Interviews with GSK and Onit/ADM, two of our 2017 Legal Procurement Award Winners.
From every aspect the legal environment has changed and is changing all the time. From in-house legal teams to law firms (big and small) to government agencies, there is no road to follow. Legal Procurement is the new frontier, and you are its cartographers.
But you aren’t using a pen and paper, you are creating new pathways in cyberspace. Exactly how does one draw technology? Or innovation? As last year’s award winners have proven, inroads are being constructed and leading to significant improvement in legal spend through efficient and effective use of technology. The results are millions of dollars in savings and permanent impact in the legal industry.
As the purpose of a map is so you and those after you can find the right road, the Legal Procurement Awards are meant to not only showcase and honor those who are at the forefront of these developments, they are also essential for helpful insight into what’s possible as we forge ahead.
There are five categories of Legal Procurement Awards: Innovation, Collaboration, Teamwork, Best Use of Technology, and Process Improvement.
Today we focus on the award categories “Innovation” and “Best Use of Technology” and have asked Marty Harlow of GSK and Mark Elfman of Onit just how they did it.*
GSK was the 2017 INNOVATION Award Winner
With the use of reverse auctions, GSK budgeted outside counsel activity by buying deliverables or results rather than “lawyer time”. Although reverse auctions are not fundamentally new in practice, GSK’s OCSI or “Outside Counsel Selection Initiative” was modified into a matter-specific, mini-RFP tool that drove favorable outcome predictability and “should-cost” purchasing models which saved the company over $50 million annually. This approach facilitated a qualitative review of firm credentials, allowed for better understanding of cost drivers, and reinforced confidence in firm selection based on metrics.
GSK’s innovative approach proved that quality, results, satisfaction, and value were not exclusive and that high-quality services could be competitively sourced. GSK’s OCSI is considered a game-changer in the way legal services are bought. GSK’s procurement team has made a permanent impact on the Legal industry.
Where did the inspiration for the project come from?
The desire was to have more visibility in the largest spend in the legal department. Prior to that time, we had visibility only into ancillary legal services. OCSI is a means to an end and allows procurement access. It ensures we select best legal counsel using objective criteria and decision-grade data.
How did you come up with the solution?
It was a collaboration of the Procurement department, Legal ops, Finance and consultants and the desire to develop a solution that would help Legal. We started with a white board to draw up the concept and how to QUALITATIVELY select law firms (for litigation and M&A). We quickly understood that we missed substantive knowledge.
My colleague Justin Ergler suggested we use eAuctions to vet the fees. We then toned it down and beefed up training for the law firms. There are 24 hours of visibility before the auction goes live, which allows for lots of changes to ease it for the firms. In the future we will automate a template exchange.
What were the main challenges you faced during the implementation?
Our biggest challenge was selling the "crazy idea" internally in only three, four months.
We had to sell it to each practice area: how it worked, how this changed their lives and we had to tell them we would be taking away the most “fun” job in their lives: awarding the work.
The Process was a roadblock, in itself. We had to incorporate a process to follow before they could award their favorite law firms.
Another challenge was selling it externally. However, it didn't take long as it was very much a buyer’s market. Firms were desperately hungry for work and willing to participate. The market conditions were right. It was the right timing as non-hourly fee arrangements were getting more popular. AFAs are good for the reverse auction technique as you have fewer data points. With hourly rates, there are too many moving parts!
What do you wish you would have known before you started the project?
We set the level too high (Currently only matters above $250K in value have to go through the process). We don't have a good solution for matters below $250K in value.
That means, we’re currently only managing 20% of the matters. We should do a “OCSI light” with a quick turnaround; a self-serve model. It could accomplish the same things as OCSI for matters worth $50K-$250K. We’re piloting it now; and will launch it soon!
Do you have recommendations for other facing the similar issues?
People tend to focus on a technique or approach procurement in some areas. For example, auditing invoices may produce value, but it’s dealing only with data that is already in the PAST. It's important to get involved in deal-flow, up-front when counsel needs to be selected (otherwise procurement is not influential!).
We also no longer do shadow billing, only true flat fees. In fact, 90% of our matters today are set up as AFA. Hourly billing “is definitely fading into the sunset”. We typically pay equal monthly installments and do quarterly reconciliation of billing; adjustments made in eBilling. So for us, there is no need for invoice audits; eBilling system flags mistakes.
In the future, we would like to see and do more should-cost modeling: When a new matter comes in, we need to have an idea of how much it should cost (this gives you power!). In litigation, the cost drivers are: depositions, motions, discovery. So how will the firms manage it? We need to be able to trust our historical data.
ONIT for ADM (Archer Daniels Midland) was the 2017 BEST USE OF TECHNOLOGY WINNER
It took Onit and Archer Daniels Midland only six months to significantly improve ADM's legal spend management through efficient and effective use of technology. Together, they developed an enterprise spend management platform that encompassed ADM’s legal spend in 160 countries.
Onit and ADM leveraged change management techniques and built alliances with ADM’s shared services organizations. The intention was to ensure and streamline operations and the adoption of the technology. Training and regionalized floor support for the technology helped speed deployment and compliance. The combination of innovation, automated tools, process re-engineering and technology helped ADM save millions of dollars of legal spend.
Where did the inspiration for the project come from?
ADM approached Onit for a business process platform to help solve enterprise legal management problems they had. The company couldn’t easily locate basic information about its legal environment – such as the number and type of legal matters, how many law firms it was using, or how much it was spending on particular matters. The e-billing solution the department was using could not do the job.
How did you come up with the solution?
ADM began their journey with five primary objectives – (1), to ensure that the leadership team had visibility to all matters at ADM worldwide and real-time access to legal spend; (2), to implement consistent processes to minimize low value administrative tasks while providing visibility to legal risk across all ADM business units; (3), to implement systems and technologies to validate behaviors that drive prescribed business processes and procedures; (4), to provide a system for understanding and level setting that included ongoing feedback supported by analytics and data; and (5), to reduce total legal spending while providing better service to its clients. Onit’s solution was based on objectives set by ADM.
How did you go about solving the issue?
Due to ADM’s complex, global business problems, Onit analyzed each problem to devise the most effective solution. ADM and Onit constructed a platform that reaches all corners of the law department, beyond legal and spend management. To streamline adoption, David Cambria (ADM's Global Director of Operations) leveraged change management techniques and built alliances with the shared services organizations within the company, changing policies where necessary to facilitate automation.
Who was involved?
Software designers and developers at Onit, and David Cambria with his
legal team at ADM were all involved in the project.
What were the main challenges you faced during the implementation?
Cleaning and migrating ADM’s fractured data was rather time-consuming. In order to speed full deployment, users needed to be trained in classroom and WebEx sessions, and were provided with regionalized floor support. These strategies along with strong teamwork made for a quick and successful implementation.
What do you wish you would have known before you started the project?
We knew going into the project that AMD had complex business issues but we didn’t have a good understanding of the breadth of their processes or workflows. Our technology allowed us to make changes iteratively and make the necessary adjustments quickly. This was extremely valuable during the project.
What would you do differently now?
The entire project was a learning process and we’ve been able to pass on best practices to other clients. With this experience, we can tweak other client projects and have a better understanding of how to automate complex process similar to those at ADM.
Do you have recommendations for others facing a similar issue?
We suggest starting with a simple process and getting it up and running quickly. Look for an early win and get users familiar with the system before tacking a complex problem with multiple workflows, users, business scenarios or integrations. A simple legal service request or NDA process might be a great place to start. The stakes are less risky and you can likely get up and running very quickly.
THERE ARE JUST A FEW SHORT WEEKS LEFT TO APPLY FOR THE 2018 LEGAL PROCUREMENT AWARD!
DEADLINE FOR SUBMISSION: FRIDAY, JUNE 29, 2018
LEGAL PROCUREMENT CONFERENCES -- IT'S NOT TOO LATE!
Our Legal Procurement Conferences are the place for education on legal procurement and have a laser-sharp focus on the buying of legal, alternative and ancillary legal services. We combine sharing best practices and learning new skills with cutting-edge industry insights and academic knowledge contribution.
The London EMEA Conference is next week, on June 12th and we have only a few seats left! Sign up here.
LEGAL ANALYTICS: INFORMED, DATA-DRIVEN DECISIONS
To better manage legal spend, focus on understanding what you are spending, weighted average billed rates and staffing leverage to obtain information about what you’re paying your vendors and how efficiently they are managing your matters. Also, consider metrics related to billing compliance that help to provide additional information about what activities your vendors are billing you for.
Vince Vetri of Elevate Services joins us in this brief video to explain how data can be used to select and implement strategic initiatives. You can download the Legal Spend Management Primer at www.buyinglegal.com/LSM
DON'T MISS IT!
Legal Procurement Best Practices Calls
Our calls focus on practical information and solutions. We cover issues you face in your daily work, best practices, and the latest trends in buying legal services. Dial into our peer-to-peer calls: ask experienced legal procurement professionals anything you want to know about best practices and "how-to's".
Our next call is 6 June with Peter Connor (AlternativelyLegal) who will discuss Will Law Firms become Software Businesses? Please click over to our the BLC site to see the time of the call in your region.
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Legal Services Sourcing Manager (Johnson & Johnson), Pricing Analyst (Foley & Lardner), Category Manager-Legal (GSK), Legal Operations (Hearst Corporation): Read about it on our Careers page.
*Interviews have been edited for length and content.