ACC General Counsel Roundtable

October 2, 2015 Toronto

Managing a Successful Legal Department

This Report summarizes the discussion at the ACC’s General Counsel Roundtable session “Managing a Successful Legal Department.” ACC’s General Counsel Roundtable sessions are designed to provide a forum for GCs who wish to exert greater leadership in their companies, at the bar, in the courts, and in the halls of government on emerging issues of greatest concern.

Roundtable participants were:

  • Mark Hemingway - Host - Senior Vice President, Corporate Development, Governance & General Counsel

CIBC Mellon Global Securities Services Company

  • Charles Alexander – General Counsel & Corporate Secretary,

Citibank Canada

  • Richard Brait – General Counsel

Siemens Canada Limited

  • John Cairns – Senior VP, General Counsel & Secretary

Chubb Insurance Company of Canada

  • Kathleen Flynn – General Counsel

Indigo Books & Music Inc.

  • Scott Kirkpatrick – Vice-President & General Counsel,

Coca-Cola Refreshments Canada Company

  • Lynn Korbak (Co-Moderator) General Counsel and Corporate Secretary

MorneauShepell

  • John Mountain – SVP Legal, CCO & Corporate Secretary

NEI Investments

  • Fabio Pozzobon – Vice-President Legal & General Counsel

Sofina Foods Inc.

  • Doris Stamml – Chief Legal Officer

Ernst & Young LLP

  • Maria Tesla - Vice President & General Counsel

Canon Canada Inc.

  • Donald Webster – Chief Legal Counsel,

Mercer

KEY TOPICS

The participants discussed the following key topics:

  • Legal Department (“LD”) structure and strategic planning
  • Innovation and Working Differently
  • Metrics tools and processes to guide focus and measure results

KEY TAKEAWAYS

Participants attended this session with the hope of finding ways to deliver more for less, to keep up with the pace of change and ensure proper coverage of an organization’s legal needs. In short, they discussed strategies that related to efficiency and collaboration. It is within this context that thought-leaders participating in this session described a number of ideas and practices. Listed below are some top themes and takeaways.

LD Structure and Strategic Planning:

Many of the participants hail from relatively small LDs but regardless of size, participants structure their LDs in a manner that aligns with their organization’s business. Some participants organize their LDs along business pillars, others in accordance with legal function. Regardless, as in-house legal leaders, they must establish a department and roles that go beyond merely monitoring operations, allocating resources and coordinating shared functions. To this end, participants noted the following:

  1. Strategic plans: The most efficient and effective LDs have strategic plans that are cohesive with their respective business organizations and the departments that comprise these organizations. In this manner, in-house staff develops a deep understanding and expertise of the business and greater fluency in key business concepts.
  2. Alignment with the business: Having a strategic plans allows decisions of the LD to align with overall business objectives.
  3. Road map: The LD’s business strategy should provide long-term direction and boundaries, identify the unique capabilities, competencies and gaps of the LD and address both day-to-day issues as well as emerging “hot” issues.

Having a LD structure and strategic plan that aligns with an organization’s business will ultimately allow the LD to provide not only reactive legal services but also proactive legal services. In this way, LDs will spend time on both revenue protection pursuits and revenue generating pursuits.

Innovation and Working Differently

Participants reported actively seeking innovative workplace strategies while acknowledging an ingrained resistance to change. A shift in thinking and a new approach to space and work may be needed to allow the LD to remain nimble. In this regard, participants discussed the following in relation to data management and a paperless environment:

  1. Paperless: To be or not to be: Participants represent the full spectrum in relation to a paperless environment, from those who have a “no dedicated desk” and paperless policy to those who have not yet ventured into the paperless legal world. Those without a dedicated desk manage paper by attempting not to create it. That is, everything is imaged and stored electronically. Participants send paper to storage after a certain period of time. In one example, everything that is more than 18 months old goes to storage. Others work with and store everything electronically.
  2. Electronic storage: Those who have gone paperless cautioned that it might cause staff to save and store more information. If every email and document is stored electronically, it is easy to forget about the data and, in addition to physical and e-storage solutions quickly hitting capacity, it becomes a risk management issue. To solve for this potential risk, participants noted that it is critical to have an appropriate data management policy and tools. (To help make the case to business management for permission to purchase risk management tools a participant pointed to the cost of adding additional storage in the form of servers or physical on-site and off-site storage). Items mentioned in regard to data management include the need for:
  3. Document destruction and retention policy.
  4. Document identification and classification system (content-based and request-oriented systems)
  5. Document naming protocols. This is a must to allow for easy retrieval by everyone in the LD.
  6. Shared drives. This facilitates drafting and editing by multiple parties.
  7. IT Solutions: Various participants are working with or thinking about implementing technology to assist with data management issues. Software can be implemented containing internally mandated retention schedules and the like. One participant uses iManage for document management to help improve knowledge sharing and enhance retention execution; to secure and increase control over confidential or sensitive content; and for fast and easy centralized access to documents by multiple users. Another participant mentionedMitratech, an ACC Alliance partner, for enterprise legal management. It provides end-to-end matter management, spend management, e-billing, legal hold, contracts management, reporting and compliance solutions.

Much time, effort and cost is expended in the filing, storing, locating and retrieving of physical paper documents. Generally, participants noted that data management is a difficult and overwhelming project to start. The response: just start somewhere. Thus, some participants have decided to take a forward-looking approach and to begin data management projects from the present onward. Others have manually culled documents that were in storage and have taken an overall approach. With the implementation of a well thought out naming and storage process, going paperless can dramatically decrease the time employed to locate and retrieve documents, both current and archived. Use of documents is improved, making them instantly accessible and allowing for simultaneous access by multiple staff members. The cumulative effect of these benefits is increased efficiency and productivity for all concerned.

Metrics, Tools and Processes to Guide Focus and Measure Results

Roundtable participants discussed various dashboards and metrics that they use to help them run a successful LD.

  1. Dashboards: Dashboards are a snapshot of important indicators from budget, invoices and other reports, which can help you see how the various elements relate and form patterns thus pointing the way to improvements. Participants use strategic, operational and transactional dashboards. Operational dashboards have a proactive aim and focus on business process, contract management and business process development. Metrics and dashboards allow GCs to know how well they are progressing toward LD goals and are used to do the following:
  2. manage to budget;
  3. assess the cost of in-house staff as a percent of company revenue;
  4. assess the number of hours of external counsel (“EC”) time that must be replaced to justify an internal hire (if any area costs more than 400-500 EC hours one can more than justify an internal hire who will cost less, do more and understand your business better);
  5. compare internal legal spend versus external legal spend as a percentage of revenue;
  6. review claims (amount claimed in a statement of claim)/reserves/actual damages paid as a percent of EBITDA;
  7. provide totals such as matter counts and average cost per matter (eg. contract counts, mission critical matters, new matters, routine matters)

In regard to metrics, participants noted that it is difficult to obtain comparatives. Numbers vary by industry (for example, financial institutions have very many more lawyers than other industry LDs) and comparatives are generally difficult to obtain without paying extraordinary fees to third party providers.

Participants also discussed various tools and processes used to help make the LD more efficient. The following were discussed:

  1. Time tracking: Some participants docket time to determine the average cost per hour of legal time on a matter. Many participants do not use any sort of in-house time tracking but some have done so for test periods. One participant conducted time tracking for a limited period in a semi-automated fashion. Each lawyer in the LD had a laminated sheet with bar codes for each category of work. Bar codes were scanned at the beginning and end of a period of time spent working on a particular matter. This process helped to collect useful data in terms of total time allocation for categories of work. It allowed the participant to determine which line of business was the largest consumer of LD time and to determine what was important to the business. This has allowed the LD to focus time on value-added work. GCs present have used this information to help coach their teams on proper use of their time and services, empowering the team to add value. Time tracking is also useful for budget allocation purposes.
  2. Allocation of costs: Participants discussed budgetary processes such as allocation of costs by client. Some participants will allocate portions of their costs and budgets (such as for contracts, marketing or litigation) directly to client business units while others do not. One participant indicated that allocating costs to the business unit has caused the business unit to act more responsibly in relation to decisions requiring the use of EC. They are more cost conscious as a result of the allocation process.
  3. Charter of service commitments and expectations: One participant noted use of a charter that covers expectations from both sides of the equation; that is what clients expect from lawyers and vice versa. Thus, a charter may include a service commitment timeline (eg 3-10 business days for review of x provided client provides a, b and c information.)
  4. Planning spreadsheets: One participant indicated that the LD circulates a spreadsheet to senior management containing all LD projects. Management is requested to indicate any new projects that are in the pipeline and if priority is requested it engenders a discussion between business groups versus putting pressure on the LD to attempt to prioritize.
  5. Reporting: Participants use various review or reporting methods with staff, whether in writing or in person and whether a 5 minute, end-of-day chat or a written weekly report. For example, in the latter case, weekly reports from staff provide a list of matters worked on, issue at hand and status. These reports are then compiled and used to inform the participant’s one-on-one meetings with the CEO. This keeps the CEO aware of what the LD accomplishes and provides high profile visibility to the LD.
  6. Policies: Other tools used to help make the LD efficient include policies regarding contract execution (for example, based on a certain risk threshold that is not necessarily financial, nothing may be signed unless the LD has reviewed it. In addition, templates are used for standard contracts and are not reviewed by the LD unless the business requires a major change.)
  7. Surveys: The use of client surveys was also discussed. Surveys were found to be useful by some and not by others. Specifically, surveys are found to be less useful when the people being surveyed do not understand the intricacies and complexity of legal work. Also, if the business is following an entrepreneurial culture and the LD constantly points out risks, survey results may skew negatively. If client satisfaction surveys are used, it is important to ensure proper client education regarding policies and process and it is important to manage, on a daily basis, client expectations in relation to legal services rendered.

Conclusion

Roundtable participants believe running a successful legal department requires a good strategic plan that aligns with business objectives. It also requires the use of appropriate tools, processes and metrics that allow in-house lawyers to work in innovative ways. These mechanisms help in-house lawyers provide legal and strategic advice.

In an environment of increasing workload and diminishing legal resources, where there is constant pressure to do more for less with less, participants question their role: business owner or legal advisor. The general consensus seems to be that to lead a successful LD, GCs must act as business partners who bring legal skills to the table. In their roles as lawyers, and given that the LD touches every aspect of an organization’s business, they now offer advice not just on law and related matters but help shape discussion and debate about business issues. To shape successful LDs, GCs bring their experience and business understanding to the table,creating roadmaps that better enable them and their LDs to act as guardians of their client’s resources and trust.

A Sampling of Additional Resources and Links:

Law Department Operational Plan Template May 2015

How Law Department Leadership Can More Effectively Develop Their Teams and Proactively Work with the BusinessOCT 2013

RecruitingRetainingIn-HouseCounsel

OCT 2013INFOPAKDOWNLOAD PDF

Guide to Value-Based Staffing

ACC Value Challenge Digital Resource Collections ...

SEP 2013

Template for Business Plan for Creation and Management of Legal Department Oct 2012

StaffingAndTalentDevelopment- Association of Corporate ...

MAR 2012 ACC LAW DEPARTMENT EXECUTIVE LEADERSHIP REPORT

Guide to Project Management

ACC Value Challenge Digital Resource Collections ...

SEP 2013

Organizational Effectiveness: The New Imperative for Developing a World-Class Legal Department JUL 2011INFOPAK

Top Ten Ways to Run Your Legal Department Like a Business Unit Sept 2012

The Role of the General Counsel in Canada: Leading Practices in Law Department Management Sept 2009