Legal Resource Allocation:


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Legal Resource Allocation:

  1. 1. Resource Allocation: The Most Important Role of the CLO TodayMischa Kowall, Associate Counsel, The Katz GroupJoe Milstone, Co-Founder, Cognition LLPGanesh Natarajan, President & CEO, Mindcrest Inc.David Skinner, Co-Founder & President, Gimbal Canada Inc.
  2. 2. Fill out your Electronic Evaluation– Access the app through any browser at– Select the tab: Session/Workshop Evaluations (on the homescreen)– Click on the session you wish to evaluate– Under the session description, click on Questionnaire • If you are not logged in you will need to enter your email and password • If you have not created a log in you will need to enter the email address provided upon registration, and create a password– Select/Enter answers and click Submit to complete each question
  3. 3. 3• Pharmacy• Sports & Entertainment• Real Estate Development3
  5. 5. Corporate Law Departments Cognition LLP Traditional Law Firms An outside firm that behaves like in-house counsel Lawyers with best-of-breed credentials Low overhead structure Integrated with legal and business teams
  6. 6. Lean practice management advisorsA new paradigm for prosperity in the business of law Helping in-house counsel deliver added value in less time and at less cost. •Improved efficiency •Faster turnaround time •Lower overheads •More predictable legal spend •Stronger relationships with external counsel •Greater client satisfaction Lean Six Sigma / Process Optimization Professional Development6
  7. 7. Session Goals• “Level-set” on current challenges and constraints faced by corporate counsel• Equip corporate counsel with a more comprehensive toolkit of options and solutions• Inform on realities and myths of PO/Six Sigma, AFA’s• Expand thought process on extracting value from internal and external legal relationships• Assess experiences and opinions of industry leaders and experiential corporate counsel
  8. 8. Overview of the Session1. Linkage with CCCA Spring Sessions2. The Corporate Counsel Predicament (or opportunity)3. The Value Funnel as a Base Plan4. Service and Solutions Alternatives5. Strategies in resource deployment6. Maximizing relations with resource providers
  9. 9. What we (could have) learned from the Spring Conference Leaders: Joe Milstone David Skinner
  10. 10. Why we’re stuck• Susskind: – Converging factors of demand versus resources, technology solutions, liberalization of market – Corporate counsel complicit in lack of change – Opportunities to emerge• Faure: – Smarter legal model: optimizing the coverage, headcount and total cost triangle
  11. 11. Expert Services Model Creates core competency leverage by pushing work to thelowest level of competency with the capability of providing the optimum level of service in a cost-effective mannerGeneral counsel moving from provider of service to a project manager amongst several providers, internal and external
  12. 12. Trevor Faure, The Smarter Legal Model: More from Less“At worst, functions that are not research, development, production, sales, marketing, distribution and so on are regarded as superfluous bureaucracy and subject to reduction with no theoretical minimum level, almost irrespective of the consequence. At best, the corporate lawyer can transcend such a calculation by adopting commercial methodology and translating legal services to mirror the “front office” activities, using the same world-class business tools used to achieve higher efficiency in all other parts of the enterprise.”
  13. 13. Tony Jomati, After the Golden Age: The New Legal Era“This belief (that you shouldn’t buy on price) has long circulated in the legal market, just as the IBM cliché has. But, given the choice between two relatively equal service providers (of which there are many) and one offering a more collaborative, risk-sharing and in short, a less expensive service, a buyer may be well advised to take the better priced offering. The anti-price argument preyed on the idea that high cost equates to high status and quality, therefore less expensive legal products were necessarily worse legal products. However, this argument entirely omitted the fact that a more efficiently run law firm can be equally as good quality, but less wasteful of a client’s money.”
  14. 14. The Corporate CounselPredicament – expanded…Leaders: Mischa Kowall David Skinner
  15. 15. The Challenges Facing CLOs• Being everything to everyone• Tight budgets• The need for greater budget predictability• Resources• Staying current• Managing efficiency and controlling costs• Organizational barriers to change
  16. 16. Panel Discussion
  17. 17. The Value FunnelLeader: Joe Milstone
  18. 18. Evolution of Corporate Counsel Historical Today Tomorrow?Huge, BetCompany Outside Counsel Outside Counsel Outside Counsel In-House Counsel In-House Counsel In-House Counsel LPO LPO
  19. 19. Panel Discussion
  20. 20. New Alternative Models and Resources Leader: Joe Milstone Ganesh Natarajan
  21. 21. LEGAL SERVICES LANDSCAPEIN-HOUSE OUTSIDE LPO PROVIDERS•Governance COUNSEL •Litigation support •Core Servicesand risk (Litigation, •Contractsmanagement Complex management•Compliance transactions, supportprograms Compliance law,•Litigation Securities) •Compliance process supportmanagement •Value based•Transactions billing•Contracts•Manage service •Clientproviders relationship 21 development
  22. 22. In Your House Already• Existing headcount• Better use of paralegals• Non-lawyer integration• Equipping the business• Scoping your own work SOW
  23. 23. Straying Outside• LP-Off• LP-On• Contract lawyers• Virtual law firms• Alternative model law firms (dispersed)• Traditional law firms• Products, technology and managed service solutions
  24. 24. OUTSOURCING FRAMEWORK Low context/High expertise High context/High expertise ( #3 – Outsource last) (core to the client) Audits, Reports and Governance Contract Enforcement Contractual Risk Analysis Partner Management/Vendor management Maintaining Contracts in Audit Ready State Complex Litigation Low context/low expertise High context/Low expertise (#1 – outsource first) (#2 – Outsource next)Contract and Subcontract Review and Management Contract ManagementContract review and abstraction - Policies, Templates and Playbooks (CreationElectronic Contract Repository Creation / Maintenance phase)Outsourcing Due Diligence and Transition Template creation and maintenanceChange Management/Certification Management/Software Negotiation Playbook Creation / RefreshLicense Management - Drafting and Negotiations RFx SupportLitigation Contract Drafting and Negotiations SupportStandard document review for relevance, privilege Approval/Escalation Routing Litigation 24 IP litigation, government investigations
  25. 25. Products and Managed Solutions• EDiscovery• Project/Litigation Management• Contract Management• Technology Solutions
  26. 26. LITIGATION STATISTICS • Satisfaction with outside counsel – E-discovery 21% – Budget forecast reliability: 16% – Overall cost management: 14% – Pricing and alternative fee flexibility: 17% • Alternative fee arrangements have increased to 62% in 2011 – Blended rate, capped, contingent, fixed fee, performance/rewards based fee • Litigation spend – Under 500k: 34% (company size is under $100M) – 500k to 1M: 13% – 1M – 5M: 30% (1/3 company size is over 1B 1/3 between 100-999M) – 5M – 10M : 12%26 – 10M or more: 11%
  27. 27. CONTRACTS MANAGEMENT CHALLENGES The average Fortune 1000 company maintains between 20,000 to 40,000 active IMPACT contracts (according to the Deficient contract approvals Institute for Supply Management). processes Un-auditable contract paper trails Many contracts are still Poor contract and exposure analysis languishing in file cabinets, being managed with very limited Increased legal and financial risk technologies, or being managed using manual Poor contract visibility and control processes due to complex software and technologies Lost savings, profit and revenue (according to a study by Inside opportunities Counsel).27
  28. 28. Results from In-House Counsel Survey• 6% use document assembly automation for contracts• 23% use CMS for executed contracts• 9% had any form of CMS integrated with CRM• 25% view CMS process as a competitive advantage• 2/3 stored in physical or electronic filing cabinets
  29. 29. COMPLIANCE RISKS – 3RD PARTIES subcontractors 3rd parties affiliates can deliver tremendous % suppliers value 50 offshore captives distributors affinity partners Cost savings Reduce headcount agents Provide better service brokers Greater efficiency Be more nimble40-60% of your revenuerequires 3rd parties
  30. 30. Panel Discussion
  31. 31. Strategies to Get (Much) Morewith Less – Within and OutsideLeader: David Skinner
  32. 32. Using Lean Six Sigma to Drive Efficiencies• Introduction – The context and what Lean Six Sigma is – What is Lean Six Sigma for Lawyers – Four goals• Process optimization through Value Stream Mapping – Understanding process optimization and its goals – VSM as a tool• An example: optimizing the process to protect an invention
  33. 33. Current State Value Stream Map
  34. 34. Future State Value Stream Map
  35. 35. Using Lean Six Sigma to Drive Efficiencies (cont’d)• The Value-Add Pop Quiz: Think about your day – What percentage is spent re-working something someone else has done? – What percentage is spent doing something someone else has to re-work? – What percentage of what’s left do you spend on activities that do not add value?
  36. 36. Using Lean Six Sigma to Drive Efficiencies (cont’d)• Three Value Criteria – Does it alter the material? – Is the client willing to pay? – Is it done right the first time?
  37. 37. Using Lean Six Sigma to Drive Efficiencies (cont’d)
  38. 38. Panel Discussion
  39. 39. Intersection between PO, RFP’s and AFA’sLeaders: Joe Milstone Ganesh Natarajan David Skinner
  40. 40. How alternative service providers structure fee arrangements or provide alternatives to the billable hour Time and Material Hourly (criticisms: cost plus, inefficiency, penalizes productivity, not value-based) Full Time Equivalent (FTE) Transaction Based Per document Per agreement/lease Per file Per function Contingency, satisfaction-based (all or part) Project Based Fixed fee, decoupling and fixing Purchased Hours Fee caps, blended rates
  41. 41. Process optimization: more customizable structures and more accurate fixed fees• RFPs and moving away from the billable hour• Disaggregation• Process optimization and LSS
  42. 42. Panel Discussion
  43. 43. Strengthening Relationships between Corporate Counsel and Key External ConstituentsLeaders: Mischa Kowall Joe Milstone David Skinner
  44. 44. Advice to Give Your External Advisors to Give Better Value• Be relevant• Seek alignment of interests• Be efficient and transparent• Communicate...but not too much• Be creative
  45. 45. Wrap-Up
  46. 46. Follow-up:••••
  47. 47. Thank you