1. The Smarter Legal Model – overview &
data update from client engagements
January 2014
Trevor Faure, Partner, Global Leader
Legal Services, Ernst & Young Global
trevor.faure@uk.ey.com / +44 7802 595053

2. Page 2 The Smarter Legal Model: more for less. ©Trevor Faure 2010. All rights reserved.
Coverage
Compliance
Client Satisfaction
Internal
Head Count
Net Cost (incl. legal fees,
fines & business losses)
As defined by stakeholders (C-suite, shareholders, internal clients, regulators, legal staff, customers, etc.).
• The Essentials - substantive legal work product: contracts, transactions, litigation, licences, policies, corporate
governance, subject-matter specialisation, advice, negotiation, drafting, etc.
• The Enablers - execution of legal operations: business involvement, management of external counsel, training of
clients, FAQs, processes, knowledge management, legal research & education, administration. budget management.
Adherence to all applicable laws,
regulations, third-party rights, codes
of professional practice, contracts,
licences and performance of all
related obligations.
As assessed by clients.
Key Performance Indicators such
as: contract turnaround times,
meeting project deadlines,
successful litigation / dispute
outcomes, responsiveness,
expertise, clarity & precision of
drafting & advice, proactive support
& training, client empowerment,
alignment with business objectives,
user-friendly work product
(templates & processes, etc.).
Full-time equivalent legal staff
employed including non-qualified
support staff and contractors.
• The cost of Internal Head Count and external legal
services, law firms, expert witnesses, outsourcing,
knowledge/matter management systems.
• The cost of failure: e.g. contract liability claims,
unfair dismissal compensation, regulatory fines, civil /
criminal compensation, legal cost awards.

3. Page 3 The Smarter Legal Model: more for less. ©Trevor Faure 2010. All rights reserved.
Coverage: 50%
Compliance: Several incidents
Client Satisfaction: 7/10
Head Count
< X
Net Cost (incl. legal fees,
fines & business losses)
> $Y M
Average Performance of 250 leading legal departments
Measured & Analysed: the False Economy Model

4. Page 4 The Smarter Legal Model: more for less. ©Trevor Faure 2010. All rights reserved.
Coverage 25% to 80%
Compliance: 500% GMI improvement
Client Satisfaction: 3/10 to 9/10
Head Count
X
Net Cost (incl. legal fees,
fines & business losses)
$Y M – 30%
Typical improvements achieved under The Smarter Legal Model

5. Page 5 The Smarter Legal Model: more for less. ©Trevor Faure 2010. All rights reserved.
Measuring Coverage: does the Legal function actually have a list of
the essential legal work and responsibilities agreed with the
stakeholders? [250 leading legal departments, May 2013]
57%
43%
No Yes
66%
34%
No Yes
Essentials - substantive legal
work product: contracts,
transactions, litigation, licences,
policies, corporate governance,
subject-matter specialisation,
advice, negotiation, drafting, etc.
Enablers - execution of legal
operations: business involvement,
management of external counsel,
training of clients, FAQs, processes,
knowledge management, legal
research & education,
administration. budget management.

6. Page 6 The Smarter Legal Model: more for less. ©Trevor Faure 2010. All rights reserved.
Measuring Coverage: to what extent does the internal & external
Legal function cover the legal essentials and enablers for all
stakeholders in all jurisdictions? [250 leading legal departments, May 2013]
Under 25%
25% - 50%
50% - 65%
Above 80%
22%
20%
27%
11%
Coverage
% of Legal Departments

7. Page 7 The Smarter Legal Model: more for less. ©Trevor Faure 2010. All rights reserved.
Measuring Compliance & Net Cost: how many serious compliance
incidents have occurred during the last six months (i.e. those
resulting in significant penalties/legal fees)? [250 departments, May 2013]
None
1 - 5
5 - 7
Over 10
34%
54%
7%
5%
NumberofComplianceIncidents
% of Legal Departments

8. Page 8 The Smarter Legal Model: more for less. ©Trevor Faure 2010. All rights reserved.
Measuring Client Satisfaction: What is the level of Client
Satisfaction with the Legal function (self-estimated or surveyed)?
[250 leading legal departments, May 2013]
1 - 2
3 - 4
5 - 6
6 - 8
9 - 10
1%
8%
18%
54%
19%
SatisfactionRatingoutof10
% of Legal Departments

9. Page 9 The Smarter Legal Model: more for less. ©Trevor Faure 2010. All rights reserved.
Measuring Head Count: does the Legal function have an adequate
level of staffing? [250 leading legal departments, May 2013]
Yes
No
27%
73%
% of Legal Departments

10. Page 10 The Smarter Legal Model: more for less. ©Trevor Faure 2010. All rights reserved.
Measuring Net Cost: the level of external legal spend is....
[250 leading legal departments, May 2013]
too Low
just right, Goldilocks!
too High
unknown, to be honest
18%
25%
44%
13%
% of Legal Departments

11. Page 11 The Smarter Legal Model: more for less. ©Trevor Faure 2010. All rights reserved.
Previous State
Coverage: 52% of Legal Essentials & Enablers
Compliance: Several costly incidents
Client Satisfaction: 6.5/10
Head Count:
2.4 Lawyers per $Billion
ABC Revenue:
Half the Industry Median.
Net Cost:
0.38% ABC Revenue:
15% above the Industry Median
PLUS $20-150M Compliance Fines.
Real world example: ABC was overspending due to lack of controls and inadequate legal
coverage. Rationalizing law firms, systematising processes and improving internal talent
saves up to One Third of the true total ABC legal spend and minimises Compliance losses.
AnonBusinessCorp
Future State
Coverage: 80-85% of Legal Essentials & Enablers
Compliance: Few incidents
Client Satisfaction: 8/10
Head Count:
4 Lawyers per $Billion
ABC Revenue:
Responsive, Proactive
& Strategic.
Net Cost:
0.26% Revenue
20% below Industry Median
PLUS ABC revenue upside from
contract management and leverage.

12. Page 12 The Smarter Legal Model: more for less. ©Trevor Faure 2010. All rights reserved.
“Drawing heavily on management theory, economics, and
organizational psychology, and rooted also in his extensive practical
experience as an in-house lawyer, Faure offers a set of tools to help
reduce costs, increase legal coverage, improve compliance, and
increase client satisfaction. [H]e casts aside the traditional, often
fraught, commercial relationship between law firms and their clients
and replaces this with a species of partnership arrangement, under
which the business interests of the in-house lawyers and their
external advisers are much better aligned”.
Professor Richard Susskind from “The End of Lawyers?”
www.uk.practicallaw.com/about/morefromless
“Like Malcolm Gladwell’s Tipping Point and Jim Collins’ Good to
Great, Faure’s The Smarter Legal Model is the rare book that will be
read with equal interest and appreciation by both practitioners and
academics. It is destined to become an important part of any
conversation about the role of law and lawyers in the global
economy.“
Professsor David B. Wilkins, Harvard Law School
“He shows...the holy grail of business productivity... Bursting with
ideas, his book is a "must read" for business people and the lawyers
who work with them.”
Ben W. Heineman, Jr., Former GE Senior Vice President for Law
See Bloomberg TV: Modernising legal services & Law Firm
Business Development OR YouTube: “Trevor Faure Bloomberg”