Structure for Change
The legal department at global power management company Eaton includes 55 lawyers and 70 support staff worldwide. The function is made up of Special Practice Groups (SPGs), such as IP, litigation, M&A employment and benefits, and others; as well as focus teams aligned to departmental priorities, or "pillars." This innovative team structure has enabled a multifaceted drive toward value over the past two years that has reduced pattern litigation spend by more than 15 percent, reduced litigation report cycle time by 40 percent, and reduced total legal spend 11 percent year over year. Leadership development and staff engagement are equally important outcomes of the team structure for Heath Monesmith, Executive Vice President and General Counsel, who joined the company in 2012.
"Most legal departments are designed to respond to legal needs as they arise," he observes. "We wanted to create a culture in which lawyers were leaders, held themselves accountable, and took responsibility for driving change. But change isn't confined to specific areas of the law. It must go where the business needs it. So, we wanted a structure that was team-based, where priorities and challenges were identified for the entire department, not just the functional areas; and that would allow the team to come together to drive the needed change."
The focus teams drove improvement in five key areas:
- optimizing relationships through supplier selection, convergence, and budget discipline
- project management through technology-enabled solutions
- increased inclusion and diversity through a special program and mentoring
- continuous improvement through proactive projects
- pattern litigation docket efficiency through feedback and benchmarking.
Strategic Alliance: Better value from outside counsel. Eaton's law department revamped its outside counsel strategy and developed a new process to ensure that only the most qualified firms represent the company. In a gradual convergence effort over the past four years, the number of outside firms has been reduced by 80 percent. "This has enabled us to develop stronger partnerships and leverage better rates and discounts," Monesmith says.
Firms are subject to a multi-level outside counsel evaluation process. "We think of our outside counsel as an internal team, and give powerful feedback," Monesmith says. "It's remarkable how much change can happen when you're sharing strengths and opportunities for improvement in a transparent way."
The budget discipline came with the creation of a Worldwide Legal Spend Dashboard, aligned with business objectives; and the implementation of life-of-matter and annual budgets on all litigated matters, to which outside counsel are held accountable.
Leveraging legal operations and technology to improve efficiency. Eaton created a Legal Operations Specialist position in 2017, who helps to identify and drive cost savings opportunities across practice areas. The department also created a Cost-Out Team as one of its pillars; improved reporting efficiency, reducing cycle time by 40 percent; and invested in a state-of-the-art contract management platform.
Backstage Pass: Promoting diversity through mentoring. Underscoring Eaton's commitment to inclusion and diversity, the law department introduced a unique mentorship program, which invites diverse associates from strategic law firms to gain a behind-the-scenes perspective of Eaton's law department.
Lessons Learned: Proactive prevention of future risk. Any member of the legal team is empowered to identify and execute a Lessons Learned initiative to drive change within the business; these projects are incorporated into team members' annual goals. Focusing on current or anticipated legal risks, "Lessons Learned have helped redefine the notion that a corporate law department is merely a cost center," Monesmith says. It wasn't always easy, though: "It takes time to instill this cultural mindset and I am very proud of what our team has accomplished."
Driving costs out of pattern litigation. Working closely with the Cost-Out team, Eaton reviewed and restructured pattern litigation procedures; defined creative ways to be more cost-efficient, including benchmarking against similar companies; and circulated to outside counsel a list of more than 60 strategies to reduce spend.
For other general counsel considering implementing a similar team structure, Monesmith has this advice: "This wasn't some master plan that we started with on day 1, but it does build from thinking more creatively about the department. We realized that we needed teams to address priorities that don't exist in formal areas of the law, but do exist for everybody," he says. "And, we wanted to establish the expectation that our lawyers are leaders, rather than dealing with problems only in a reactive way."
Eaton Cleveland Team