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August 2015
Lincoln Financial Uses Analytics to Measure Firm Success and Retain Outside Counsel
by Novus Law LLC, Client Solutions Team. Follow on Twitter @NovusLawLLC.

When Reese Arrowsmith decided to track Lincoln Financial Group’s total legal spend, he launched a covert operation. Organizations haven’t historically worked to track settlement costs and measure results from firm to firm – and many lawyers – inside and out – still default to the notion that measuring a win is too unwieldy, too complicated, and too dependent on the notion that “every matter is too special” to measure.

Arrowsmith, vice-president, head of operations, teamed with two colleagues – one focused on data and analytics and the other an IT expert – to measure multiple dollar flows for every outside law firm and matter.

“Generally, ‘outcome’ can be difficult to measure,” Arrowsmith says. “It’s too complex in corporate litigation to say somebody won or lost for us; there are too many nuances. That’s probably why nobody tackles it.”

The trio tracked repetition and constancy among cases and “sliced and diced” the numbers, creating scatter charts and bar graphs, to see what they could uncover. They broke down their research into buckets – from average, minimum and maximum outside counsel rates; average, minimum and maximum settlements; geographical impact; total cost of a case; to groups of matters handled by different firms to see if they could determine which firms delivered better results overall. 

“The report of average spend per firm didn’t tell enough,” Arrowsmith explains of the process. “And, it could be misleading. Once we learned how to weigh the numbers, we saw different firms giving us different cost results.”

They also worked on defining and measuring wins.

“Legal ops has focused the last two to three years on outside counsel spend, but that is just a fraction of total legal costs,” Arrowsmith says. “Often the largest cost comes at settlement. Why would we continue to use a firm that doesn’t get us the best settlement? Even if the firm spend is low or their hourly rates are low, why use that firm?”

Armed with clear and concise data, Arrowsmith presented his research to others within his law department – where he experienced initial pushback stemming from concern that the data would prove inaccurate or not useful, he says. Lincoln Financial Executive Vice President and General Counsel Adam Ciongoli didn’t need persuading, however, and after a brief “no-brainer” conversation, Arrowsmith was given the green light to continue his work.

“Sometimes I go down rabbit holes,” Arrowsmith says of his legal ops role, which he’s held since 2011 – and followed nearly 15 years of experience as a legal consultant. “This one turned out not to be, which I expected.” 

Six months into the project, Arrowsmith has shared his preliminary measurement methods with one law firm partner – and received a lukewarm response. However, Arrowsmith counters that metrics and analytics will only make good partnerships between in-house lawyers and their law firms even stronger.

“To prove our hypothesis, we are being very strategic. We are starting with one matter type which is fairly repetitive,” Arrowsmith says. “We are not firing firms or moving existing cases from one firm to another.”

But, his team does plan to better strategize the placement of matters among law firms.

“We’re trying to be methodical and not change too much at one time,” he adds. Small changes – such as bidding more cases to firms that have achieved better results (by Arrowsmith’s newly developed standards) to see if the previously calculated average spends hold – will allow him to determine if success is circumstantial or specific to the strategic practices of a particular outside firm.

Arrowsmith is also determined to bring his legal ops cohorts on board with better analytics, and hopeful that the practices of Lincoln Financial can be applied across more law departments. To that end, he’s asked the same questions of audience members at three big legal industry events this year – including the inaugural ACC Legal Ops annual conference this past June: Who is tracking win rates? Who is tracking the total cost (settlement plus outside counsel fees) of their legal spend by firm?

Silence, followed by a few head turns to see if any lone hands were raised, has greeted him every time – but his efforts remain undeterred.

“I’m really focused on this now,” Arrowsmith says. “I’m trying to turn legal spend metrics into simple math equations. These metrics won’t apply to every matter, but this is a great start.” Arrowsmith wants to prove that any legal department can apply the same approach to a subset of matters to measure success, and ultimately, drive the total cost of legal down. This is just one more way the legal department is adding value and better managing the company’s resources.

Reese Arrowsmith is VP, head of operations at Lincoln Financial Group. He spent 8 years implementing legal matter management systems, 3 years consulting for corporate legal departments and has been Head of Operations at Lincoln for the past 4 years. Reese assisted dozens of fortune 200 legal departments with system implementations, organizational improvements and cost savings initiatives before going in house at Lincoln. You can see the presentation in which he participated on “Running the Law Departments Like a Business” at the ACC Legal Ops kick-off conference on the Program Materials page.  

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How Legal Ops Can Drive Deeper Innovation in Law
by Novus Law LLC, Client Solutions Team. Follow on Twitter @NovusLawLLC.

“New Law,” “Paradigm Shift” and the “New Normal.” All describe the morphing landscape of the legal profession as law firms and professions adapt, for the first time in more than 100 years, to unprecedented market change. Legal service providers and their clients are experimenting with new agreements, pricing schemes and staffing measures as they strive to innovate the modern practice of law. But history has proven that it’s possible for a major industry to engage in long periods of shallow innovations that don’t help very much, even when deeper, more powerful innovations are possible.

It’s helpful to consider the evolution of car manufacturing. In the 1950s, a time when highway death rates were at a historic high, product innovations among Detroit automakers focused largely on appearance. For example, flashy tail fins were all the rage – inspired by the look of World War II fighter aircrafts – and sold many automobiles on “cool” looks alone. 

At the same time, lifesaving seat belts and headrests were generally unavailable. Seat belts weren’t present until the 1960s and 1970s, even though a group of physicians began to install their own lap belts 30 years prior. Meanwhile, 30,000 Americans died every year in car accidents. There were plenty of other so-called “innovative technologies” being applied to cars, but few actually made the product better.

Why did Detroit take decades to make a genuinely safer and better performing car? Because “[n]othing fails like success,” to borrow the words of the influential American author Steven Covey. The Big Three were on top of the world, leaders of “the industry of industries” – a phrase coined in specific reference to GM and U.S. car manufacturing. Why try to improve?

Big Law can be a lot like the U.S. Big Three automakers. In Big Law’s heyday, particularly the 2000s, firms grew on nearly every measure. Just like the Big Three, much of Big Law made little effort to improve the product while the good times rolled. Law firms offer a service that looks much the same today as it has looked for decades – though the cost has gone up. 

Today, legal media and professionals are quick to tout sincere, meaningful innovation in law. But lawyers, clients and the legal ops executives leading the charge for true change should ask: Is it predominantly deep or shallow innovation? Answer: Unfortunately for the legal profession, we still see a lot of shallow innovation.

Here are some of the most typical examples of innovation occurring in the profession today:

Alternative Fee Arrangements. AFAs are very popular, but shallow, because clients are accepting discounted and blended hourly rates as AFAs, rather than moving to value-based (non-hourly) fees that align incentives. If there’s relatively little difference in the underlying delivery of services and value – economic or otherwise – for the client, then it may be that the only thing different is how the same fees are packaged.

For AFAs to become a deep innovation, the actual legal work would need to be and feel different. There would be significant and noticeable changes in the processes used to deliver them. When a law firm uses alternative fees, do the process and final work product feel different from the client’s perspective? Is the client achieving lower costs, more predictable spending and better outcomes? If not, deep innovation has yet to occur.

Staffing Models. When firms push work down to less expensive lawyers, whether staff counsel, contract lawyers or a legal processing outsourcing company, the innovation is often shallow because they rely almost exclusively on labor arbitrage to deliver value.

For a staffing model to reflect deep innovation, we would expect very different kinds of people, with a wide variety of expertise and unique skill sets, not just similar people in a different zip code. For example, a new staffing model could include law enforcement experts, investigators, librarians, technologists, data analysts and project managers, many of whom may be more qualified to do certain types of work on a matter. 

Project Management. Whether promoted through technology, a legal consultancy or in-firm, PM is often a shallow innovation because professional project managers are rarely fully in charge of a matter. Too often, project management systems and software go unused. 

If there were deep innovation, another sign would be project managers leading engagements, and lawyers, including partners, contributing their expertise, similar to the commercial construction and aerospace industries. Good questions to ask law firms or other legal service providers with proposed project management programs are: Who runs the projects? Is the scope defined at the outset? Are the specific metrics for the schedule, budget and status of matters defined and shared weekly? If not, deep PM innovation has not evolved.

In short, innovation is almost always shallow when a law firm, in-house department or other legal service provider hasn’t precisely defined its processes. Toyota Motor Corporation revolutionized the motor vehicle industry with the Toyota Production System – the leading example of lean production in the world. This system shifted the focus from individual machines and their utilization to the flow of product through the total process. The result was a better car – not on the shallow measure of appearance, but on the deep measures of reliability, safety and total performance.

Toyota did not simply promote technology, different parts, nor smarter people. It had better process: a vastly, consistently and relentlessly better process. With it, Toyota kicked off a spasm of industry-wide competition on deep innovations that changed the world.  

In 1950, the American automobile death rate was 8 deaths per 100 million miles. Now, it hovers just above 1 death per 100 million miles. That is the result of deep innovation – an undeniable improvement in core product performance. The legal profession has not experienced improvements of this kind in the past 100 years, if ever. That’s because law has never truly taken process (the intersection of science and art) seriously – until now.

Law can experience deep innovation because legal processes are now being defined so that they can be transformed. As a result, legal services are being designed to better identify and meet customer needs.

With this development, law’s “tail fin” period is nearing its end, and process innovation has begun, with legal ops executives and new types of legal service providers on the vanguard. For those who know how, and whose business models will permit it, let the deep innovation begin.

Novus Law LLC is a global legal services firm that applies highly engineered processes, quantitative analytics and advanced technologies to make litigation, investigations and other document-intensive matters more efficient and less expensive. Novus Law changes the practice of law for corporate clients and their law firms through its promise of fixed fees, measurable accuracy and timely delivery of work. 

ACC Value Challenge resources are available on value-based fees, staffing, project management and more.Visit http://www.acc.com/valuechallenge/resources/.

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Steering the ACC Legal Ops Section
by Catherine J. Moynihan, ACC

You may have noticed when you joined the ACC Legal Ops section that you were invited to "become a contributing member of an organization designed to unite the legal operations ecosystem and advance law department management through connectivity, collaboration and continuity of interaction." To support and guide the ongoing efforts of the ACC Legal Ops Interest Groups and Regional Groups, the founding Steering Committee has decided to expand to include the leaders of each of those groups.

The expanded ACC Legal Ops Steering Committee will convene monthly to touch base on projects being undertaken, providing strategic oversight and input as needed.  We are fortunate to have a seasoned group of legal ops professionals serving on the Steering Committee, and look forward to rotation over time as others take their turns in leadership roles.  Keep an eye out for posts in the ACC Legal Ops Forum about projects being undertaken, and don't hesitate to contact any of the leaders if you want to get involved. After all, it's "by legal ops professionals, for legal ops professionals." 

Huge thanks to the volunteer leaders forming the 2015-2016 ACC Legal Ops Steering Committee:

Reese Arrowsmith - Lincoln Financial Group


Nicholas Bunin - Fox Entertainment Group


Connie Brenton* - NetApp, Inc.


David Cambria* - The Archer Daniel MIdland Company


Tania Daniels* - The Walt Disney Company


Lesley Garafalo - Duke Energy Corporation


Bruce Goldberg - The Allstate Insurance Company 


Jeff Isaacs* - Goldman Sachs Group, Inc.


Elizabeth Jaworski* - Motorola Mobility LLC


Sheila Kennedy - Medtronic


Lynette Lupia - AbbVie, Inc.


Susan Packal - Hilton Worldwide Holdings, Inc.

Sowmyan "Sam" Ranganathan - AbbVie, Inc.


Aaron Van Nice - Baxter International, Inc.


Shannon Whitt - American International Group, Inc.


*Founding Steering Committee Member (Executive Committee)

Catherine J. Moynihan is Senior Director of Legal Management Services for the Association of Corporate Counsel (ACC). She directs the ACC Legal Operations Section and the ACC Value Challenge, providing resources, education, networking and advocacy to advance the law department function and the value of legal spending.

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Legal Ops Observer June Poll Results

As a legal ops professional, what personal skill would you most want to improve upon in the coming year?

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Highlights from the ACC Legal Ops News & Announcements Page

There is a lot of terrific information floating by in the social media stream – often too much for busy legal ops professionals to consume. The ACC Legal Ops News & Announcement tab tracks the best items to keep you well informed. Take a look at these two great catches:

  • Three of our members spoke about the legal ops function and how they're making metrics and analytics ever more actionable at the Bloomberg Big Law Business Summit (video). It’s working – the profile of legal ops is ever rising! 

We are adding more hand-picked items all the time – be sure to bookmark www.acc.com/legalops/news/.

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Not a Member of ACC Legal Ops? Join now!

Join now to get access to our top-notch conference materials, participate in any of the Interest Groups, and use the online Forum for ad hoc benchmarking and referrals. The ACC Legal Ops section is active throughout the year, adding resources and providing webinars on topics of interest to legal operations professionals. 

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

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Contributing Editor:

Lincoln Financial Uses Analytics to Measure Firm Success and Retain Outside Counsel
How Legal Ops Can Drive Deeper Innovation in Law
Steering the ACC Legal Ops Section
Legal Ops Observer June Poll Results
Highlights from the ACC Legal Ops News & Announcements Page
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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