©eversheds consulting 2011. a division of eversheds llp. paul smith, partner eversheds consulting...

©Eversheds Consulting 2011. A division of Eversheds LLP.

Paul Smith, Partner

Eversheds ConsultingWorld class management services for in-house legal teams


Eversheds LLP – Eversheds Consulting

One of the largest full service law firms in the world with over 4,326 people including more than 560 partners and almost 2,500 legal advisers

46 offices in major cities across Europe, the Middle East, Africa and Asia

Relationship lawyers – pioneers of partnering in the legal market

Providing control over costs - championing the cause closest to clients’ hearts. Practising proactive legal and risk management: prevention not cure


Eversheds LLP – Eversheds Consulting

Eversheds Consulting – A team of lawyers, certified project managers, auditors, IT and marketing specialists which delivers tailor made solutions to legal departments

Drivers of change – experience of outsourcing and off-shoring


Cost centre to profit centre

Today’s environment for Legal Departments:– Budgetary pressures– Drive to achieve more for less– Search for optimum effectiveness– Focus on added value– Outsourcing pressures– Showing the value of internal teams

Re-aligning your legal team to achieve success

With the above in mind, this presentation can help move your teams move from a cost centre to a profit centre


Cost centre to profit centre

Analyse the effectiveness of your internal team

Reducing external costs

Working efficiently through project management

Developing cultural change

Integration of legal and business units

Identifying revenue streams

Profitable legal department

Steps to success – giving you the tools


Re-aligning to achieve successYour legal team

Review of internal department

Process mapping

Focused KPI’s linked to objectives/strategy for the team

Benchmarking

Clear management information relating to financial performance

Monthly reporting on KPI, strategy and legal spend


Our processes


Legal Work – Cost/Risk/Quality Matrix

The starting point


Process analysis

A gatekeeping process is necessary to keep a check and balance on the inputs from the business, which drive the negotiation process.

Introducing this new step in the process and ensuring its implementation will drive efficiencies throughout the rest of the process by reducing the level of rework and administrative burden placed on the negotiators by inaccurate and incomplete information.

RECOMMENDATIONS

Reduction ofadmin burden

and rework

Accurate and full information

GatekeepingIs info

received accurate & complete?

Yes

No

ImprovedInputs fromthe business

Negotiatorsreceive fullaccurate

information


Process maps

Incomplete and inaccurate information received by legal team

Currently done by negotiators. Transfer responsibility to admin team?

No unique identifier for cases transferred between systems

Delays in starting and considerable rework required due to missing or incomplete documentation


Process maps

We recommend that this task is done by the admin team

The team has automated much of this workflow to produce TMA within 2 working days

Missing a step for the allocation process

Missing a ‘gatekeeping’ step which checks documentation is correct


Benchmarking CURRENT PROCESS

< 30 days

30-60 days

60-90 days

90-180 days

6-9 months

9-12 months

> 1 year0

20

40

60

80

100

10

26

46

66

78

90

100

17

33

48

76

8692

100

2004

2006

Cumulative mean percent of agreements executed by given time buckets*

*Source: International Swaps and Derivatives Association www.isda.org (ISDA Master Agreement Negotiation Survey

< 30 days

30-60 days

60-90 days

90-180 days

6-9 months

9-12 months

> 1 year0

5

10

15

20

5

10

1718

10 10

5

7

10 10

20

5

23

2004

2006

Comparison of negotiation times between 2004 and 2006 Surveys. Median percent by time bucket*

Firm Firm Firm Firm Firm Firm Firm Firm Firm Firm Firm Firm Firm Firm Firm Firm 0

10

20

30

40

50

60

70 BLINGECIIEHDORESCNRTRNIPICLBAUIR

http://www.isda.org/


The legal department – metricsSteps to success

$ Exposure $ Legal spend vs budget

Business strategic

level

Budget


Offshoring/outsourcing

Highcomplexity

Moderatecomplexity

Lowcomplexity

Skill set

req

uir

em

en

ts

High

Low

Billin

g r

ate

s (

£ p

er

hou

r)

High

Low

Title Hourly price

Monthlyrate

FTE rateper annum

Paralegal £20 £3,200 £35,000

Onshore LPO Bristol Paralegal Support

Title Hourly price

Monthlyrate

FTE rateper annum

Junior Lawyer(India)

£16 £2,600 £31,000

Senior Lawyer(India)

£25 £4,000 £47,000

Junior Lawyer(Philippines)

£19 £3,000 £36,000

Senior Lawyer(Philippines)

£29 £4,500 £55,000

Offshore LPO Lawyer Support


We scoped the matter fully; understood key issues; agreed expected outcome with the client

We agreed a written fee quote, including scope of work and assumptions which must be reasonable

We controlled costs, updated client as appropriate, agreed revised scope of work and constantly revised fee quote

Updated client as to progress

Obtained feedback

Project management of legal workWorking efficiently

Service excellence means that for all client matters, we must be able to say YES to all of the following:


Project managing your successWorking efficiently – “DealTrack”


Getting value from your external law firmsReducing external costs

20** Panel reduction process 20**

Existing firms

Firm Firm

Firm Firm

Firm Firm

Firm Firm

Firm Firm

Firm Firm

Firm Firm

Firm Firm

Firm Firm

Firm Firm

Communication to business

Create jurisdiction panel firms

Implement instruction protocol to panel firms

Review historical work with non-panel firms

Introduce invoice validation management system and global measuring against budget

Commence use of matter manager for new matters

New matters only to be instructed to panel firms by legal team

Implement value added strategy

General contractor model

Implementation of [* *] Legal ModelNew

externalpanel

H.O.

Firm

Firm

Europe

Firm

Firm

Asia

Firm

Firm

N. America

Firm

Firm


Case studies


Case study 1

The DuPont Legal Model “is an integrated approach for managing change within the law department and for continuously improving how legal services are provided to DuPont businesses in terms of quality, cost and efficiency”

Founded on strategic partneringRequires ongoing re-engineering of work processesFocus on the bottom line has led to cost effective and client-centred legal services350 to 40 law firms in US, UK, Canada and MexicoTotal savings exceed $75 million


Case study 2

Gap analysis of internal resources and external needs

Eversheds replaced 285 existing law firms in EMEA and seconded lawyers to Tyco

Legal costs reduced by 30% and Eversheds reappointed after two years

To achieve significant cost reduction and improve legal representation Tyco held a competitive tender for its legal needs in EMEA


Before No way of showing

team’s value Under pressure from wider business How to adapt to needs of business?

After Financial &

Customer validation of team

performance Identified

improvements for next stage of

evolution

Case study 3

Result: Report suitable for sharing with wider business showing legal team value, and identifying areas for improvement

Case study: FTSE 100 CompanyOnline business survey with face-to-face interviews. Benchmarking of legal team value to business units, as well as strategies for legal/business protocols

Proving value

Demonstrating value of legal team with key metrics?


Before No processes no decision

criteria ad hoc

After sophisticated

decision tree risk/quality/capacity assessment applied to different work areas in different ways – rigidly

applied

Case study 4

Result: Provision of detailed breakdown of £6m legal spend, enabling benchmarking of internal v external legal spend and convergence programme of legal panel

Insource v outsource

Case study: Fortune 500 manufacturing multinational Eversheds Consulting was approached to analyse and assess existing legal management and risk and compliance functions over 39 jurisdictions

Managingspend


Before No KPI’s No MI

No regular meetings

No clear strategy

After Focused KPI

linked to objectives/strategy

1:1 and team meetings

Monthly reporting Clear strategy

Case study 5

Result: We achieved a 32% reduction in the team caseload as part of the project

Managing internal teams

Case study: FTSE 50 financial services Engaged on a legal spend and process engineering project – the starting point being the wholesale banking legal team. Eversheds Consulting were responsible for delivering process improvements, optimal team structures, data integrity and quality checking, as well as team KPI’s

Reducingspend


The challenge of contract management

Getting the value from your contracts

ContractManagement

Lifecycle

Negotiation

Activa

tion

Com

pliance

Analysis

Maximise the value of your in-house legal work

Manage your suppliers effectively

Reduce your risks

Reduce your costs and get full value from your contracts

Make your legal team profitable – recoveries


The profitable legal department

How to create a revenue stream

Identification of legitimate claims that otherwise might be missed

Money on the table which is not picked up

Proactive management of transactions, agreements, patents and other contracts to discover wrongdoings. Eg warranties and indemnities in M&A

Not a Litigation Programme

But needs a cultural change – proactive not reactive

Achieving the ultimate goal


Case study 6

A legal recovery is defined as:“any recoupment in the form of cash (royalty payments, settlements and adjustments), products, services or other quantifiable rights obtained for a company or its affiliates, through the intervention by legal professionals beyond a normal business transaction”

DuPont have recovered $1.6 billion since it started its programme 5 years ago


Not simply obtaining a favourable settlement

Capturing value in contracts

35% outside US

DuPont 2009 recoveries by cases

Commercial/Contracts $248.9 million

Intellectual Property $60.4 million

Bankruptcy/Collection, Commercial/Sourcing $16.9 million

Trade/Customs $7 million General Torts, Antitrust, Pioneer

Trade/Antidumping $941 million Solae $659 million

<1%: Insurance $492 million; Tax $240 million; Environment $114 million; Corp. Securities $77 million


Action

Evaluate litigation history and define profit and loss

Implement structured programme between legal, finance and business units

Educate and inform on the possibilities, eg:– Supply contracts– Over-billing– Power cuts– IP/Licensing fees

Establish a programme to assert legal rights

Change the culture

Communicate success


Developed to meet challenges faced by in-house teams

Eversheds Consulting

Legal spend and legal

management

International records

management

Environment, health and

safety

Global corporate secretarial

Risk and

compliance

Recoveries

Helping your department to

generate income


Paul Smith

Paul is a Partner, environmental lawyer and litigator and has defended a number of multinational companies over the years in relation to criminal investigations in the UK, Europe and North America. The investigations have ranged from chemical plant explosions, insider dealing, railway disasters and price-fixing to environmental incidents and other major crises.

Paul is a recognised expert on law firm partnering and convergence. He began developing this expertise as client partner for DuPont more than ten years ago. In recent years Paul has focused on how the law firm and the global corporate law department can work together effectively across multiple jurisdictions. Paul consults with many global corporate law departments on their structures, processes and practices to derive greater value from outside counsel. He is part of the

Eversheds team involved in the Tycoconvergence project in Europe, Middle East and Africa, where Tyco used its innovative 'SMARTER' model to consolidate most of its outside legal services from more than 250 law firms across 37 jurisdictions to one: Eversheds.

In February 2008, Legal Business magazine honoured Paul Smith as 'Lawyer of the Year', one of the most prestigious awards in the UK. He was awarded for his pioneering work in delivering new approaches to global client relationship management. Paul was also included in 'The Lawyer' magazine's list of the 'Hot 100 Lawyers' for 2008.

Paul Smith+44 845 498 [email protected]

©eversheds consulting 2011. a division of eversheds llp. paul smith, partner eversheds consulting...

Documents

division of eversheds

legal advisers

legal market

profit centre slide

accurate information

inhouse legal teams

shoring slide

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