In the previous article in this series, I promised a case study to show how one company took a flood of data about legal spend flowing through its inside counsel department and made it into a useful stream of information. Motorola Solutions, based in Schaumburg, Ill., leveraged technology and process plus internal and external data to control spending and drive new disciplines into its legal and government affairs organization.
Motorola Solutions provides mission-critical communication infrastructure, devices, software and services. The company provides these products and services for enterprise and government customers worldwide. Last year’s revenue was $8.7 billion.
During the past several years, Mark Hacker, who was recently named general counsel, has brought a business focus to the legal and government affairs organization by aligning lawyers and professionals with the business colleagues they serve and advise.
“Each one of the practice areas is now more effective at protecting the corporations’ assets, mitigating risk and helping produce better margins for the business,” Hacker said.
The practice areas formerly led with their intuition and experience and now are augmenting that with fact-based decision making. Each area requires a specific strategy for marshaling its information in managing the most cost-effective spend. “We improved the business acumen of our team by institutionalizing a training program designed to increase business, financial, and communication skills,” Hacker said.
Karen Dunning, who reports to Hacker, leads legal operations and drove the development of the Legal Spend Management Model.
Dunning and her team began by providing monthly reports to various stakeholders within legal and government affairs. They spent time with all stakeholders to make sure they understood the reports and pointed out key areas to focus on. The reports provided a new lens through which the attorneys could get a new perspective on their cases and how they impacted the budget, as well as the overall financial health of Motorola Solutions.
As the department began to see value in data, Dunning began work on the next phase of developing a data-informed culture. With the help of members of her team, she rolled out the framework for the Legal Spend Management Model. The model included the following components:
- Analytics (Know your data)
- Benchmarking (Know your world)
- Dialogue (Know your business)
- Automate (Digitize for simplicity)
- Architect for Strategy (Improve your results)
Know Your Data
This is the cornerstone of the Legal Spend Management Model. Insights are driven by data and analytics. Yet Motorola Solutions realized it also needed to tell a story through the data. To do so, Motorola Solutions utilized visualization tools that produced easy-to-understand charts and graphs, which helped the lawyers understand the bigger picture. Motorola Solutions focused its analytics in three main areas:
- Summary of Spend – Understanding where the legal spend was allocated (type of work, business unit, practice area) was core to their success and to the Legal Spend Management Model.
- Practice Area Details – Determining the cost drivers of legal expense for each practice area, and understanding which matters, businesses and attorneys are driving legal expense helped focus the team’s attention on areas that would offer the greatest impact.
- Law Firm Profiles – Gaining insights into the work each law firm was performing, along with its billing practices and pricing over time allowed for informed decisions about which law firms to send work to.
Dunning understood benchmarking was critical to her department’s ability to truly understand how it stacked up in the market and where the company had opportunity for improvement. To do this, they leveraged industry reports and tools that provided quantifiable benchmarks, derived from data about the results law departments in other companies were experiencing. The initial stage of benchmarking focused on attorney rates and patent filings.
Through benchmarking, the Legal and Government Affairs team was able to clearly understand its position in the market and drive data-informed discussions with internal clients (business units) and external resources such as its law firms (see Know your business below).
“Having an ‘outside-in’ perspective is important to understanding how other companies have optimized their spend,” Hacker said.
Know Your Business
The team also realized that to be successful it could not simply gather data about historical spend and industry benchmarks, it would need to create an open dialogue with all stakeholders, business leaders and partners at the company’s law firms.
Through these open discussions, they could better plan for the future and understand the past and present challenges each group faced.
Using analytics and benchmarking, these discussions became data-informed, instead of just subjective reviews of outside counsel performance and estimates of what had historically happened.
“For a law firm to truly be a partner, it must understand our strategy and desired results,” Hacker said.
Digitize for Simplicity
Dunning recognized that she could leverage technology to help reduce the burden placed on the attorneys of reviewing invoices, making it easier to manage their legal expense and ensure greater enforcement of their guidelines. Dunning’s team identified a number of outside counsel rules that could be automatically identified and processed by the electronic billing solution, increasing the accuracy of review, and removing the need for attorneys to manually review invoices.
They also recognized that a large portion of invoices going through the patent group were for small dollar amounts. Identifying the disproportionate amount of time it took attorneys to review these invoices, they developed a strategy to have those invoices routed to a central review team. Again, this freed up attorneys’ time.
Through this type of automation, Motorola Solutions was able to reduce the overall cost for processing an invoice. At the time they conducted their study, they calculated that manual invoices cost approximately $5.69 to process, while electronic invoices cost only $0.15, a reduction in cost of 97 percent for each electronic invoice transaction.
All of the steps outlined above support the overarching strategy and deliver measurably improved results. (It’s important to have a clear vision of your strategy, so you know what results you are looking to achieve.)
What Dunning and Motorola Solutions discovered was that the last component of their Legal Spend Management Model, Architect your Strategy is a critical component. I frequently see this element overlooked by most law departments as they develop their spend management programs.
Dunning and her team transformed the Motorola Solutions culture from an intuition-based one to a data-informed one. You can do it too. But you need to take the time to understand and document your objectives and principles for managing your legal expense. Those objectives and principles should then guide the decisions you make and the tactics you deploy. Keep in mind that, without a clear strategy, it is difficult to implement and sustain any type of change.