Small Department Leverages Technology, Social Media Tools and Smart Pricing to Get More Bang for the Buck
China State Construction Engineering Corporation is the largest real estate and construction company in the world. The company’s legal department is headquartered in Dubai, United Arab Emirates, and led by Mohd Sadique, general counsel.
Sadique began his quest for lower costs and improved value for money in the provision of in-house legal services in January 2012.
“In an in-house setting, ‘clients’ are other departments, the CEO, the Board, and the staff—in short, everyone,” he says. “The days of expansive legal teams are over. In view of our team’s modest size, innovation and technology are the chosen bedfellows of our department. They have been instrumental in achieving cost reductions and credible value outcomes.”
CSCEC’s legal department has a $20 million annual budget and a team of only five professionals who oversee the legal issues of a total staff numbering 4,527 in Saudi Arabia, Qatar, Kuwait, and the United Arab Emirates. Technology extends their reach and bandwidth while knowledge sharing aids client service, communication, and understanding.
For example, legal activity is tracked in a central database. Line graphs depict time expended in each country over the preceding months; they are shared widely across the organization. “This creates awareness as to which country warrants greater attention when measured against the yearly targets for the country,” Sadique explains. “it guarantees prioritization and alerts staff to track which country demands a greater investment of time.” It also acts as a key performance indicator for staff.
The legal staff leverages up-to-the-minute technology, including micro-blogging and instant messaging, to interact with one another and with their internal clients. Using a central online system, the department tweets out legal updates, classifying subjects through the use of hashtags.
“Twitter’s 140-character limit ensures brevity, while its use strips away the monotony of work and aids real-time information sharing,” Sadique says.
Instant messaging, available on mobile devices and desktops, allows regional staff to interact with the legal team. It aids prompt resolution of problems and serves as an early warning system of burgeoning issues. In addition, updates on pending corporate legal cases are available to upper management with a single click through the central online system.
Greater efficiency has been achieved by pulling contracts back in-house, aided by the use of templates. Legal staff personally draft and review major contracts rather than outsourcing them. The work is aided by a system that permits the population of 20 key, regularly used contract documents through customized pro forma.
“This saves precious re-drafting time, eliminates major errors, and ensures compliance,” says Sadique. “Further, by doing it in-house, the contract is more in tandem with the organization’s needs.”
Those in-sourcing exercises saved the company $5 million in legal fees in 2012 over 2011, including man-hours and taking into account opportunity costs of other work.
The quest for value extends to the company’s relationships with outside counsel. A selective panel of law firms have signed on to CSCEC’s corporate culture, which requires a fee estimate prior to the commencement of work. Sadique avoids hourly-rate retainers and requires a fixed minimum fee, usually 60 to 70 percent of a usual fixed fee, with a success fee to be paid if monies owed are recovered. Because the projects can total in the billions of dollars, the amounts owed may be sizable; outside counsel may recover principal with interest, in which case the interest usually covers the success fee, Sadique says.
“This value-added fee structure incentivizes the law firm, expedites project completion, and enhances the prospect of recoverability for our organization. It also promotes palatable legal outcomes,” says Sadique, who reports that the fee structure saved $15 million in legal fees in 2012 and enhanced recovery by 60 percent.
Even the handoff of work to outside counsel is made more efficient through the use of technology. An online folder protocol establishes a period of 30 days for claims to be considered and resolved. At the end of that period, access to the folder is disabled and external counsel is appointed.
“I commenced the value initiative to ensure value for money when clients sought legal representation. It contributed to a reduction in legal spend and better value outcomes for my company. In most cases, it also enhanced recoverability of erstwhile bad debts. The upshot to all this is that it boosts corporate confidence to seek legal representation and to draw on external legal expertise,” Sadique concludes.