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February 2016
Turning Law Firms Into Managed Service Providers at Microsoft
by Novus Law LLC, Client Solutions Team. Follow on Twitter @NovusLawLLC.

 Lucy Bassli isn’t an ops executive.  In fact, she’s just a “regular lawyer,” she says of her position as Assistant General Counsel at Microsoft Corporation, where she oversees all inbound procurement contracting.  In short, she leads a team that doles out advice to the company’s procurement team, sourcing professionals, and other procurement lawyers.  

However, a quick survey of the way Bassli executes her practice and runs her legal team – which includes contract operations for the company’s law department and beyond – and it’s easy to spot her legal operations hat.

“Microsoft empowers its employees to do their best; and that is what I am trying to do,” Bassli  says of her 11-year tenure at Microsoft, which she joined in 2004 after two years in Big Law.  She’s spent the past ten years devoted to operationalizing procurement contracting – once known as “death by legal” by the internal procurement clients with more than 30 legal professionals each doing their own work without standard templates, timelines, predictability or acceptable risk,” Bassli says.  This often resulted in unpredictable delivery or delays of contracts, regardless of their complexity and length, she adds.

To begin, Bassli revised the internal processes for legal review of such contracts, standardizing the approach and developing smart risk tolerance for procurement contracts across the legal department.  This included building new tools for her team using internal resources and creating new partnerships with outside legal service providers.

“Now, we have more than 20,000 contracts that get legal review through our system, a combination of automation and outsourced legal processes” she says.  

From overseeing the life of the contract, to escalating negotiations, obtaining electronic signatures and storing in a global repository – they’re all managed by Bassli’s team and Integreon Managed Solutions, Microsoft’s outside partner of six years.  In addition to the 20,000 contracts, which require substantive legal work, Integreon processes more than 100,000 contracts for signature and storage only, Bassli adds.

“Our company expects everyone to self-serve procurement contract preparation and this approach wasn’t working,” Bassli explains.  “By centralizing and outsourcing the process, any Microsoft employee who needs a document signed and stored can submit a request to Integreon and get the help they need.”   

The process took years to centralize and then outsource, but the effort has proven fruitful, Bassli says.  

“We’ve now added upper-level work to the process by stratifying our legal services with self-help at the very bottom, to advanced work by our law firms and finally our in-house attorneys, paralegals and contract specialists at the top.”

One recently implemented law firm program now sees Bassli’s team using outside counsel for higher level contracts such as master service agreements.  

“Our lawyers were doing the same type of contracts over and over,” Bassli says.  “Initially, to keep my team happy and engaged, we thought to push the work to our law firms so that my team could focus on the more critical and challenging work – the good stuff.  But, then our law firms would be doing the same things over and over, and we wouldn’t get more value by simply handing over more work.”

So Bassli created a managed service operation with two trusted outside firms.  “We learned about the benefits of outsourcing from our engagement with Integreon, and we wanted that from our law firms, too, i.e. metrics, business intelligence, process analysis and length of negotiations.  In short, I wanted the high-level legal skills of a law firm, and the metrics and operational efficiencies of an LPO,” Bassli says.  

Although the program includes a flat-fee for work, this isn’t about having an alternative fee arrangement (which Bassli calls “so obvious”).  It’s a complete managed service model that provides a holistic approach of Microsoft’s procurement contracting process – and eliminates the tired scenario of four to five law firms doing the same type of deal over and over, with the in-house lawyers still in the middle of the engagement between the business owner and the outside firm.

Law firms David Wright Tremaine and London-based Addelshaw Goddard have built their own internal technology and/or processes to monitor the program, analyze patterns and provide continuous improvement – which has changed Bassli’s and her teams’ day job dramatically, she says.

“For the same dollar, I now get business insight,” Bassli says.  “Law firms already have this information in their possession and now they are sharing it in a consumable and agreed upon format.”

“Firms are eager to offer something different to clients, but they may not know how to get it done,” Bassli says. “That puts the onus on clients to ask their firms for more, not just cheaper, faster and better,” she adds.  “There was a lot of thinking and talking through [with our firm lawyers] about what more they can deliver for the same price, basically. Adding that layer of business analysis and program management is so valuable – without a big haircut to the firms,” Bassli says of the implemented program.   

“Trust used to be all about relationships.  Work was sent to outside counsel because of historical experience and long-standing knowledge of the client’s legal needs.  Now, trust is being built by the quality and quantity of new ideas and ways of working. My firms tell me what work we should start or stop doing, and where they should or shouldn’t spend my money.  Those are the firms I can trust more than firms who continue to sell themselves as smart and capable.  They better be top quality!  That is an assumption.  The discussion should focus on creativity and smart risk-taking - together.  This is the new way of developing trust.  

“Real professional law firms want to do this.  We [clients], need to push for it.  Smart firms are eager, but need help with the ‘how’.  Once you have interest and appetite, you can make it happen.  Finding the right firm for this sort of engagement can be painful and it’s my job to be clear, as the client, about my expectations. Now the law firms need to be ready for clients who want to take this next step together with them.”  

While the first round of RFPs for the managed services program over 6 years ago, which ended up with Integreon, equated to a lot of “square pegs in round holes without any process or knowledge management, many firms are now very business minded in their responses,” she says.  “They want to play and move forward. The RFP process this time around was a completely different experience, with very savvy responses from several law firms.

“My goal is to have the firms manage the operation as much as possible. I just want to know the outcomes – which are driven by the goals we set for metrics.  It’s up to each side [client, law firms and legal service providers] to make sure it works financially, but we’re in it together.  They have become virtual extensions of my team, so that my team can pick and choose their work and not be stuck with everything that falls onto their desk.”

While shifting to a managed service model was uncomfortable – or more likely, unfamiliar – for some of the in-house lawyers, overall, Bassli’s team also loves the outcomes, she says.

“With my team, it was easy.  They could either keep managing five or six law firms without knowing details about the work they’re outsourcing, aside from it being done and assuming its high value and quality.  Or, they could pick up the more exciting strategic work that we couldn’t get to and have the law firm managed service provide business insight into the work they are handling on the team’s behalf.  

“We’re just starting out, Bassli says of the 9-month-old program, but what we get back is worlds apart from any legal traditional operating model.”  And, that success is what motivates Bassli to see her colleagues embrace similar innovations.

“It’s now my job as a good corporate citizen to share my success with our legal ops department.  The legal ops department can be challenged when it comes to getting lawyers to try new arrangements with their law firms.  So having a real example of innovation in action can go a long way in changing how in-house attorneys buy law firm services.  I am lucky that the only person I had to convince was myself.”  Bassli says of her position as a practicing lawyer and team leader within the corporation.  

“My team is delivering legal services to thousands of procurement clients across Microsoft in a different way,” Bassli says.  “I have a genuine passion and love for what I do, the autonomy to decide how to do my work, and the scope and volume to operationalize my practice of law in an efficient manner.

“I don’t want the reputation that I only do process,” Bassli cautions – her enjoyment of the art of practicing law clearly evident.  “I bring smart legal risk-taking in an operationally efficient way.  Otherwise I’d be stuck doing one contract at a time with a red pen and anxious business clients who want speed.  We’re a tech company – we need to move fast.”

Bassli’s next steps are to really globalize what she’s done (it is a global solution today, but admittedly can be enhanced on a deeper scale) – a big project to wrangle.  But, doing so will “keep Microsoft’s other corporate attorneys focused on generating revenue for the company, and solidifying our global footprint in ways that demonstrate to our attorneys around the globe that they too, should have time savings and benefits that are material to them.”

Now, if only she could find the time to write a manual about outsourcing legal services from a client’s point of view…

Lucy Bassli joined the legal department of Microsoft in 2004, providing legal support to the central procurement organization globally and across all lines of business at Microsoft. In recent years, she has focused extensively on complex and global outsourcing contracts. She has negotiated strategic outsourcing contracts in the areas of legal services, finance and operations, and IT, among others. Lucy has gained firsthand experience in outsourcing by engaging an outsourced legal services provider (LPO) to assist her with high-volume contract transactions, and recently launched a new “managed services” engagement with law firms. She oversees a centralized contracting office in the legal department of Microsoft, specializing in non-revenue contracting tools and processes. This office is responsible for managing the company’s global contract repository and supporting the process of electronic signature and storage. Prior to joining Microsoft, Lucy practiced law at Davis Wright Tremaine, LLP in Seattle, WA, specializing in commercial transactions and commercial bankruptcy. Lucy received her J.D and BA from the University of Houston in Houston, Texas, where she grew up, but has been living in the Seattle area since completing law school.   Lucy is a licensed member of the Washington and Texas state bar associations, and was named to the National Law Journal list of Outstanding Women Lawyers, 2015.

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Stirring the Pot With Metrics
by Novus Law LLC, Client Solutions Team. Follow on Twitter @NovusLawLLC.

Sam Ranganathan isn’t a lawyer.  In his own words, “I’m the guy who stirs the pot,” he laughs of his position as Senior Director, Legal Operations at a research-based pharmaceutical company.  Ranganathan also leads the Metrics & Analysis Interest Group for the Legal Operations section of the Association of Corporate Counsel (ACC) – which aims to offer measurable solutions to inefficiency problems – a theme throughout his nearly two decades-long tenure in various roles within Legal Operations.

“Let me be blunt,” Sam preps, “metrics tend to be what we can easily measure, and every single decision-maker – from GCs to CFOs – discount them right off the bat.  Those are often metrics that don’t seem to initially attack what is most important – to achieve the outcome they desire at the least possible cost.”  An outcome which ultimately should boost shareholder value, a primary function of all corporate departments, including legal.

In order to convey the resounding impact of process innovation and improvement through the use of applied metrics on the legal department, Ranganathan often found himself facilitating conversations within the organization at his previous company, “I had a decoder ring,” Ranganathan laughs.  "I had to establish success factors and KPIs that would align with the GC’s vision."

“After the preliminary meeting to lay out the initiative, periodic progress is expected – someone needs to drive the initiative to completion, to clearly understand where the project is headed from the onset, establish measurables for performance and identify limitations” Ranganathan says.

“There are always limitations, and teams often struggle with delivering to the expectation.  It’s too late to go back to the GC weeks later to say we took the wrong approach.  You have to bring those messages out right away and communicate both ways so that the entire team understands and benefits.  For us, the most important thing to do from a general counsel perspective was to contain the cost of litigation and make it predictable without affecting outcomes.”

In his current role, Ranganathan oversees three functions: outside counsel management; eDiscovery; and business process improvement.  He also manages the legal technology budget.  In each area, if it is possible to reduce uncertainty with measurement – “that is a success,” he says.

While Ranganathan can lead the charge to push for more efficient processes internally – it’s much more difficult to determine the best internal practices for his law firms in order to achieve greater predictability and better legal outcomes.

“We haven’t been in the driver’s seat necessarily with law firms in managing their costs effectively; that conversation has traditionally been driven by law firms’ aversion to risk and less about managing each aspect of their operation efficiently” Ranganathan says, particularly in circumstances where corporate legal departments may not have a lot of prior experience with a particular issue or matter type.  “If a law firm tells you that the life of a case, over the course of a year or years, will be $2.6 million, how do you know that is the best price to expect and not have to be a 20-year veteran to know that? We’re trying to predict the cost of a case and the factors that affect it.

“Unfortunately, many law firms are often focused on responding quickly to the changing needs of a case, and not as well-versed in managing the resources efficiently as the needs change and eliminating unnecessary spend,” Ranganathan says.

Talking Standardized Metrics With Outside Counsel

Metrics guru and proponent for universal quality standards in the legal profession, Ron Dolin, relives the same Groundhog’s Day-like scenario when he meets with law firm lawyers. It goes like this:

The CIO of an AM Law 100 firm says, “We want to do big data.”

“What problem are you trying to solve?” asks Dolin, an angel investor to legal technology startups and a Senior Research Fellow at Harvard Law’s Center on the Legal Profession, working on quality metrics.

“We’re not sure.  We just need big data,” responds the CIO.

This scene is a familiar one among well-known commentators on the legal profession, many who have written at length about the dire consequences of misunderstanding (or underestimating) the role of design in process and technology development.

“It’s risky to build a sandbox without speaking to clients about their needs – understanding their pain points – and thinking deeply about the process improvements necessary for the specific problems to solve,” says Dolin.  “To build a solution looking for a problem, regardless of the industry or profession, isn’t beneficial to anyone.”

Dolin, like many of law’s forward-thinkers pushing a century-old guild into a new era, is accustomed to playing buzzword bingo with law firms and clients.  And, while he’s optimistic about the recent flurry of legal ops attention within the industry, he echoes the quiet frustrations shared by many senior legal ops executives when he hears from law firm partners who don’t solicit regular client feedback.

“Push harder,” Dolin says.

“The incentive and push for change does need to come from the clients, but the nature of the change needs to come from the law firms [and other legal service providers]."

It’s a model – most well-known through the work of Harvard professor and businessman Clayton Christensen – where clients can look at their law firms as a black box, and say: ‘Here is what I want to pay for; you figure out how to make it work.’  This is an important component of The Innovator’s Dilemma. 

“The main point is that you have to give up high margin work at some point, and innovate in new, unknown or lower margin markets; the dilemma is in deciding when to give up your highly profitable work because the writing is on the wall,” Dolin says.

“When creating a new market, the innovators or producers of new services shouldn’t – and, in theory cannot – ask existing consumers or clients what they should do next.  The reason is simple: clients often don’t know,” he explains.  “You would never ask someone buying coal about electricity,” he proffers.

The same stands true for new, improved ways to deliver legal services.  The innovators, law firms and legal service providers, must be the ones to identify and create new channels where their clients are stuck.

“You can do market analysis in a new market, but it won't uncover the size of the market,” Dolin says.  “For example, people might have known that their old computer systems were limited, but not have known how helpful windows and a mouse would have been to resolve their frustration.  You can ask about the frustration, innovate and test possible solutions, and try them out in the market. But you couldn’t have determined how many PCs would have sold from the start.” 

Dolin doesn’t suggest that all providers need to follow the same path -- or build the same operating system – to produce better outcomes for their clients.  “Each law firm might take a different approach – it might be an issue of the culture of the firm or the type of business they are working on.”

Process diversity within law firms allows firms to define their own culture and practices.  Clients aren’t seeking to standardize the day-to-day operations of their outside legal service providers, but rather achieve specific, predictable outcomes.  Which means that when it comes to comparing law firms, universal quality measurements trump the old-school promises of smarter, better educated or competent lawyers of Firm A compared to Firm B.

However, most lawyers aren’t accustomed to discussing design concepts and brainstorming with clients about work flow.  And, they haven’t traditionally been economically incentivized to do so.

For this to happen easily, clients need to be able to compare the quality of different firms and practice groups.  If a client can be confident in the quality of work at Firm A, and the pricing is more favorable than Firm B for the same quality, the business case for Firm A is simple.

Moving Toward Universal Quality Metrics

Dolin’s research at Harvard Law’s Center on the Legal Profession seeks to define, implement, and evaluate the use of legal quality metrics in the selection and management of outside counsel of Fortune 100 companies.  He works with clients and some of their select law firms, as well as new entrants into legal services to bring about adequate data collection by all parties, a common theme these days among “legal operations” teams within in-house departments.  While measuring process components and timeliness is somewhat straightforward, measuring quality in some reliable, formal way is more elusive.

The market for bespoke legal services is constricting, and while some firms will remain in the upper echelons of the profession – protected by prestige, pedigree, or hopefully actual quality – others will depend on a system where they can compete more effectively, where clients are able to easily compare service providers on the same metrics. 

Standard quality metrics are also particularly helpful to gauge new entrants to the legal profession – a swiftly-growing category – and measure new innovations and processes against traditional ways of practicing law.  Standardized metrics can aid procedural interactions with outside counsel, and provide better insight into the selection and management process for comparing established relationships, as well as for bringing new entrants into the fold, Dolin says.

“The fact that we can define a metric that covers a wide variety of uses in no way means we are covering everything that everybody wants to do,” Dolin concedes, but universal metrics can give clients measurable and proven ways to focus on cost and efficiency while maintaining, or improving, quality.  “I can’t think of an in-house counsel who would turn away from that argument,” he says. 

In order to succeed, clients and law firms must also be incentivized to implement changes through organizational structures that “require people to understand what they are doing, how to do it best, and permit them to make changes they are comfortable with,” Dolin says.  But first, the profession must do its homework and start at the beginning, with understanding pain points, problems and desired outcomes.

“The measurements need to be correlated with the subjective opinion of clients and lawyers of what is a good work product,” Dolin says.  “The only way to know is to talk to a lot of people.  It’s not as simple as defining some metric,” [especially if that metric isn’t useful for competing across the industry.] 

“The goal is to end up with a metric that everyone feels the profession should incentivize – and is feasible in the workflow – only then will we be in a place to properly evaluate, and more reliably improve, the delivery of legal services.”

Sam Ranganathan spends most of his days devising innovative ways to make legal functions more efficient. He is currently working to build a set of legal department metrics that matter to corporations and their law firms. Over the course of his career, Sam has helped teams to develop hundreds of patentable  ideas; implemented novel ways to analyze patent portfolios; and built an offshore in-house patent  engineering team to improve quality of patent prosecution while reducing overall cost. Most recently, Sam  has identified significant cost savings by creating in-house eDiscovery capability, and new ways to uncover  EP validation and litigation spend management opportunities. Sam received a Master of Science degree in  Chemical Engineering from University of Illinois at Chicago and a Master in Business Administration from the  Kellogg Graduate School of Management at Northwestern University. Sam has two patents issued in his  name and is an avid weekend photographer. You can find more information about Sam (here). You can view some of his photography (here). 

Ron Dolin is an angel investor, focusing on legal technology startups. He co-founded the Program for Legal Technology and Design with SLS alum Margaret Hagan and has worked on legal innovation at the Stanford Center on the Legal Profession. He is currently a Senior Research Fellow at Harvard Law’s Center on the Legal Profession, working on legal quality metrics. He is also Adjunct Assistant Professor at Notre Dame Law School, where he teaches Legal Technology & Informatics. Ron has been asked to participate on panels and give talks at universities and organizations such as Stanford, COLPM, ILTA, and ACC, on issues related to legal technology and innovation. More information is available at Ron's Radical Concepts blog.

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Roundup of Activities within the ACC Legal Ops Section
by Catherine J. Moynihan, ACC

Many of the Interest Groups are turning their attention to planning great sessions at the 2nd annual ACC Legal Operations Conference June 23-24 in Chicago. To let the member planning committee know what programming you’re interested in, and what knowledge you would like to share, click here (deadline extended to Friday 12 February COB).

And here are some additional highlights of activities among the Interest Groups:

•    The Metrics & Analysis group sent a delegation to a P3 meeting in New York during LegalTech to coordinate projects aimed at reforming billing codes to obtain better building blocks and benchmarking data for AFAs.  

•    For the Internal Resource Management group’s “Legal Ops in a Box” project, many hands make light work as volunteers who have set up Legal Ops functions once or twice are documenting key steps in work streams such as implementing technology, putting financial management procedures in place and process improvement. Next up – a pre-conference workshop June 22nd in Chicago.

•    The External Resource Management gang has a survey in the field, getting member assessments of the value of certain metrics to select and retain law firms and vendors, as well as the worth of the “value-added” services they offer. To put in your 2-cents, click here.

•    And the Project and Process Management Interest Group is getting organized via a conference call on March 1st – drop a line to lawdepartmentops@acc.com if you would like to be added to the invite.

To keep abreast of the Interest Group activities and participate in ad hoc benchmarking as questions arise, log in to the Member Forum – it’s crackling with posts and replies as members help each other out. And, don’t forget the News & Announcements page for curated reports, articles and blogs. 

 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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Highlights from the ACC Legal Ops News & Announcements Page
by ACC

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 & Announcements tab tracks the best items to keep you well informed.  Take a look at these two great highlights:

ACC Chief Legal Officers Survey Finds Drastic Growth in Legal Operations Staffing.  The percentage of general counsel (GCs) stating that their companies have designated legal operations staff has more than doubled, the ACC Chief Legal Officers (CLO) 2016 Survey reports.  The 2016 report includes an executive summary, key findings; and an in-depth question-by-question analysis on key metrics.  

From the ACC Docket:  Shell Sees Legal Team as Instrumental to its Future.  This is the first in a series of methodologies into Shell's legal operations.  It details Royal Dutch Shell's global panel review process from the hiring of their first ever Global Sourcing Officer ( a member of the ACC Legal Ops Section) to the mechanics of the panel review itself,on to the results, negotiations, KPI's, stakeholder engagement, and more.  Take a front-row seat for this story of continuous improvement in procurement of legal services. 

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!
by ACC

Join now to get access to resources, participate in any of the Interest Groups, and use the online Member Forum for ad hoc benchmarking and referrals. The ACC Legal Ops section is active throughout the year, adding resources, conducting benchmarking studies, and providing webinars 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:

Turning Law Firms Into Managed Service Providers at Microsoft
Stirring the Pot With Metrics
Roundup of Activities within the ACC Legal Ops Section
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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