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WHAT HAVE YOU DONE FOR US LATELY?Enhanced Law Department Reporting to Management
BERNADETTE BULACAN, DIRECTORASSOCIATION OF CORPORATE COUNSEL, IOWANOVEMBER 21, 2014
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A PICTURE IS WORTH A THOUSAND WORDS
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STATISTICAL INFERENCES
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TODAY’S GOALS
• Demonstrate department’s value with compelling law department management reports– Overall Legal Landscape
– Litigation Management
– Employment
– Transactional/Contracts
– Outside counsel management; law department operations
• Best practices to collect and use data
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E-BILLING: THE PAPER(LESS) CHASE
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WHY USE METRICS TO MEASURE THE LEGAL DEPARTMENT?
DATA
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YOU CAN’T MANAGE WHAT YOU CAN’T MEASURE
* Fifth Annual Legal Department Operations Survey (Inside Counsel)
Which of the following metrics do you track?
60%Percent of legal
departments with formalized
metrics program
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TODAY’S GOALS
• Demonstrate department’s value with compelling law department management reports– Overall Legal Landscape
– Litigation Management
– Employment
– Contracts/Transactions
– Outside counsel management; law department operations
• Best practices to collect and use data
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COMPANY LEGAL STATUS:MULTIPLE DATA POINTS BUILD THE PICTURE
MONTH YTD 2011
Total Matters 595 -152 747
Total Spending $672,024 $4,974,492 $9,084,047
Total$/$M Sales .19% .16% .21%
Active Litigation 12 -2 14
New Litigation 1 8 17
Closed Litigation 0 8 15
Cycle Time N/A 199 Days 357 Days
Litigation Spend $367,960 $2,960,967 $3,642,612
Litigation $/$M Sales .10% .10% .08%
Settlement $ N/A $1,602,715 $278,936
Patents 970 +31 939
Trademarks 272 -17 289
IP Spending $176,135 $1,358,005 $1,467,726
IP$/$M Sales .05% .04% .03%
Trainings 7 32 21
Ethics Complaints 0 1 1
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DEEPER DIVE: TOTAL SPENDING
MONTH YTD 2011Total Matters 595 -152 747Total Spending $672,024 $4,974,492 $9,084,047Total$/$M Sales .19% .16% .21%
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DEEPER DIVE: LITIGATION
MONTH YTD 2011
Active Litigation 12 2 14New Litigation 1 8 17
Closed Litigation 0 8 15Cycle Time N/A 199 Days 357 DaysLitigation Spend $367,960 $2,960,967 $3,642,612
Litigation $/$M Sales .10% .10% .08%Settlement $ N/A $1,602,715 $278,936
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DEEPER DIVE: INTELLECTUAL PROPERTY
MONTH YTD 2011
Patents 970 +31 939Trademarks 272 -17 289IP Spending $176,135 $1,358,005 $1,467,726
IP$/$M Sales .05% .04% .03%
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DEEPER DIVE: OTHER INDICATORS OF DEPT. VALUE
MONTH YTD 2011
Trainings 7 32 21
Ethics Complaints 0 1 1
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DESCRIBING THE LEGAL PORTFOLIO
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TOTAL MATTERS MANAGED
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SUBSTANTIVE LEGAL AREAS
2009
2010
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TODAY’S GOALS
• Demonstrate department’s value with compelling law department management reports– Overall Legal Landscape
– Litigation Management
– Employment
– Transactional/Contracts
– Outside counsel management; law department operations
• Best practices to collect and use data
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WHAT IS OUR LITIGATION PROFILE?
Division InsuredUninsure
dMass Tort Plaintiff Total
Corporate 0 0 1 0 1Energy Processing 21 7 4 14 46Subsea Production 0 3 0 0 3Surface Production 12 1 0 0 13Total 33 11 5 14 63
Location InsuredUninsure
dMass Tort Plaintiff Total
US 33 6 5 14 58
Non-Us 0 5 0 0 5
Total 33 11 5 14 63
By Division (Year to Date)
Domestic vs. International (Year to Date)
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WHAT ARE THE PRIMARY DRIVERS OF OUR LITIGATION?
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WHERE IS OUR LITIGATION SPEND CONCENTRATED?
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Regional Litigation Spend
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IS YOUR PROCESS DEFENSIBLE?HIDDEN LEGAL HOLD LIABILITY
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APPLES TO APPLES:LOOKING AT LIKE DISPUTES BY PHASE
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Matter Short Name Substantive Law
Firm Short Name Level Name
Approved Invoices
Total Approved by
Matter
% of Matter Spent
Case I Intellectual Property - Patent
Firm B L1 - Assessment
$24,289.00 USD
$44,846.15 USD
54%
Case I Intellectual Property - Patent
Firm B L2 – Pre-Trial
$20,357.00 USD
$44,846.15 USD
45%
Case I Intellectual Property - Patent
Firm B L3 - Discovery
$80.00 USD $44,846.15 USD
0%
Case I Intellectual Property - Patent
Firm B L4 – Trial
$100.00 USD $44,846.15 USD
0%
Case S Intellectual Property - Patent
Firm H L1 - Assessment
$139,297.00 USD
$181,828.17 USD
77%
Case S Intellectual Property - Patent
Firm H L2 – Pre-Trial
$17,994.50 USD
$181,828.17 USD
10%
Case S Intellectual Property - Patent
Firm H L3 - Discovery
$12,434.00 USD
$181,828.17 USD
7%
Case S Intellectual Property - Patent
Firm H L4 – Trial
$360.00 USD $181,828.17 USD
0%
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TODAY’S GOALS
• Demonstrate department’s value with compelling law department management reports– Overall Legal Landscape
– Litigation Management
– Employment
– Transactional/Contracts
– Outside counsel management; law department operations
• Best practices to collect and use data
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WHAT IS DRIVING THE CHANGES IN OUR LEGAL INVENTORY?
Company engaged in series of acquisitions, doubling number of employees and open HR matters
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DISCRIMINATION CLAIMS BENCHMARKS
Claim Type Company EEOC Data
Race 21.6%
Gender 17.5%
Nat'l Origin 6.8%
Religion 2.3%
Retaliation 21.8%
Age 14.0%
Disability 15.2%
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SAVINGS FROM PRACTICING PREVENTIVE LAW
• Show the value of trainings provided by legal department
Law department increased the number of trainings in response to rising number of HR matters
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UNPOPULAR EMPLOYMENT DECISIONSBASED ON DATA
Sales revenue: $$$$$ =
Greatest Sales In the World
Untouchable
Sales revenue: $$$$$(internal LD resources $$$)
(outside counsel costs$$$) =
Termination
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TODAY’S GOALS
• Demonstrate department’s value with compelling law department management reports– Overall Legal Landscape
– Litigation Management
– Employment
– Contracts/Transactions
– Outside counsel management; law department operations
• Best practices to collect and use data
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DEMONSTRATING TRANSACTIONAL EFFICIENCY
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DEMONSTRATE ROLE IN GENERATING & PROTECTING REVENUE
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“DARK ARTS”: BUDGETING FOR M&A TRANSACTIONS
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MICROSOFT’s “DEAL 360”
•“Predictability through process” and data
•Phase 1: initial budget & staffing plan
•Each deal evaluated by 26 factors: geography; number of shareholders; pending litigation, number of commercial agreements, etc.
•Phase 2: track success; refine matrix based on deal volume
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TODAY’S GOALS
• Demonstrate department’s value with compelling law department management reports– Overall Legal Landscape
– Litigation Management
– Employment
– Contracts/Transactions
– Outside counsel management; law department operations
• Best practices to collect and use data
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WHAT’S YOUR LEGAL SPEND?
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WHAT’S YOUR LEGAL SPEND- BY REGION
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BALANCING WORK AMONG FIRMS
• Understand the landscape of the department’s external matters
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FirmBusiness Unit/ Focus 2011 $K %
2011 Evaluati
# Files (Lead)
Firm 1 Employment (All 1,186 23.8% 3.4 31Firm 2 Processing & Production/Lit & Gen492 9.9% 3.0 12Firm 3 IP 347 7.0% 3.6 81Firm 4 International 304 6.1% 3.4 15Firm 5 International - Brazil 300 6.0% 3.0 2Firm 6 All - Annuity Payments 297 6.0% N/A N/AFirm 7 International 265 5.3% 3.2 36Firm 8 IP 202 4.1% 3.3 58Firm 9 IP 191 3.8% 3.5 98Firm 10 Customs Compliance 145 2.9% 3.6 1Firm 11 Litigation 132 2.7% 4.4 13Fimr 12 IP - DDS 131 2.6% 3.6 34Firm 13 IP 117 2.4% 3.6 15Firm 14 Corporate 115 2.3% 4.1 21Others 39 Firms 750 15.1%TOTALS 4,974 100.0%
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BEST PRACTICE: AUTOMATERETENTION GUIDELINES COMPLIANCE
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COMPLIANCE WITH RETENTION GUIDELINES
• Are our firms following our retention terms?
• Are we leaving money on the table by ignoring audits?
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QUANTIFY SAVINGS FROM INVOICE REDUCTIONS
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Company Invoice ReductionsKaty Perry $160,586.71
Arias & Morales $520.15Maczalaw $454.75Holland & Knight $2.70Pellerano & Herr $60.66
Buffet Banque & White $156,066.00Lee & Lee $601.45Kilpatrick and Stockton $2,881.00
Justin Beiber $46,380.18MWE $601.45Posler Hospin $37.53Prokskauer Daisy $42,953.70King & Spalding $2,787.50
Kim Kardashian $10,780.40Appleby $343.00Womple Carlyle $3,330.31Norton Daisy $5,084.64Pereya & Asociados $2,022.45
GRAND TOTAL $217,747.29
2012 Company Invoice ReductionsAppleby $1,917.25Arias & Morales $454.75Buffet Banque and White $948.34Holland & Knight $7,256.70Kilpatrick and Stockton $161,389.25King & Spalding $601.45Lee & Lee $177.25Maczalaw $601.45MWE $37.53Norton Daisy $4,297.88Pellerano & Herr $2,787.50Pereya & Asociados $343.00Posler Hospin $887.58Prokskauer Daisy $5,084.64Womple Carlyle $18,928.00
GRAND TOTAL $205,712.57
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KEEP ATTORNEYS ACCOUNTABLEFOR THE LEGAL BUDGET
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March 2013- Spend by Attorney
AttorneyMarch Spend
Monthly Budget
% Monthly Budget
YTD Spend
2013 Budget
% 2013 Budget
Katy Perry
Foreign $40,267 $132,460 30% $261,589 $1,589,522 16%
US $4,921 $10,000 49% $16,174 $120,000 13%
Justin Beiber
Foreign $0 $0 0% $0 $0 0%
US $103,072 $22,917 450% $137,343 $275,000 50%
Kim Kardashian
Foreign $2,319 $2,500 86% $11,692 $30,000 39%
US $23,540 $45,833 51% $74,582 $550,000 14%
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IS OUR LEGAL SPENDING ON TRACK?
Budget to Actual Report
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BEST PRACTICE: AUTOMATE PROJECT BUDGET TRACKING
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PERFORMING TRIAGE TO PRIORITIZE MATTERS THAT NEED ATTENTION
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BEST PRACTICE:OPTIMIZE STAFFING ON PROJECTS
• Project success depends on assembling the right team and monitoring allocation of work.
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COLLECT DATA TO IDENTIFY HIGHEST PERFORMERS
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OUTSIDE COUNSEL EVALUATIONS
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BEST PRACTICE: PREPARE FOR RATE NEGOTIATION
LAW FIRM X Spend Volume Break-Even (tiered structure)Name 2009 2010 2011 2012 2013 $6M in spend $12M in spend
Doe, Lawyer 1 450$ 500$ 525$ 505$ $2M @ 20% disc. = 12% price incr. $2M @ 20% disc. = 12% price incr.year over year % change 11% 5% -4% $4M @ 25% disc. = 5% price incr. $8M @ 25% disc. = 5% price incr.Doe, Lawyer 2 420$ 420$ 450$ 440$ $2M @ 30% disc. = 2% price dcr.year over year % change 0% 7% -2% Net price incr. on $6M in spend is 7.3% Net price incr. on $12M in spend is 5.0%
$20M in spend $42M in spend
2011 2012 2013 $2M @ 20% disc. = 12% price incr. $2M @ 20% disc. = 12% price incr.Doe, Lawyer 1 575$ 630$ 695$ $8M @ 25% disc. = 5% price incr. $8M @ 25% disc. = 5% price incr.year over year % change 10% 10% $10M @ 30% disc. = 2% price dcr. $32M @ 30% disc. = 2% price dcr.Doe, Lawyer 2 500$ 550$ 605$ Net price incr. on $20M in spend is 2.2% Net price incr. on $42M in spend is 0.0%year over year % change 10% 10%
20% disc. 25% disc. 30% disc.Disc. % to Hold 2012
RateDoe, Lawyer 1 556$ 521$ 487$ 27%year over year % change 10% 3% -4%Doe, Lawyer 2 484$ 454$ 424$ 27%year over year % change 10% 3% -4%
Pricing Analysis
Stryker Rates
Standard Rates
Pricing Analysis ('13 vs '12)• Dept. Goal: No Increase
• Firm Proposal: – 20% disc.: < $2M spend
– 25% disc.: $2M - $10M spend
– 30% disc.: > $10M spend
• $42M in spend for no increase…. – No Thanks!!
Negotiated Rates
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BEST PRACTICE: UNDERSTANDIMPACT OF POTENTIAL RATE INCREASES
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BEST PRACTICE: INCORPORATE EXTERNAL BENCHMARKS
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FORBES: FMC’s TALE OF THE TAPE
2002 FMC Technologies
$1.8B/ 8Total sales/
No. full time attys
$14.3 M($2.8M internal; $11.5
external)
Total legal spend
20% Percent on AFAs
2.8 Average firm evaluation
2013
$7.1B/ 12
$9.5 M($3.1M internal; $6.4 external)
95%
3.3
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DEPARTMENT SNAPSHOT: DEMONSTRATE OVERALL VALUE
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TODAY’S GOALS
• Demonstrate department’s value with compelling law department management reports– Overall Legal Landscape
– Litigation Management
– Employment
– Transactional/Contracts
– Outside counsel management; law department operations
• Best practices to collect and use data
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INTERNAL CONTROLS TO ENSUREACCURATE REPORTING
• All work (internal & external) in one place
• Create practical workflows to regularly collect consistent data from all firms and members of law department for all projects.
• Connect directly with outside counsel with e-billing/matter-management to collect invoices, accruals, budgets and status updates
• Preview results with business clients to verify accuracy and avoid surprises
• Compare performance with both internal and external benchmarks
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WHERE TO LOCATE MEANINGFUL DATA & BENCHMARKS?• E-billing and matter management systems
• Contract/IP management systems
• Other-company financial systems
• Law firm billing-records
• Manually stored historical information
• Internal surveys
• External benchmarking studies (ACC/Serengeti Managing Outside Counsel Survey, Hildebrandt Peer Monitor Index, Fulbright & Jaworski Litigation Report)
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LEARN NEW WAYS TO MAKE THE NUMBERS WORK FOR YOU!
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QUESTIONS?
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CONTACT INFO
BERNADETTE BULACANDirector, Market Development, Corporate LegalThomson Reuters
Phone: [email protected]
Twitter: @InHouse_Bern