Having implemented a number of value initiatives, including e-billing and billing guidelines for external counsel, the legal department at global mining company Rio Tinto was on the way to transformation. When the department was required in 2020 to accelerate cost savings, the legal team was well positioned to drive even greater value and efficiency. Faced with that “burning platform,” Legal Operations Chief Dion Harrington turned to legal service provider Elevate to scope a review of law firm spend management, beginning with a two-year lookback to generate detailed reporting and metrics on engagements with their top 30 law firms. The review identified opportunities for accelerating legal transformation.
“A truckload of insights came out of that,” Harrington says. “We identified a number of initiatives that would deliver cost savings in addition to maturing our panel strategy. We reviewed the ease of implementation against the value each would deliver in order to prioritize the projects for 2020.”
Working with Elevate, Rio Tinto created its 2020 Spend Excellence Program, comprising four key elements: e-billing support, legal bill review, outside counsel management, and dashboard analytics. Harrington describes it as “an end-to-end solution with invoice review in the middle.”
Elevate took on the administration and maintenance of Passport, Rio Tinto’s e-billing platform, and created a dedicated Passport Desk Service. Working with in-house lawyers and outside counsel, Passport Desk staff create new matters, maintain timekeepers, onboard new firms, generate reports, perform system updates, and handle internal and external queries. They ensure that spend data remains accurate and current, which allows Harrington and his colleagues to use the data with confidence, generating metrics for insights into emerging trends, benchmarking, and new value opportunities. Since January 2020, the number of firms in Passport has grown from 30 to 74, covering 90 percent of Rio Tinto’s global legal spend.
Adopting legal bill review to complement Passport, Rio Tinto enforced consistent compliance with its billing guidelines and reduced administrative burden for the in-house team. Line-by-line reviews of every invoice are now standard process; those that are non-compliant with guidelines are resolved pragmatically through collaboration with the parties involved.
Rio Tinto and Elevate also identified a significant opportunity to apply more process rigor and utilize technology to run matter RFPs. To complement that, they created an advisory service, the Outside Counsel Concierge (OCC) program, to support Rio Tinto lawyers in tendering and engagement. Through three regional desks, OCC staff partner with in-house attorneys to prepare detailed matter scopes, run tenders, analyze bids to support negotiations and firm engagement, and provide high-touch support during the engagement.
The Passport and Outside Counsel Concierge Desks optimize the abilities of technology through human guidance, discretion, and collaboration. This is typical of Elevate solutions, says Mathew Morosin, Director at Elevate. “We come to customer problems with an agnostic viewpoint, knowing that technology is a fantastic enabler, but not the only or the entire solution. If you have a bad process and you wrap technology around it, all you’ve done is automate a bad process.”
At first glance, it may seem as though these high-touch services would be costly. Not so, says Harrington. In fact, the OCC in particular has helped to progress the Rio Tinto value journey by using RFPs to bring more external legal spend under alternative fee arrangements (AFAs).
“The whole discipline of spending a bit more, not on a tech solution but a high-touch service, sitting down with our lawyers and doing the heavy lifting on scope—that sets us up to allow firms to tender for the work on an AFA basis and gives the firms more certainty about entering into AFAs,” he says.
Since Spend Excellence Program (SEP) inception, 94 percent of OCC RFPs have resulted in some portion of fees under AFAs, and 88 percent of those have all fees under AFAs. The savings realized range from 4 percent to 94 percent, with a median of 28 percent.
Using its Vision platform, Elevate provides data analytics and dashboards on Rio Tinto’s external legal spend. The technology provides real-time metrics across firms, business units, matter types, and other parameters. Rio Tinto has also commenced using this data to measure the gender diversity of external timekeepers and plans future data-driven initiatives to promote diversity and inclusion in the legal industry.
Choosing initiatives that would cause the least internal friction was a key part of the team’s change management strategy. “These types of initiatives require people who have been doing things for a very long time in a very particular way to think about doing them differently. While some people really thrive in that situation, some people find it quite intimidating,” Morosin notes.
The launch of the SEP in November 2019 included internal and external communications, webinars for outside law firms, a launch pack for in-house attorneys, training sessions, and the recruitment and training of project champions who advocated for the program and supported its success internally.
By the end of 2020, Rio Tinto had met all its major milestones and improved consistency in reporting and management of all external spend. Not only did the in-house legal team have deeper insights into the work performed by outside law firms, they also had greater confidence in exploring alternatives to hourly rates. Total savings across all initiatives totaled more than US$10 million in the first year.
“It’s a journey, of course; you don’t get there overnight,” says Harrington. “We will be looking at various initiatives going forward as well, including more formal panel arrangements and embedding more criteria around the OCC Desk.”