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ACC Reveals Its List of In-House Value Champions
The secrets to big-time budgetary savings in the law department got a little less secret on Thursday, when the Association of Corporate Counsel announced its inaugural class of ACC Value Championsfive in-house departments and seven pairings of in-house teams and outside firms that demonstrated lawyers can think like businesspeople, too.
"They're making significant and measurable value," ACC president and CEO Veta Richardson says of the winners, who were culled from 61 applications. The competition is a new component of ACC's ongoing Value Challenge.
The standalone in-house departments to earn the championship title are GlaxoSmithKline, The Home Depot, Lucchini S.p.A., Medtronic (a 2012 Best Legal Department winner), and Pfizer Inc.
The in-house/outside counsel collaborations that shone through include RBC Capital Markets and Morgan, Lewis & Bockius; Rockwell Collins and Seyfarth Shaw; The Sherwin-Williams Company and Gallagher Sharp; Target and Nilan Johnson Lewis; Tyco International Ltd. and Shook, Hardy & Bacon; United Retirement Plan Consultants and Porter Wright Morris & Arthur; and Whirlpool Corporation and Wheeler Trigg O'Donnell.
On ACC's website, the Value Challenge winners' circle features profiles of all the victors, along with the judges' comments as to what made each winner's approach so effective.
For instance, the judges cited "the use of technology and a scorecard to select outside counsel" at GlaxoKlineSmith, and they highlighted the collaboration between Sherwin-Williams and Gallagher Sharp as an "excellent example of how the use of a single firm to coordinate designated types of matters nationwide can result in significant savings, improved predictability, and improved outcomes."
What all the winners have in common, explains Richardson, is that they're applying "commonsense management principles" and "adapting techniques used on the business side" to legal department spend. In the economic climate of 2012, "there's a heightened responsibility to measure and determine how you're contributing to the bottom line," she says.
Another trend among the winners, Richardson notes, is that they have applied alternative fee arrangements "across a spectrum of practice areas"and not just in litigation.
For example, the judges praised Target and Nilan Johnson for handling employment and labor law work with a variety of fee arrangements that have generated both predictability and savings.
So how'd they do it?
"You have to know each other really well," Joe Schmitt, a partner in the labor and employment pratice at Nilan Johnson in Minneapolis, tells CorpCounsel.com.
Nilan Johnson has been working with Target since the late 1990s, and starting in 2005, negotiated a flat monthly fee for day-to-day questions about labor and employment law. By that time, the firm and Target had a "rich history" of questions and a "certain measure of predictability" to draw from.
"We weren't just shooting in the dark when we were structuring the arrangement," says Schmitt. "It's absolutely critical that you have data you can use."
Trust, of course, is also a key component. "Target can ask me as many questions as they want in a month, for a flat fee," Schmitt explains. And if the company were to completely inundate him with queries, "I would take a tremendous loss on the monthly retainer," he says. "But I know that Target would never do that."
Bringing outside firms together and into the Target fold has been a major focus for Jim Rowader, the company's general counsel for employee and labor relations. That vision has also paved the way for alternative fee arrangements to take hold.
"I wanted [our outside counsel] to function as a team," the same way in-house counsel work together, Rowader says.
So about five years ago, the law department started hosting a two-day conference for the company's outside counsel, using the gathering to educate the firms about Target's business, and as an opportunity for the firms to get to know one another. "We were building this more cohesive group of outside attorneys," Rowader says. "That helped us set the stage for some of these alternative fee structures."
Now, when firms bid on Target's legal work, they're not only well-acquainted with the law department's needs, but they also know the competition they're up against. "That pressure certainly forced them to give back to us their best efforts, and it also allowed us to pick and choose," Rowader says.
In turn, Rowader's department gives firms honest feedback, whether it's about why they lost a bid or how they performed on the work that they won. "They get a report card on their performance," he says.
Meanwhile, Target's legal department is getting a thumbs-up from their colleagues in finance. With greater predictability and accuracy built into the legal budget, "our finance partners are ecstatic," Rowader says, adding that, "it gives us more credibility with the business side. That's the bottom line."