48
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.

Legal Resource Allocation:

Embed Size (px)

Citation preview

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.

Fill out your Electronic Evaluation

– Access the app through any browser at www.eventmobi.com/clc

– Select the tab: Session/Workshop Evaluations (on the homescreen)

– Click on the session you wish to evaluate – Under the session description, click on Questionnaire

• If you are not logged in you will need to enter your email and password

• If you have not created a log in you will need to enter the email address provided upon registration, and create a password

– Select/Enter answers and click Submit to complete each question

• Pharmacy

• Sports & Entertainment

• Real Estate Development

3

3

4

MINDCREST - WHO WE ARE

WE ARE THE BEST AT WHAT WE DO

An outside firm that behaves like in-house counsel

Lawyers with best-of-breed credentials

Low overhead structure

Integrated with legal and business teams

Corporate Law Departments Traditional Law Firms Cognition LLP

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

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

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

What we (could have) learned from the Spring Conference

Leaders:

Joe Milstone

David Skinner

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

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

“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.”

Trevor Faure, The Smarter Legal Model: More from Less

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.”

The Corporate Counsel Predicament – expanded…

Leaders:

Mischa Kowall

David Skinner

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

Panel Discussion

The Value Funnel

Leader:

Joe Milstone

Historical Tomorrow? Today

Outside

Counsel

Outside

Counsel Outside

Counsel

In-House

Counsel

In-House

Counsel

In-House

Counsel

LPO LPO

Evolution of Corporate Counsel

Huge, Bet Company

Panel Discussion

New Alternative Models and Resources

Leader:

Joe Milstone

Ganesh Natarajan

21

LEGAL SERVICES LANDSCAPE

IN-HOUSE •Governance and risk management •Compliance programs •Litigation management •Transactions •Contracts •Manage service providers

OUTSIDE COUNSEL •Core Services (Litigation, Complex transactions, Compliance law, Securities) •Value based billing •Client relationship development

LPO PROVIDERS •Litigation support •Contracts management support •Compliance process support

In Your House Already

• Existing headcount

• Better use of paralegals

• Non-lawyer integration

• Equipping the business

• Scoping your own work SOW

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

( #3 – Outsource last) High context/High expertise

(core to the client)

Audits, Reports and Governance Contractual Risk Analysis Maintaining Contracts in Audit Ready State Complex Litigation

Contract Enforcement Partner Management/Vendor management

Low context/low expertise (#1 – outsource first)

High context/Low expertise (#2 – Outsource next)

Contract and Subcontract Review and Management Contract review and abstraction Electronic Contract Repository Creation / Maintenance Outsourcing Due Diligence and Transition Change Management/Certification Management/Software License Management Litigation Standard document review for relevance, privilege

Contract Management - Policies, Templates and Playbooks (Creation phase) Template creation and maintenance Negotiation Playbook Creation / Refresh - Drafting and Negotiations RFx Support Contract Drafting and Negotiations Support Approval/Escalation Routing Litigation IP litigation, government investigations

Products and Managed Solutions

• EDiscovery

• Project/Litigation Management

• Contract Management

• Technology Solutions

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%

– 10M or more: 11%

27

IMPACT Deficient contract approvals processes

Un-auditable contract paper trails

Poor contract and exposure analysis

Increased legal and financial risk

Poor contract visibility and control

Lost savings, profit and revenue opportunities

The average Fortune 1000 company maintains between 20,000 to 40,000 active contracts (according to the Institute for Supply Management).

Many contracts are still languishing in file cabinets, being managed with very limited technologies, or being managed using manual processes due to complex software and technologies (according to a study by Inside Counsel).

CONTRACTS MANAGEMENT CHALLENGES

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

offshore captives

distributors

affinity partners

agents

brokers

subcontractors

affiliates

suppliers

50%

COMPLIANCE RISKS – 3RD PARTIES

40-60% of your revenue

requires 3rd parties

3rd parties can deliver tremendous

value

Cost savings

Reduce headcount

Provide better service

Greater efficiency

Be more nimble

Panel Discussion

Strategies to Get (Much) More with Less – Within and Outside

Leader: David Skinner

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

Current State Value Stream Map

Future State Value Stream Map

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?

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?

Using Lean Six Sigma to Drive Efficiencies (cont’d)

Panel Discussion

Intersection between PO, RFP’s and AFA’s

Leaders: Joe Milstone

Ganesh Natarajan

David Skinner

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

Process optimization: more customizable structures and more accurate fixed fees

• RFPs and moving away from the billable hour

• Disaggregation

• Process optimization and LSS

Panel Discussion

Strengthening Relationships between Corporate

Counsel and Key External Constituents

Leaders: Mischa Kowall Joe Milstone David Skinner

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

Wrap-Up

Thank you