In-house Lawyers Building Apps to Manage Outside Legal Spend...and more
Benno Quade, General Counsel at Germany-based Software AG, believes that lawyers have skills that extend far beyond the law. Recognizing that legal logic is similar in many ways to software design principles and coding logic, Quade was convinced that lawyers could also be talented app-builders. Their in-house creation of the Software AG External Legal Manager application proved him right—and saved the company nearly 3 million Euros in the bargain.
When Quade was promoted to the role in 2015, the company's CEO requested greater efficiency from the department. Not wanting to decrease head count, Quade set himself a goal of transforming the team into a digital legal department, and to bring greater order and centralization to external legal spending. The timing seemed right, as Software AG had recently acquired a platform company, LongJump (Relational Networks).
Quade decided to begin with North America. "It was our hot spot," he explains. "We had just acquired new technology that we determined to be useful. We were in an active M&A cycle, doing four to five deals at a time. Getting quotes for outsourced work and incoming litigation was burdensome."
Debbie Neuman, Kenny McWilliams, Kris Thomas, Stan Smith, Joanne Bradley, Joshua Freeman
Further, says Stan Smith, Senior Vice President and General Counsel for the Americas, "Software AG historically had handled external legal spending in a decentralized, ad hoc fashion. There was no defined process for sourcing external legal services." Smith and his Regional Counsel colleagues, along with Quade, decided to create a legal spend management system to:
- Identify Software AG's current external legal providers
- Analyze the providers to determine which should have preferred status, and enter them into the registry
- Rank and rate providers to reward on the basis of quality, quote reliability and responsiveness.
"This was an occasion to review and question our law firm relationships," says Quade.
"We could confirm our subjective feelings with objective results and data, resulting in increased efficiencies and savings," Smith adds.
Using Software AG's ARIS Business Process Analysis Platform to create a process map, as well as tools from Software AG's proprietary Digital Business Platform, the team developed the application by moving through three phases: sorting, a bidding process, and post-award coordination. They employed a sandbox approach, Quade says, in which every member of the team was invited to play around and submit ideas to a core project team of four people. Smith and the other Regional Counsels participated in process and content input.
The Software AG team tackled the sorting phase next, determining which matters they would handle directly and which would be outsourced. "We tried to make intelligent decisions about how to spread the work, and onboarded projects and cases based on sufficient people, coverage, and resources," Smith says.
For the matters to be outsourced, the team developed a bidding process: preparation of a Request for Quote, invitation of certain firms to respond, and establishment of a process for selection. Law firms submitted their information using an external quote engine. In the third phase of the project, the SAG team set up project management guidelines and other steps to onboard, manage and monitor outside counsel and legal services providers; analyze the completed project and deliverables; and conduct performance assessment.
The result is a 100 percent increase in captured ratings for law firms, which is not only important for quality management but is also relevant for weighting a law firm's quote.
The Software AG attorneys built the External Legal Manager software application in just three weeks. "It validated that the team could do much of this work on its own, without having to bring on outside consultants or tools; and demonstrated the ability of the legal department to stand up a digitized process quickly," Quade says.
Quade and Smith estimate that they have achieved a virtual savings of more than 2.9 million Euros through the use of the application. They arrived at the figure by comparing the highest law-firm quote received to the quote submitted by the firm ultimately engaged. Budget predictability was increased by almost 50 percent, as was the use of alternative fee arrangements. The department hopes to monetize the application by licensing it to other in-house law departments and is in talks with several prospective clients.
Having learned how much they could accomplish by building custom apps, the Software AG legal team picked up the pace, creating more than dozen additional applications that other corporate functions use. Expanding the constituency for their apps beyond the legal department raises the team's profile internally, Smith observes. "People see that your department is innovative and trying to offer solutions proactively."