Value-Based Fees, Use of Legal Operations Function Help Companies Drive Time and Cost Savings
In-house Bar Recognizes 12 ACC Value Champions
Posted: May 19, 2015
WASHINGTON (May 19, 2015) — General counsel are using detailed data analysis to shape their law departments and applying technology and value-based fees (VBFs) to create solutions to expensive areas like discovery and litigation, the Association of Corporate Counsel (ACC) announced at its 2015 ACC Value Champions press briefing today. ACC also highlighted that companies are building transformative, multi-pronged programs, often employing legal operations professionals to implement plans and measure success.
At the press briefing, ACC recognized 12 companies, including two partnering with law firms or legal service providers as 2015 ACC Value Champions. Their strategic approaches increased client satisfaction, enhanced the value of legal service spending, reduced turnaround times and costs and improved outcomes. The ACC Value Champions program is part of the ACC Value Challenge, which promotes adoption of management practices that drive value — reducing spending and yielding better outcomes and higher predictability.
Most of this year's honorees, which include organizations located in Australia and Canada, focused on implementing multi-faceted platforms that hinged on legal operations techniques. In many cases, departments benefitted from designated legal operations teams while in others, the department "crowd sourced" initiatives from lawyers, paralegals and other staff.
"Each of the 2015 ACC Value Champions applied a deliberate mix of legal operations tactics and called on employees to be involved in strategic decisions about resource allocation, outside counsel management and internal processes," said Veta T. Richardson, president and chief executive officer of ACC. "In many cases, the winning nominees partnered with law firms and legal service providers to turn challenging projects into opportunities for savings and better legal service."
This year's Champions worked with innovators in legal technology and business processes to gain insights from data and other metrics on making improvements while reducing costs. Companies' partner firms made drastic shifts towards VBFs, in one case banning the hourly fee option entirely and in another, employing "success-based fee arrangements." Another winning law department relied on a data-savvy internal litigation support team of non-lawyer specialists coupled with contract attorneys to conduct document review for large litigation, saving nearly 70 percent over costs of outsourcing to law firm associates.
In multiple instances of grassroots initiatives, employees working or competing in teams identified opportunities to gain efficiencies. At one company, employees suggested avoiding "double-handling" of trial correspondence for litigation matters while at another, staff consolidated reporting by 60 percent by eliminating redundancy and better using technology.
ACC recognizes the following 2015 ACC Value Champions, selected by a panel of in-house counsel judges from a group of 80 nominees:
3M (St. Paul, Minn.) — Deployed its Litigation Technology Services team to bring maximum efficiency and effectiveness to document review. The team interviews internal clients to limit search parameters (reducing the volume of data for processing by 13 percent) and used a custom review platform to save $300,000 annually. Employing contract attorneys for large case document review cuts costs by 70 percent each year.
AIG (New York) — Created a global legal operations center for enterprise legal needs and on behalf of insurance clientele, which allowed AIG to leverage vast data to develop tools and services in support of consistently achieving the best legal outcomes at the most compelling value. The center also leveraged AIG's global buying power to deliver value and performance by transforming law firm and vendor relationships. The program generated over $200 million in savings of legal cost related benefits in 2014 alone.
Bendigo and Adelaide Bank (Adelaide, Australia) — Revolutionized a law department that was "at capacity" with its external spend and internal work. By banishing hourly fees and disaggregating, the team cut costs on routine, externally sourced legal work by as much as 50 percent and reorganized workflows. Lawyers trained commercial departments to manage lower-risk projects, insourced and co-sourced, and eliminated redundant litigation handling, saving AUD500,000 on discovery in one year.
BMO Financial Group (Toronto) — Took a grassroots approach to efficiency, sourcing 40 ideas through an "Innovative Team Challenge." The best ideas implemented resulted in a standardized regulatory compliance review process that eliminated the need for 60 percent of business reports and, through the use of VBFs, the department reduced legal spend on employment litigation matters by 30 percent. BMO also accelerated progress in eliminating hourly fees, moving to 40 percent of legal work on VBFs over two years.
FedEx Ground Package System (Coraopolis, Pa.) — Used "quality action teams" to better measure internal and law firm performance, especially focusing on discovery, outside counsel engagement and alternative dispute resolution. By setting key performance indicators and focusing on optimizing resources, FedEx lowered its average monthly general litigation costs by 32 percent and cut discovery costs by 62 percent.
Fireman's Fund Insurance Company with Novus Law (Novato, Calif. and Chicago) — Reduced redundancy in discovery, while also improving litigation strategy and results, by making internal improvements and applying Novus' proprietary technology. A fixed-fee-per-page discovery model saved $15.7 million over three years. FFIC also eliminated email communications with litigation-focused outside counsel through technology. As a result, and with the help of VBFs, FFIC saved $5 to $10 million in outside counsel costs.
Juniper Networks (Sunnyvale, Calif.) — Transformed its patent budget in order to optimize spending while protecting company innovations. The law department created a collaboration site for all outside counsel, a more strategic approach that helps the two patent attorneys on staff to assess the value of 500 to 600 patent assets each quarter. As a result and with the help of a budget analysis system for outside counsel, the department achieved its goal of yearly patent spending within 2 to 3 percent of its budget.
SSM Health (St. Louis) — Moved away from reliance on law firms and built its first in-house law department with 20 lawyers, a contracts database and a cloud-based legal practice management program. Insourcing projects and establishing a standard fee schedule cut legal expenses by 65 percent. The new in-house team cut contract review time by six days and increased contract completions by 127 percent.
The Heico Companies with Shook, Hardy & Bacon (Chicago and Kansas City) — Heico evaluated its law firms using a lean six-sigma legal services efficiency model and identified Shook, Hardy & Bacon as one of its strongest firms based on spending, efficiency and value-added legal services. Heico and Shook, Hardy then collaborated on attorney secondment and other strategies to further enhance efficiency by more than 12 percent from the second half of 2014 into early 2015. The collaboration also dramatically reduced case resolution cycle time while improving overall outcomes for the company.
VMware (Palo Alto, Calif.) — Undertook a three-year transformational strategy to meet the challenges of dramatic business growth without increasing headcount or expenses. The company enhanced its legal operations to gain efficiency across all geographies while also elevating client satisfaction. Value programs improved budget predictability by 98 percent and reduced legal costs by more than 10 percent.
Xcel Energy (Minneapolis) — Formed a "Legal Efficiency Strategies Committee" to provide input on meeting higher client service demands while keeping costs steady. Xcel Energy reduced its outside legal spend by 7.5 percent over two years, due in part to moving more than a quarter of its outside counsel spending to VBFs. Internally, hiring an e-discovery manager, redistributing practice area work and expanding use of matter management tools increased efficiency and client satisfaction.
Yazaki North America (Canton, Mich.) — Leveraged technology to set up a project intake process, which then allowed for analysis on attorney workload and other key metrics. The results informed the team's decision to insource high-value work, hire new lawyers at headquarters and open a law department in Mexico. They simultaneously introduced success-based fee arrangements for outside counsel. Overall, Yazaki reduced its legal spend by 52 percent over three years.
About the ACC Value Challenge: The ACC Value Challenge, launched in 2008, has provided resources and training for in-house counsel and law firm lawyers to help affect change within the legal industry. By re-aligning relationships and promoting value-based fee arrangements and other management tactics, such as project management, process improvement, efficient use of technology and knowledge management tools, the market for the delivery of legal services benefits from the same insights and wisdom upon which every other service industry relies to provide world-class value to their clients. For more information, visit www.acc.com/valuechallenge.
About ACC: The Association of Corporate Counsel (ACC) is a global legal association that promotes the common professional and business interests of in-house counsel who work for corporations, associations and other private-sector organizations through information, education, networking opportunities and advocacy initiatives. With more than 35,000 members in 85 countries employed by over 10,000 organizations, ACC connects its members to the people and resources necessary for both personal and professional growth. By in-house counsel, for in-house counsel.® For more information, visit www.acc.com and follow ACC on Twitter: @ACCinhouse.
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