A Corporate Cost-Consciousness Inspires Varied People and Places for Legal Work
By Jennifer J. Salopek
“The principal driver of change is our own culture,” says Peter Lieb, executive vice president and general counsel at Aon plc. As an organization that consults with clients in more than 200 countries on risk, health, retirement, talent, capital, and other pressing issues, Aon takes its own advice. In recent years, an understanding that increased engagement begets improved performance has driven efforts to augment colleague engagement, including in the legal department. Lieb wants the department's 425 members to have fulfilling careers that they enjoy.
Cross that goal with Chief Operating Officer for the Law Department Audrey Rubin's strong belief in LEAN/Six Sigma--“I think it's the right approach for all law departments”-and you get the multifaceted initiative that has resulted in reduced legal costs, increased budget predictability, improved legal outcomes, and greater employee satisfaction. The Law Department Strategic Improvement Project, kicked off in June 2014 and under full steam by December 2015, includes these elements:
- LEAN/Six Sigma process design on billing and invoicing processes by outside law firms
- Partnership with procurement department for RFP process on trademark and other legal matters
- Global rotation program for members of the legal department
- Shifting shared legal services to lower cost locations
The desire to increase colleague engagement coincided with an effort across Aon to contain costs-an intersection right up Rubin's alley, a self-described “efficiency nut.” That tipping point provided Lieb and Rubin with the opportunity and incentive to take a hard look at where the legal department could eliminate waste. One such area was billing and invoicing by outside law firms. To gain alignment and buy-in, legal department and law firm staff attend LEAN/Six Sigma training together. Through the traditional steps of mapping current processes, identifying pain points, and discussing possible future states, the teams tackle such areas of improvement as faster completion time, lower cost, and fewer errors. As a result, the total dollar amount of rejected invoices decreased by 41 percent. Once extended to subpoena responses, the initiative decreased the average subpoena cycle time by 44 percent. Plans for 2016 include extending the approach to contract reviews and M&A workflows.
Next, the law department developed a multifaceted RFP process for trademark legal matters and established a partnership with Aon's procurement department to make it hum. The two groups collaborated on a list of potential law firms, identifying key questions to address and defining a scoring rubric for assessment. The procurement team was fully involved with financial negotiations with the selected law firm and required an up-front bidding process. In 2015, approximately 40 percent of all U.S. legal matters with outside counsel support fell under a flat free agreement. The Aon Law Department achieved nearly 100 percent budget predictability for those matters. Legal and procurement have since worked together to extend this approach to seven areas of work, including litigation, immigration, and court reporting.
“This is not just a law department initiative,” says Lieb. “We have a great relationship with procurement, which is a very sophisticated department. The RFP process came out of our previous experiences with using them to drive cost containment and better quality work.”
The legal team also tackled contracts, driven by a larger Aon strategy to find less expensive locations for shared services including India and Poland. An internal team analyzed commercial contracts work to identify activities that could be moved to lower-cost locations and junior-level legal resources; non-disclosure work from the U.S., UK and Canada was moved to India while contracts work from the UK was moved to Poland. The transitions were guided by playbooks that detained contract and training guidelines. The team members in Poland and India are employees of the law department; they interact with “onshore” legal teams and have direct communication with legal clients. They also receive ongoing training, professional development, and career planning. This transfer of work and focus on insourcing has reduced the annual cost of contracts work for the sourcing regions by 50 percent and reduced turnaround time by 66 percent.
In the most innovative aspect of Aon's value approach, the law department not only moves the work around, as described above, but it also moves the lawyers around. Upon discovering that sites in other countries were understaffed and needed resources for projects, the law department created a global rotation program. Host locations design and advertise projects that provide value to the business and valuable experience for participants; interested candidates apply via internal social media for two- to three-week rotations. In its first year, nearly 50 percent of eligible attorneys applied.
- A colleague from India went to Toronto, Canada, to conduct a risk assessment related to an Aon product.
- A colleague from Lincolnshire, Illinois, went to Sydney, Australia, to assist with the strategic acquisition of a financial advice business.
- A colleague from London, England, went to Chicago, Illinois, to research and possibly redesign the governance structures of some of Aon's regulated entities.
Annual savings of 30 percent were achieved by this creative resourcing approach. The program also provided valuable career development opportunities and business awareness. In 2016, the program will be extended to all business units.
“It gives people a great experience, our projects get done, and we enjoy decreased reliance on outside counsel,” says Lieb.
Asked what advice they would give to other companies wanting to design successful value initiatives, Lieb and Rubin responded that it's key to listen to what the business needs and align to its priorities and goals.
“Aon is very cost-conscious. They like the increased predictability that these programs bring, and they have recognized our efforts,” says Lieb.
Richard Ferris, Chantal Kazay, Selene Brett, Michal Kade, Cindy DeMarco, Audrey Rubin, Doug Stevens, Ilene Grant, Kristine Scott, Kathleen Sweitzer, Peter Lieb, Alison Kronstadt, Slawek Stanuch, Dan Kasten, Amanda McCarthy, Dalbir Singh Sahrawat, Neharika Srivastava, Darren Zeidel, Harris Kaplan, Przemyslaw Karolak, Eric Brilman