatility by using fixed fees and other alternative fee arrangements (AFAs).
- Avis Budget Group (Parsippany, N.J.) — Combined convergence, insourcing, and creation of a legal operations program to achieve over 30 percent savings on annual legal spend. Avis Budget Group consolidated outside firms from approximately 700 to seven, selecting for use of technology and LPOs, AFAs, a culture that supports innovation, and a client satisfaction orientation. By hiring a legal operations director, the company was also able to pursue high-impact insourcing, as well as introducing a new global e-billing and matter management system to permit real-time evaluations and comparisons.
- Bankrate (New York) — This small legal department went from hiring its first in-house lawyer in 2012, to achieving 93 percent budget predictability in 2015-2016 by restructuring fees and adding in-house staff to allow the team's three lawyers to handle the most substantive work. Noteworthy for a small legal department, Bankrate hired a legal operations manager to help implement a full complement of tools and techniques designed to reduce conflicts. The company reduced its legal spend on commercial contracting by 37 percent through flat fee arrangements with firms and 30 percent for compliance-related matters.
- BASF (Florham Park, N.J.) — Shifted the focus of the law department towards strong use of data analytics for litigation and deployment of AFAs for all legal spend. As a result, nearly 80 percent of the company's legal spend is now organized under AFAs, including fixed fees, phase-based fees, and success fees. The team paired AFAs, including for its insurance companies, with an innovative efficiency algorithm that considers total cost to reach cases resolution (among other factors). Altogether, the company reduced it legal budget by 48 percent year-over-year.
- Cabela's (Sidney, Neb.) with Littler Mendelson(Chicago) — Took advantage of an integrated solution to managing Cabela's single-plaintiff employment litigation and administrative agency charges through greater collaboration with flat fees and a dedicated team, and the introduction of a new case management platform. Accordingly, Cabela's achieved 57 percent and 20 percent reduction in legal spend on administrative agency charges and single-plaintiff employment litigation, respectively. The company now more easily assesses risk, weighs the cost vs. benefit of litigation, and enjoys more reliable budgets.
- Express Scripts Holding Company with Husch Blackwell (both St. Louis) — Taking a truly collaborative approach, Express Scripts and Husch Blackwell revamped their approach to litigation. The process started by reviewing 16 years of cases to glean insights that became a playbook for future matters. Adding two types of process maps, an online portal, and building a legal operations team from scratch also yielded efficiencies and stronger collaboration. Over four years, while the number of litigation matters rose 35 percent, the time spent per matter dropped by 39 percent, allowing the team to provide higher quality work under short deadlines.
- NetApp (Sunnyvale, Calif.) with Elevate Services (Los Angeles) — NetApp became the first in-house law department to be a two-time ACC Value Champion with an integrated value strategy project for its IP group. Combining analytics, narrowed scopes of work for law firms, fixed fees, a competitive bidding process, and revised billing guidelines and invoice review, NetApp reduced its overall patent portfolio spend by 58 percent (approximately $4 million) and cut the time needed to manage the portfolio by 17 percent, yielding time for higher-value legal activities. NetApp started with its highest spending unit to gain the biggest results, and plans to replicate the strategy.
- Ricoh (Malvern, Pa.) with Reed Smith (Chicago) — Modeling best practices in knowledge management (KM) and collaboration, these co-Champs customized a case management system for single plaintiff employment litigation and administrative agency charges that eliminated active paper files by over 90 percent and reporting time by 67 percent. Ricoh then built a legal department KM site within its intranet, RWorld, to foster closer relationships with internal clients. RWorld includes forms, non-compete information, FAQs, and policies — a knowledge repository that can be updated instantly. It attracted an average of 1,900 daily active users in 2016. Information shared on RWorld reduced employee questions to the law department by the thousands.
- Shell (The Hague, Netherlands) — Combined appropriate fee arrangements, convergence, outside counsel management, and use of alternative providers to realize a 25 percent reduction in external legal spend. The department has structured 100 percent of new legal matters under appropriate fee arrangements, including the novel concept of tying fees to the price of the barrel of oil in order to automatically reduce spend during periods of budget constraints. Shell moved from use of 400 firms to a global panel of six, plus use of 18 local/specialty panels worldwide. Outside counsel relationships are monitored with scorecards that track a host of factors, including valued-add services and diversity.
- Telstra Corporation with Herbert Smith Freehills (both Melbourne, Australia) — Jointly created the Legal Innovation Forum, inspired by Telstra's participation in a design-thinking workshop at Harvard University. The Forum runs eight-week sprints to prototype the best workshop ideas, and the results have eliminated 40,000 hours of low-value legal work for the team. Lawyers rotate in and out of the Forum, which used a survey of all law department staff as its benchmark for improvements and as a way to identify the areas most in need of change. Staff have benefited from a 52 percent reduction in meetings, streamlined reports, and empowering clients with self-service legal tools.
- Verizon (Ashburn, Va. and Basking Ridge, N.J.) — Applied Verizon's corporate-wide "Purposeful Positioning" initiative to the legal department, a project titled "Purposeful Contracting." The department now looks at itself as a value center, rather than a cost center, and prioritizes customer satisfaction by making it easier for other units to do business. The legal team used industry best practices to overhaul service terms (reducing page content by over 70 percent), supporting overall business outcomes. A pending overhaul of global master terms streamlines contracting, allowing use of the same document regardless of jurisdiction. Thus far, the department has realized a 25 percent reduction in costs.
- Woolworths (Bella Vista, Australia) — Developed improved automated systems, reporting, processes, and policies to ensure sustainable reduction of internal and external legal costs and enhanced budget predictability. With this multi-pronged approach, the law department reduced legal costs (internal and external) by AUS$29 million over two years, 21 percent in year one, and 25 percent in year two. Woolworths benchmarks its legal spend with others in the retail industry, ensuring its standards beat sector averages. The company started with a legal spend analysis to see what work should be brought in-house, and has set up multiple mechanisms to provide two-way feedback with outside providers and vendors.
About the ACC Value Challenge: The ACC Value Challenge, launched in 2008, has provided resources and training for in-house counsel and law firm lawyers to help affect change within the legal industry. By re-aligning relationships and promoting value-based fee arrangements and other management tactics, such as project management, process improvement, efficient use of technology and knowledge management tools, the market for the delivery of legal services benefits from the same insights and wisdom upon which every other service industry relies to provide world-class value to their clients. For more information, visit www.acc.com/valuechallenge.
About ACC: The Association of Corporate Counsel (ACC) is a global legal association that promotes the common professional and business interests of in-house counsel who work for corporations, associations and other organizations through information, education, networking, and advocacy. With more than 42,000 members in 85 countries employed by over 10,000 organizations, ACC connects its members to the people and resources necessary for both personal and professional growth. By in-house counsel, for in-house counsel.® For more information, visit www.acc.com and follow ACC on Twitter: @ACCinhouse.
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