1. Resource Allocation:
The Most Important Role of the
CLO Today
Mischa Kowall, Associate Counsel, The Katz Group
Joe Milstone, Co-Founder, Cognition LLP
Ganesh Natarajan, President & CEO, Mindcrest Inc.
David Skinner, Co-Founder & President, Gimbal Canada Inc.
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5. Corporate Law Departments Cognition LLP Traditional Law Firms
An outside firm that behaves like in-house counsel
Lawyers with best-of-breed credentials
Low overhead structure
Integrated with legal and business teams
6. Lean practice management advisors
A new paradigm for prosperity in the business of law
Helping in-house counsel deliver added value in
less time and at less cost.
•Improved efficiency
•Faster turnaround time
•Lower overheads
•More predictable legal spend
•Stronger relationships with external counsel
•Greater client satisfaction
Lean Six Sigma / Process Optimization
Professional Development
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7. Session Goals
• “Level-set” on current challenges and
constraints faced by corporate counsel
• Equip corporate counsel with a more
comprehensive toolkit of options and solutions
• Inform on realities and myths of PO/Six Sigma,
AFA’s
• Expand thought process on extracting value
from internal and external legal relationships
• Assess experiences and opinions of industry
leaders and experiential corporate counsel
8. Overview of the Session
1. Linkage with CCCA Spring Sessions
2. The Corporate Counsel Predicament (or
opportunity)
3. The Value Funnel as a Base Plan
4. Service and Solutions Alternatives
5. Strategies in resource deployment
6. Maximizing relations with resource providers
9. What we (could have) learned
from the Spring Conference
Leaders:
Joe Milstone
David Skinner
10. Why we’re stuck
• Susskind:
– Converging factors of demand versus resources,
technology solutions, liberalization of market
– Corporate counsel complicit in lack of change
– Opportunities to emerge
• Faure:
– Smarter legal model: optimizing the coverage,
headcount and total cost triangle
11. Expert Services Model
Creates core competency leverage by pushing work to the
lowest level of competency with the capability of providing the
optimum level of service in a cost-effective manner
General counsel moving from provider of service to a project
manager amongst several providers, internal and external
12. Trevor Faure, The Smarter Legal Model: More from Less
“At worst, functions that are not research, development, production,
sales, marketing, distribution and so on are regarded as superfluous
bureaucracy and subject to reduction with no theoretical minimum
level, almost irrespective of the consequence. At best, the corporate
lawyer can transcend such a calculation by adopting commercial
methodology and translating legal services to mirror the “front office”
activities, using the same world-class business tools used to achieve
higher efficiency in all other parts of the enterprise.”
13. Tony Jomati, After the Golden Age: The New Legal Era
“This belief (that you shouldn’t buy on price) has long circulated in the
legal market, just as the IBM cliché has. But, given the choice
between two relatively equal service providers (of which there are
many) and one offering a more collaborative, risk-sharing and in
short, a less expensive service, a buyer may be well advised to take the
better priced offering. The anti-price argument preyed on the idea
that high cost equates to high status and quality, therefore less
expensive legal products were necessarily worse legal products.
However, this argument entirely omitted the fact that a more
efficiently run law firm can be equally as good quality, but less
wasteful of a client’s money.”
15. The Challenges Facing CLOs
• Being everything to everyone
• Tight budgets
• The need for greater budget predictability
• Resources
• Staying current
• Managing efficiency and controlling costs
• Organizational barriers to change
21. LEGAL SERVICES LANDSCAPE
IN-HOUSE OUTSIDE LPO PROVIDERS
•Governance COUNSEL •Litigation support
•Core Services
and risk (Litigation, •Contracts
management Complex management
•Compliance transactions, support
programs Compliance law,
•Litigation Securities) •Compliance
process support
management •Value based
•Transactions billing
•Contracts
•Manage service •Client
providers relationship
21 development
22. In Your House Already
• Existing headcount
• Better use of paralegals
• Non-lawyer integration
• Equipping the business
• Scoping your own work SOW
23. Straying Outside
• LP-Off
• LP-On
• Contract lawyers
• Virtual law firms
• Alternative model law firms (dispersed)
• Traditional law firms
• Products, technology and managed service
solutions
24. OUTSOURCING FRAMEWORK
Low context/High expertise High context/High expertise
( #3 – Outsource last) (core to the client)
Audits, Reports and Governance Contract Enforcement
Contractual Risk Analysis Partner Management/Vendor management
Maintaining Contracts in Audit Ready State
Complex Litigation
Low context/low expertise High context/Low expertise
(#1 – outsource first) (#2 – Outsource next)
Contract and Subcontract Review and Management Contract Management
Contract review and abstraction - Policies, Templates and Playbooks (Creation
Electronic Contract Repository Creation / Maintenance phase)
Outsourcing Due Diligence and Transition Template creation and maintenance
Change Management/Certification Management/Software Negotiation Playbook Creation / Refresh
License Management - Drafting and Negotiations
RFx Support
Litigation Contract Drafting and Negotiations Support
Standard document review for relevance, privilege Approval/Escalation Routing
Litigation
24 IP litigation, government investigations
26. LITIGATION STATISTICS
• Satisfaction with outside counsel
– E-discovery 21%
– Budget forecast reliability: 16%
– Overall cost management: 14%
– Pricing and alternative fee flexibility: 17%
• Alternative fee arrangements have increased to 62% in 2011
– Blended rate, capped, contingent, fixed fee, performance/rewards based fee
• Litigation spend
– Under 500k: 34% (company size is under $100M)
– 500k to 1M: 13%
– 1M – 5M: 30% (1/3 company size is over 1B 1/3 between 100-999M)
– 5M – 10M : 12%
26 – 10M or more: 11%
27. CONTRACTS MANAGEMENT CHALLENGES
The average Fortune 1000
company maintains between
20,000 to 40,000 active IMPACT
contracts (according to the Deficient contract approvals
Institute for Supply Management). processes
Un-auditable contract paper trails
Many contracts are still Poor contract and exposure analysis
languishing in file cabinets, being
managed with very limited Increased legal and financial risk
technologies, or being
managed using manual Poor contract visibility and control
processes due to complex
software and technologies
Lost savings, profit and revenue
(according to a study by Inside opportunities
Counsel).
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28. Results from In-House Counsel Survey
• 6% use document assembly automation for
contracts
• 23% use CMS for executed contracts
• 9% had any form of CMS integrated with CRM
• 25% view CMS process as a competitive
advantage
• 2/3 stored in physical or electronic filing
cabinets
29. COMPLIANCE RISKS – 3RD PARTIES
subcontractors
3rd parties
affiliates can deliver tremendous
%
suppliers value
50 offshore captives
distributors
affinity partners
Cost savings
Reduce headcount
agents Provide better service
brokers
Greater efficiency
Be more nimble
40-60% of your revenue
requires 3rd parties
31. Strategies to Get (Much) More
with Less – Within and Outside
Leader: David Skinner
32. Using Lean Six Sigma to Drive Efficiencies
• Introduction
– The context and what Lean Six Sigma is
– What is Lean Six Sigma for Lawyers
– Four goals
• Process optimization through Value Stream Mapping
– Understanding process optimization and its goals
– VSM as a tool
• An example: optimizing the process to protect an
invention
35. Using Lean Six Sigma to Drive Efficiencies (cont’d)
• The Value-Add Pop Quiz: Think about your day
– What percentage is spent re-working something
someone else has done?
– What percentage is spent doing something someone
else has to re-work?
– What percentage of what’s left do you spend on
activities that do not add value?
36. Using Lean Six Sigma to Drive Efficiencies (cont’d)
• Three Value Criteria
– Does it alter the material?
– Is the client willing to pay?
– Is it done right the first time?
41. How alternative service providers structure fee arrangements or
provide alternatives to the billable hour
Time and Material
Hourly (criticisms: cost plus, inefficiency, penalizes productivity, not value-based)
Full Time Equivalent (FTE)
Transaction Based
Per document
Per agreement/lease
Per file
Per function
Contingency, satisfaction-based (all or part)
Project Based
Fixed fee, decoupling and fixing
Purchased Hours
Fee caps, blended rates
42. Process optimization: more customizable
structures and more accurate fixed fees
• RFPs and moving away from the billable hour
• Disaggregation
• Process optimization and LSS
45. Advice to Give Your External Advisors to
Give Better Value
• Be relevant
• Seek alignment of interests
• Be efficient and transparent
• Communicate...but not too much
• Be creative