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July 2016
Advancing Legal Operations Leadership; the 2016 ACC Legal Ops Conference Roundup
by Dan Currell, Novus Law

“We as a community can further change the legal industry for the better and continue to elevate our profession. We need to collaborate now more than ever to share and learn from each other to stay ahead of and manage this transformation.” These words formed part of the opening remarks of the second annual ACC Legal Ops conference from Reese Arrowsmith, VP and Head of Operations for the Campbell Soup Company legal department, harkening to one driver of the rise of legal ops – growth in the use of technology in legal processes.

Two hundred legal operations leaders from nearly 150 companies gathered on June 23nd to share information, learn the newest management approaches and take stock of the state of their emerging function. Over three days and two nights, dozens of working sessions, workshops, presentations, lunches and dinners kept the Marriott Magnificent Mile in Chicago humming.  Now in its second year – and already in a larger venue to accommodate the growing group – the ACC Legal Ops section is clearly still in its early years.  The growth of conference attendance and increased membership in ACC Legal Ops section reflect the acceleration in size and sophistication of legal operations functions within the world’s corporations.

On the eve of the conference, some of the ACC’s most experienced legal operations professionals led a four-hour  bootcamp that covered the waterfront for new and emerging legal operations functions. A packed room discussed strategic planning, goal setting, change management, work allocation, data collection and analysis, technology roadmaps, office structure, vendor management, report generation and more. The ensemble faculty developed a comprehensive set of slides to support the conversation (here) and a toolkit to aid implementation in many key areas (here).  With an afternoon of hard work behind them, the group carried their conversations to an evening reception and dinners at various restaurants along Michigan Avenue. 

Small Interest Group meetings across four different themes kicked off Day 1: process and project management, external resource management (i.e., law firm, e-discovery, etc.), metrics & analytics, and litigation support & eDiscovery. Three more Interest Group meetings would take place on Friday: internal resource management, tools & technology, and strategic planning. These sessions were not panels or presentations, but simply an opportunity to come together with a small group of true peers to share experiences, compare perspectives and discuss Interest Group plans for the coming year as these groups pick up momentum in collaborating on resources for the collective good. For many, these intimate sessions were highlights of the conference.

The conference keynote, “The Changing Dynamics of the Legal Industry,” put the role of the legal operations professional in context of the future of legal services. Jeffrey Carr, leader of ValoremNext and a former general counsel, believes that the focus of legal services will shift from managing legal disputes to a strategic focus on preventing legal disputes. Bill Henderson from Indiana University, focused on the macro-level shifts in value that are taking place now, as legal services evolve. He likened the shift to that of the global auto industry, which has emphasized increased quality and innovation, while continuously achieving reductions in year-over-year production costs. Mark Smolik, General Counsel of DHL Supply Chain, highlighted the growing utilization of metrics in legal services, notably by rigorously evaluating law firm quality and performance. 

The balance of the conference was devoted to topical sessions across a wide range of specific topics.  In every case the goal was to assemble and present actionable information based on the experience of one or more leading companies.  A few key themes emerged across all the sessions.

Project and Process Management were threads that ran through nearly every session, but particularly those on process optimization (detailed examples from Accenture and AIG here) and innovation in law department operations (a deep dive on ADM’s practice here).  Across all sessions, the view was that there are rich opportunities – too many, really – to simplify and improve processes, better define and manage projects, and deliver value to the company.

Data came up in nearly every session, too.  How to collect it; how to analyze it; how not to drown in it.  And a few sessions went deep on metrics – like “Analytics 2.0: Extreme Makeover – Law Department Metrics Edition.” That panel covered the transformation of law department metrics at HP, PG&E and McKesson (materials here).  Another deep dive into measurement came in the panels on Demonstrating the Value of the Legal Team (materials here) and a Metrics and Analysis Playbook session (here).

Technology was of interest to every participant, naturally – and came up across a wide range of topics.  A session on “Self-Service Compliance, Preventive Law & Outside Counsel” discussed approaches to enabling instant, scalable client service through tech solutions.  An “eDiscovery Role Play” (here) modeled the cost effects of different decisions, and a session called “The Legal Ops Investor” invited small groups to evaluate the trade-offs in expenditure between technology, staffing, process, strategic and other investments.

Law firm relationships remained an evergreen topic across all three days of the conference.  The bootcamp covered the waterfront of topics relating to law firm hiring, spending, management, and evaluation.  The session titled “Innovation in Outside Counsel Management” featured detailed reviews of how Microsoft and BMO Financial have evolved their law firm management practices (materials here), followed by a detailed review of GSK’s departure from the hourly rate to a system of almost entirely alternative fees (materials here).  A new task coding system for AFAs was revealed that the ACC Legal Ops section membership is invited to consider and adopt once the Metrics Interest Group expands from the original “straw man to additional matter types. 

The capstone session for this topic was a full-room, invitation-only session entitled, “Advancing Law Firm/Department Collaboration: A Think Tank for Seasoned Legal Ops Professionals and Invited Guests from P3 - Law Firm Pricing, Project Management and Process Improvement Pros.”  With law firm representatives in the room, the conversation was lively and detailed – each table addressing a different question: What are best practices in setting value-based fees?  And how can we assess their success without using shadow billing? What are the leading practices in firm/client collaboration on project management for complex matters? And how can we collaborate better to make sure budgets stick?  How to advance change in client/firm relationships generally?  It was a great conversation at the intersection of shareholder value and law firm profitability, and one “aha” moment expressed during the readout was that more opportunities for this sort of dialogue are needed (good thing we already had that in mind! Stand by for announcement of the next joint event for ACC Legal Ops and P3 leaders).

The concluding luncheon featured reports from the Interest Group leaders about plans for the coming year – from the Lit Support groups’ template assembly project to the Metrics group’s plan to survey law firms about their internal metrics to encourage firms to be more client-centric and the Internal Resources Management groups’ intentions to hold virtual roundtables. The conference concluded with a call to action for new and experienced legal operations professionals to innovate, collaborate and help each other advance this important and growing role. After providing a report on the Strategic Planning Interest Group’s plans, Aaron Van Nice, Director of Legal Operations for Baxter, summed it up, “Here’s how you can get involved: Join an Interest Group. Post on the Forum. If you learn something, share it. Seek out others and ask a question. If you want to know how I do something, ask me. We need to leverage each other's strengths to become better leaders.”

For more information or to join an ACC Legal Operations Section interest group, please contact Catherine J. Moynihan at moynihan@acc.com or +1.202.696.1559.

 

Daniel G. Currell, J.D. is Director of Client Solutions at Novus Law LLC.  Mr. Currell is responsible for identifying and developing service delivery strategies and solutions for Novus Law's clients. He is a former Executive Director in the legal practice of CEB (NYSE: CEB), where he served the company’s global membership of general counsel, chief compliance officers and chief risk officers for 16 years, working with Fortune 500 and Global 1000 legal departments on operating strategies and financial metrics, risk analyses and mitigation, process management, and the management of outside counsel. Mr. Currell practiced general commercial litigation prior to joining CEB. Mr. Currell received a Bachelor of Arts degree from Gustavus Adolphus College and a Juris Doctor from the University of Chicago Law School.

 

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Aligning on Bill Coding Yields Insight and Control at J & J
by Novus Law LLC Client Solutions Team. Follow on Twitter @NovusLawLLC.

Timekeeping is often the bane of many lawyers’ existence. Thousands of hours parsed into six-minute increments that must be assigned to a task, client and matter.

For Johnson & Johnson’s legal department, analyzing the corporation’s product liability spend based on law firm invoices – particularly when many firms were involved in multidistrict litigation – proved to be nearly impossible.

“Our ability to understand efficiencies, redundancies or optimized structures was nonexistent,” says Christopher Potter, Johnson & Johnson’s law department finance manager. “We wanted to know if we were spending money wisely.”

Potter and Andrew White, in-house counsel in the product liability section of the health care company’s legal department, initially implemented a year-long initiative (which has since grown over the past two and a half years into a full-scale pilot program launched this January) to mine and improve timekeeping data to more accurately weigh law firm rates, efficiency and value across matters.

“A small external team was dedicated to going through hundreds of thousands of lines of timekeeping entries - identifying trends and outliers – to understand what is being used reliably and consistently,” Potter says.

 “We came to a consensus on what would be the most useful UTBMS codes to deploy based on historical evidence and which ones should be eliminated from the group because they tend to destroy the real picture. We ended up with two views of the same data. What’s good, we leverage. The bad, we cut.”

However, the resulting data also raised as many questions as it answered about law firm efficiency and measuring successful outcomes. So the duo and their colleagues turned to Maria Miller, CEO and Founder of Litigation Operations, Inc., to monitor and shepherd a new coding and time description structure to the next level. 

“The keys to the analytic kingdom are streamline billing codes, and training timekeepers on how to code their time and describe their entries more transparently,” says Miller, who assists in-house counsel to reduce fees by increasing efficiencies through legal process and resource optimization.

“Once that has been achieved, data that has not been very useful in the past becomes a powerful management tool, particularly in large cases such as mass tort litigation,” she says. “Better data allows you to know the cost of any component in your case, such as taking a plaintiff deposition or an expert deposition, the cost of doing MILs, the cost of trials, which firms and even which timekeepers do work more efficiently.” she adds. “These analytics are a solid basis for not only putting together an ideal virtual law firm, but also for developing process improvements, SOPs, guidelines, budgets, staffing plans, timelines and increasing the value of legal fees.

“Rather than saying ‘We have no block billing in our guidelines, or we expect our law firms to describe and code their time properly,’ Andrew and Chris are forward-thinking and believe that proactively training their law firms to provide more transparent and usable data in their billing records provides a window to their fees that provide great benefits for Johnson & Johnson.” 

With more than a dozen firms billing “at a decent clip” according to White, the team created training materials and hosted training sessions (lead by Miller) to educate outside counsel on the new standards.

“It’s common for lawyers to bill to ‘strategy’ when writing a brief, for example,” White says. “What we really want to know is what people are doing and what spend is being put toward motions or even an entire trial. We need codes to be used in the right way.”

The purpose of the training materials and resources are to define explicit parameters for billing codes, provide examples of properly using the new code standards, and to clarify questions. They also signal to law firms that their client is serious about billing, according to White and Potter.

For the first few months of the pilot program, Miller’s team closely reviewed invoices to ensure the new standards were being met.  Now, they are able to analyze the data to bring new insights to Potter, White and the corporate legal department.

“Now that time-entry is done consistently, we are finding inefficiencies and approving good work by firms, all with the ultimate goal to drive cost down and turn our docket into better managed matters,” White says. While the team cautions that they are nowhere near the point of analysis to yield the large-scale benefits they desire, they are hopeful to be there within the next few months.

“The whole point is to have a good reliable data-set coming into the system that can be used for analytics to confidently base our decision-making processes. Only then can we do something proactive to benefit Johnson & Johnson. We must go through all of the necessary stage gates, provide direction to outside counsel, and know what makes sense going forward so that we can replicate those benefits on other challenging and complex cases,” White says.

While cost reduction is a primary goal, Potter and White are optimistic that the program will also ultimately yield better relationships with their outside counsel.

“The goal is to have talks in a friendly way to change behaviors,” White says. “There may be some difficult conversations at some point, but the hope is we won’t get to that. This is a friendly process where both sides work together to be mutually efficient at a time when costs are rising.”

Author’s note: We will publish an update to this article detailing the challenges and success of the timekeeping pilot program with Johnson & Johnson and Litigation Operations fall 2016.


Maria G. Miller is President, Chief Executive Officer and Founder of Litigation Operations, Inc.. She relies on her eight years of corporate operations experience and her eight years of law firm experience to develop win-win solutions. She graduated with a Bachelors of Science from University of North Texas. Ms. Miller is a lifetime member of The Genesis Shelter and serves on the board of directors.  She also volunteers on a weekly basis at Healing Hands.



Christopher Potter is the Manager of Law Department Finance at Johnson & Johnson. He joined the J&J Law Department in 2001 and has been involved in a variety of innovative projects for the Law Department including Matter Management, eBilling, Alternative Fee Arrangements, Contract Negotiations, Legal Data Analytics, and countless process improvement initiatives.  Prior to joining J&J, Mr. Potter worked for Navigant Consulting and Cambridge Technology Partners.  He is a graduate of Cornell University (BS) and The Katz Graduate School of Business (MBA).


Andrew White is a Senior Counsel in the litigation group of Johnson & Johnson.  He is responsible for major litigation for the company’s pharmaceutical products and medical devices.  He regularly counsels internal business clients on all aspects of litigation risk and litigation avoidance in the drug, device, and clinical trial space.   Mr. White began his career in a private law firm, Drinker Biddle & Reath.  Before joining Johnson & Johnson five years ago, he was Senior Counsel, Litigation, at Sanofi, a Paris-based pharmaceutical company. 
 

 

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Keeping Score - Part II in the Continuing Series of Articles from "Unless You Ask - A Guide for Law Departments to Get More From External Relationships"
by D. Casey Flaherty, former inside counsel and founder of Procertas, a legal operations consultancy

As the name implies, Unless You Ask encourages law departments to ask for more in order to get more from their external relationships. Beating up suppliers is not the objective. We want to encourage structured dialogue to arrive at sustainable, win-win improvement initiatives. Presented herein is a menu of potential approaches, programs, and areas of emphasis. There is, however, a justifiable fear that the untempered introduction of every item on the menu could result in asking for too much. “Be reasonable” is a good guiding principal here, as elsewhere. But reasonableness is notoriously hard to measure. If you are going to take a comprehensive approach, our advice is to keep score. You should track what both sides are investing in the relationship. Reciprocal return on investment is an important element of deep supplier relationships.

One option is to have external providers submit their investment figures as part of the annual performance-review process. Have them tally their expenditures on value-plus services (e.g. secondments), their expenses incurred for client-specific, value-enabling upgrades (e.g., document automation), and their non-recouped outlays to client-mandated vendors (e.g., the client’s e-billing platform). All of it can be expressed in raw dollar terms, as well as a percentage of payments received. Over time, history will accumulate and trends will emerge.

A second option is for the firm to maintain a client credit account. That is, based on what the client pays the firm, the client accrues credits to spend with the firm in the future. This can simply be a more relationship-enhancing, forward-looking version of a discount. The client uses credits accrued on current spend to offset future spend. It can be a structured version of cross-selling. The client spends the credits with practice groups the client is not currently using. It can be a way to fund value-plus services. The client allocates credits to ‘pay for’ secondments, training, helplines, etc.

These approaches are not sacrosanct. Nor are they mutually exclusive. There are specifics to be worked out as to what constitutes investment. There are questions of how credits are to be accrued, allocated, and spent. In a certain sense, the devil is in the details. In another sense, however, the details don’t matter nearly as much as the conversations that arrive at them.

The conversations around what and how to measure become conversations about what is valued, where investment is needed, and what behaviors should be rewarded. When the measurement has occurred, the data becomes a framework for discussions about the current and future state of the relationship. Why is a firm that gets considerable business not investing in the relationship? Why is a firm investing heavily not getting more work? Where does the client spend its credits? Why does the client not spend the credits it has accrued? These are solid beginnings to vital conversations—valuable proxies for other questions that are rarely asked because we lack the structure in which to ask them.

It can’t be all talk. Well, it can, but it shouldn’t. The numbers create bi-directional transparency as to what the client actually values. Firms should see a return on their investment not out of some obligatory sense of reciprocal altruism but because the investments deliver value to the client. If the client is not rewarding relative investment with more work or more profit on existing work (e.g., higher realizations), then the client is asking its firms to invest in the wrong things. This is on the client, and something for which the client needs to take ownership. If the firm accepts the risks, the client bears the responsibility.

Relationships come with mutual obligations. The legal market has suffered because law departments and law firms have for too long refused to be explicit about what they expect from each other. Clients are dissatisfied. Firms are confused. We need real conversations, real investment, real rewards, and real transparency. All of which are more tractable if we start keeping score.

This article is serialized from Version 1.0 of the complete Unless You Ask playbook, which is available for download here. It is a project of the ACC Legal Ops External Resource Management Interest Group.

Casey Flaherty is the founder of the legal tech consultancy Procertas. Mr. Flaherty, a former inside and outside counsel, is the creator of the Service Delivery Review, a strategic-sourcing methodology focused on how well law firms utilize process and technology to deliver legal services. He consults, writes, and speaks on strategic sourcing, legal operations, technology, process improvement, and metrics. Due to his efforts to create and promote a more rigorous, empirically-oriented approach to quality and spend management, Mr. Flaherty has been, inter alia, featured in The Washington Post, named an ABA Legal Rebel, and selected as one of the Fastcase 50. Mr. Flaherty also serves on the advisory board of NextLaw Labs.

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Call for Comments - Proposed Task Coding For Value-Based Fees

With growing adoption of value-based fees, the ACC Legal Ops Metrics and Analytics Interest Group has been working on changing the way we budget, measure and track the work done by abolishing the use of UTBMS codes for matters priced on value-based (non-hourly) fees; replacing them with task codes that reflect discrete activities. This will allow us to scope, manage, evaluate and benchmark matter costs more effectively. Check out this "straw man" task coding scheme, initially just for a defense of a product liability case, which demonstrates the proposed approach. We invite comments by email to LawDepartmentOps@ACC.com and will consider them as we work to expand the task coding system to additional matter types.

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Legal Operations Excellence - Spotlight On Three New ACC Resources

Whether you are aiming to improve efficiency in-house, get better value from your external vendors, or benchmark legal operations functions across legal departments to find ways to optimize legal service delivery both internally and externally, we have some models for you.

The ACC Guide to Process Improvement provides a framework for applying Lean Six Sigma principles and practices to Legal.  With a methodology to understand value from the client's perspective, you can use data to measure processes, and apply structural improvements to address root causes of inefficiency, eliminate waste and improve quality through consistency and effective controls. This is the latest installment in the ACC Value Challenge signature guide series to help you implement management practices to reconnect the cost and value of legal services through improvements in outside counsel management and the use of value-based fees, value-based staffing, project management and knowledge management.

Unless You Ask; A Guide For Law Departments to Get More From External Relationships lays out why and how you can weave continuous process improvement into the fabric of law firm and vendor relationships. Suggesting structured dialogue, it provides practical guidance on data-driven conversations. It is divided into three sections:

  • Value-Plus is focused on familiar benefits, but in finding alternative ways to take advantage of law firm expertise through: training, allied professionals, secondments, advice hotlines, updates/alerts, and pro bono.
  • Value-Enablement provides guidance on how to make sure that legal expertise is being properly leveraged through process and technology by asking for measurable, continuous improvement in the delivery of legal services with respect to: knowledge management, process and project management, billing hygiene, data/analytics, paper lite, expert systems, technology training, staffing, and in other firm-defined areas of innovation.
  • Why. Some law departments have already implement these ideas and the book is a distillation of their practices. Given that the approach will be foreign to some, the Why section is presented in FAQ format to forearm you with ways to overcome resistance to improving on the status quo.

Legal Operations: Leading Practices in Creating and Leveraging Units that Implement Law Department Strategy, Lead Change Management, and Advance Law Department Excellence. In this new resource you will find leading practices for installing and managing a legal operations function, drawing from the experiences of executives leading diverse corporate legal departments.  General counsel and chief legal operations officers explain why legal operations exists, what qualifications and traits are sought in legal ops leaders, reporting structures, change management and lessons learned, as well as results achieved by aligning operations to organizational priorities.

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Not a member of ACC Legal Ops? Join now!

Join now to get access to resources, participate in any of the Interest Groups, attend the annual conference, and use the online Member Forum for ad hoc benchmarking and referrals. The ACC Legal Ops section is active throughout the year, adding resources, and conducting benchmarking studies, webinars and virtual roundtables by legal operations professionals, for legal ops professionals.

For more information, visit www.acc.com/legalops or contact LawDepartmentOps@acc.com.

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Contributing Editor:

Advancing Legal Operations Leadership; the 2016 ACC Legal Ops Conference Roundup
Aligning on Bill Coding Yields Insight and Control at J & J
Keeping Score - Part II in the Continuing Series of Articles from "Unless You Ask - A Guide for Law Departments to Get More From External Relationships"
Call for Comments - Proposed Task Coding For Value-Based Fees
Legal Operations Excellence - Spotlight On Three New ACC Resources
Not a member of ACC Legal Ops? Join now!
The Legal Ops Observer is devoted to reporting on issues important to the members of the ACC Legal Ops section—from the challenges they face, to best practices that work, to how members effectively implement innovation within their individual companies and define the future of legal ops across the industry. Follow the ACC on Twitter at @ACCinhouse #ACCLegalOps.
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