ACC Europe Panel 114

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Legal Services in the 21. st. Century. Introduction. Bertrand Alexis. Senior Director. Qtel International. Managing Outside Counsel Spend. Leanne Geale. Legal Services Coordinator. Royal Dutch Shell. ID: 588355 Download Presentation

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ACC Europe Panel 114




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Presentations text content in ACC Europe Panel 114

Slide1

ACC Europe Panel 114

Legal Services in the 21

st

Century

Slide2

Introduction

Bertrand Alexis

Senior Director

Qtel International

Slide3

Managing Outside Counsel Spend

Leanne Geale

Legal Services Coordinator

Royal Dutch Shell

Slide4

Shell

We are active in more than 90 countriesWorldwide, we have 93,000 full-time employeesWe produce 3.3 million barrels of oil equivalent per dayOur fuel retail network has around 43,000 Shell service stationsWe annually sell 145 billion litres of fuel to customersIn 2010…We generated an income of $20.5 billion;Invested $30.6 billion in capital; andSpent over $1.0 billion on R&DRoyal Dutch Shell plc is listed on the stock exchanges of Amsterdam, London and New York

Source: 2010 Annual Report and Form 20-F

Slide5

Shell Legal

Over 600 lawyers

Approx. 65 intellectual property professionals

Approx. 30 compliance officers and lawyers

Over 250 paralegals and support staff

In over 50 countries

Slide6

Managing outside counsel spend

Competitive law firm billing for projects

Project budgeting

Assessing performance

Key tips for reviewing outside counsel bills

Slide7

Questions to consider

When should one use competitive bids for project?

Should one engage the company’s contracting and procurement department in the bidding process?

How can one really estimate the cost of all of the twists and turns of a matter, especially in litigation matters?

As long as the matters come in on or under budget, why spend any more time on assessing performance?

How can I reduce the time I spend reviewing invoices and still ensure they are appropriate in time and amount?

Slide8

Resources

Invoice exercise Microsoft Office Project Performance assessment form

Microsoft Office

Excel 97-2003 Worksheet

Microsoft Office

Word 97 - 2003 Document

Microsoft Office

Word 97 - 2003 Document

Slide9

Alternative Legal Service Providers

Bertrand Alexis

Senior Director

Qtel International

Slide10

Qtel is a leading fixed and mobile telecommunications operator principally operating in Qatar, Indonesia, Kuwait and IraqCustomer base of >75m as of March 31, 2011Presence in 17 countries with operations in 16 countriesFocused on 3 regions: Middle East & North AfricaAsian Subcontinent Asia PacificIncorporated in 1987 and listed on the Qatar Exchange (Doha Securities Market) in 1998:Market capitalization of QAR 23.88 bn(1)Strong sovereign ownership:55% owned by the Qatari government (directly and indirectly)13% by other Qatari government related entities

Qtel at a glance

Notes: (1) As of 31 March 2011

10

QAR Millions3M 20103M 2011Consolidated revenue6,4177,478Consolidated EBITDA11,23112,465Consolidated EBITDA margin47%48%

Credit ratings (Moody’s/S&P/Fitch)A2 / A / A+ (all stable)

Qtel Summary Financial Results

Qtel Revenue Breakdown Q1 2011

Business Area

Geography

Slide11

Alternative Legal Services Providers

Virtual law Firms – Former in-house counsel

Contract (Locum) placement models

Outsourcing legal or paralegal services (to India)

Other knowledge process outsourcers

Slide12

Questions to consider

Why change law firms?

What types of legal work could you envisage outsourcing to a specialised firm?

How would you measure the savings?

How do you manage the relationship with the outsourcing firm? (reporting, access to internal clients, renewal of contracts and pricing)

Slide13

Alternative Billing Models offered by Law Firms

Andrew Fleming

Partner

Norton Rose Group

Slide14

Slide15

Alternative Billing Methods offered by Law Firms

Good Overview: ACC Value-Based Fee Primer

www.acc.com

Alternative Fee Arrangements and Value Billing series by Jerome Kowalski

http://kowalskiandassociatesblog.com

Objectives

Manage legal spend

Improve efficiencies/productivity

Improve client/law firm relationship

Align interests

Implementation

Managing expectations

Importance of data

Key Issues

Candid dialogue

Transparency

Trust

Slide16

Alternative Billing Methods offered by Law Firms

Questions

Who goes first – law firm or client?

How do alternative billing models affect quality of service

Can we identify some of the challenges in alternative billing models?

Can we identify some of the advantages of alternative billing methods?

Slide17

One Stop Shop Model – one Company’s Experience

Andrea Goodrich

Associate General Counsel

Tyco International Ltd

Slide18

TYCO INTERNATIONAL

Global, diversified company with businesses in

- Security products and services

- Fire protection and detection products and services

- valves and controls and other industrial products

Industry: Conglomerate

Revenue FY10 $17.0Bn

Employees: 100,000 in October 2010

Legal Team includes about 100 attorneys and about 60 legal professionals

Slide19

Tyco’s Single Regional Provider Approach: Path to Selection of an External Partner

Problem/Opportunity

250 different law firms in EMEA and $9 million annual spend

Assessment of Key Value Drivers for Legal Services

What is it that the client wants out of the engagement?

How is success defined? (Goals)

What are the measures of success? (Result, Cost, Time)

What are the factors influencing success? (Integration)

Approach: Solicit partnership proposals

How does a firm compare value drivers and add value?

Do they have “skin in the game” and share risk/reward?

Will your partner develop and share metrics for success?

Is the firm willing the dump the hourly fee for service model?

Slide20

Tyco’s Single Regional Provider Approach: Path to Selection of an External Partner

EMEA Regional Representation by Eversheds

Convergence of

250

firms to

1

firm

Coverage

:

27 jurisdictions

Cost

:

Blended rate with target annual hours for basic counseling and litigation (with Cap and collar)

Preference on additional work at discounted hourly rates

Budget of $3M in FY11 for in scope work

Consistency

:

Eversheds integrated into team meetings and operations

Management data including reporting/accruals

First Rule- Legal pre-approval of all cost estimates

Slide21

Tyco’s Single Regional Provider Approach: Benefits & Challenges

Key Value Drivers

Flexibility in resourcing

Transparency and Certainty for P&L leaders

Demonstrated firm investment

Consistency in provision of legal services in most matters

Challenges

Initial Business Buy-in

Data management, incompatible systems, accruals

Some Affiliates/Best Friends provide inconsistent service

Constant open and transparent dialogue critical to maintaining benefits for long term success

Slide22

Stop Beating up on Outside Counsel

Andrew Fleming

Partner

Norton Rose Group

Slide23

Stop Beating up on Outside Counsel

Establishing the relationship on a spectrumPartner/best friend Defined process/metric centricImportant Factors:Using the procurement functionNumber of legal providersSize of legal functionDirect access to business unitsType of work – commodity vs. bespoke

Slide24

Stop Beating up on Outside Counsel

Questions

Where does outside counsel provide exceptional value?

When is it appropriate to “premium bill”?

How can both client and law firm achieve each other’s objectives

Efficiencies

Value/cost

Certainty

Quality

How does risk/reward assessment play into the relationship?

Slide25

Managing the In-house Legal Budget

Michael C. Wu

General Counsel and Corporate Secretary

Rosetta Stone Inc.

Slide26

CompanyRosetta Stone Inc.Founded1992IndustrySoftwareMissionChanging the way the way theworld learns languagesCorporate headquartersArlington, VAOther officesUS - Harrisonburg, VA and Boulder, CO Overseas – Beijing, London, Munich, Sao Paulo, Seoul, TokyoStock symbolRST (NYSE); IPO April 2009Number of EmployeesApproximately 2000U.S. Brand AwarenessBest known language learning brand – 75% awareness (Berlitz second with 23% awareness)Legal Department7 attorney and 12 other professionals (contract admins, legal assistants, anti-piracy enforcement)

26

Slide27

Rosetta Stone - The Most Recognized Language Learning Brand

27

Slide28

Managing In-house Legal Budget

Optimal mix of outside counsel/in-house staff budget

Benchmarking against peers (ACC , CLEX, etc.)

Studies show that bringing in more in-house results in lower total costs

Retain core practice areas in-house – commercial/contracts, financial, IP, administrative and regulatory; outsource large or complex litigation and other matters requiring specialized skills

Key metrics for in-house department

Legal dept. spend as a percentage of revenue

Performance against budget

Recoveries gained

Liabilities averted

Number of initiatives successfully launched/charting wins and losses

Preventive efforts: training seminars/modules created and delivered

Slide29

Managing In-house Legal Budget

Justifying the value of the in-house team

Increased legal department spending reduced legal liability

Legal liability rising in recent years and risk of exposure growing

Tenured lawyers’ company specific knowledge appears to reduce legal liability (CLEX data on damages, settlements and fines)

Higher compliance budgets correlated with reduced legal liability, business interruption and reputational harm

Managing outside counsel relationships and reducing outside counsel spend

Board support – enhance board support: (i) improve board development, (ii) assist in corporate strategy, (iii) manage company-wide risk

Aligning Legal Services with Client Needs – (i) client surveys to assess priorities and identify gaps in perception, (ii) educate clients on appropriate work to send to Legal, (iii) Enhance client self-sufficiency

Slide30

Managing In-house Legal Budget

Considering outsourcing the legal department

Develop criteria to identify low-value work to outsource to the appropriate alternative service provider

Run-of-the-mill contracts, legal research, document review, etc.

Pushing work down to paralegals and contracts administrators

Build an alumni attorney network – opportunities for moving work to contract attorneys

Leverage value of alumni attorneys who understand company

Leverage value of former in-house counsel colleagues

Slide31

ACC Resources

ACC Top Ten (2011):

Top Ten Considerations When Evaluating a System for Managing Outside Counsel Work

ACC Presentation (2010):

Legal Service Management 3.0 Core Curriculum

ACC Leading Practices Profile (2010):

Leading Practices in Providing In-house Legal Support for Corporate Governance Initiatives and Compliance and Ethics Programs

ACC Value Challenge:

www.acc.com/valuechallenge

Slide32

Bibliography of Other Resources

American Bar Association

http://www.americanbar.org/publications/law_practice_home/lawpractice_archive/lpm_magazine_articles_v34_is5_pg47.html-

Legal Process Outsourcing

http://www.outsourcing.org/Directory/Legal/1

http://www.lawgazette.co.uk/in-business/a-first-hand-look-a-legal-process-outsourcer-provider-india


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