Thank you for sharing!

Your article was successfully shared with the contacts you provided.
Just a few years ago, Liberty Mutual Insurance Company’s legal department was caught in management’s crosshairs. The number of insurance claims needing legal attention had increased 23 percent in four years, from 113,556 matters in 1998 to 139,360 matters in 2002. The 768 in-house lawyers who work on these claims weren’t able to keep up with the extra work. The insurer decided not to hire more attorneys. Instead, the company’s claims department, which can refer matters in-house or to law firms, sent more high-priced work to outside counsel. Liberty’s legal department had “capacity” problems, says William Kratch, assistant vice president and manager of Liberty’s personal markets claims department. The lawyers were limited in the number of matters “they could handle at any one time because they hadn’t developed their technology yet,” he said. Senior members of the law department argued that if they upgraded their technology, they could handle more cases. Their offices weren’t networked, notes and drafts were done on paper, and ancient-looking mainframes were still in heavy use. At the same time, Liberty’s management wanted to track the $600 million the insurer spent each year on inside and outside counsel litigation costs. So Liberty brass gave the legal department a few million dollars to follow the money and upgrade its technology. In 2000 Catherine Pomiecko, associate vice president of legal systems, hired Michael Russell, a goatee-sporting techie who was just 29 at the time, to manage the legal systems operations and training department. Russell spent his first few months conducting a comprehensive work-flow analysis, and soon after, bought and implemented the tools to turn the department’s technology around. He made big investments in matter management, legal intranets, document management, timekeeping technologies, voice transcription, and client-to-legal systems integration. Four years later, that investment has paid off. Russell says the Boston-based insurer has “saved hundreds of millions of dollars.” Liberty is sending a smaller percentage of its litigation load to outside counsel, and to handle the increased in-house workload, Liberty has taken on 114 lawyers in the past three years. In 2003 Liberty’s staff lawyers billed $194 million to the claims department and worked on approximately 135,000 matters. Outside counsel, handling similar claims, charged $245 million to handle 42,000 matters. (The company spent $137 million on other litigation issues.) “We’re a very unique animal,” says Helen Gillcrist, vice president of corporate legal, who’s in charge of field operations for the department. “One of the big challenges this department has faced has been in maintaining this giant, enormous structure. The metrics we’re now deriving as a result are really phenomenal. Hopefully, it goes to show that we’re providing cost-effective legal services.” Liberty Mutual’s investment in legal technology makes the private company one of the most progressive businesses on Corporate Counsel‘s 2004 In-House Tech Survey, which looks at the technology used by law departments from Fortune 500 companies [see "Under the Hood"]. In 2003 Liberty’s legal department spent $21.8 million on technology. That makes Liberty the biggest spender of the survey respondents that supplied budget data this year. Liberty’s rollout is particularly impressive, considering that it happened as other companies around the country put the brakes on technology spending following the Y2K blowout and the recession. “Liberty Mutual’s legal department now has an excellent reputation in terms of technology,” says Charles Durtschi, senior project manager in the IT department at American Airlines, Inc., and a member of LawNet, Inc., an IT networking group. “They are ahead of the curve; it was one of the first departments I know that instituted e-billing, among other things.” Liberty’s law offices are modeled after a traditional law firm. The company currently has 768 lawyers (and 766 support staff, plus 302 paralegals) at 69 legal offices. Most of the 768 are “captive” lawyers who work exclusively on claims disputes. Each law office is referred to by the supervising attorneys’ last names. Liberty’s San Francisco law department is Muhar, Roberts, Fama, Kramer & Monty. The captive lawyers serve their “clients” � the company’s claims office � and their “client’s client” � the policyholders. The lawyers have to assure policyholders that they will zealously defend them, while assuring the company’s claims offices � which “pay” for in-house and outside counsel out of their budgets � that they will do the job cheaply. According to Neil Rifenbark, resident attorney at Liberty’s Woodland Hills, California, office of Rifenbark, MacNeil & Watkins, that’s where technology comes into play. “We are as good as or better than any law firm out there,” says Rifenbark. “We handle complex cases, just as they do. And if anything, the technology that we have at our disposal lets us do a better job than outside counsel.” But only four years ago, Liberty’s law department lived in the Stone Age. Lawyers avoided anything with a keyboard, dictation was the norm, and paralegals and secretaries grappled with mountains of paperwork. As legal systems operations team leader Audrey Cantelli, who has worked in the company’s Boston headquarters for more than three decades, recalls, “We used to have floors of office space in this building devoted just to the [paper] files we kept.” As a result, says Rifenbark, staff lawyers were losing the very asset that made them valuable to the company � their cost advantage over outside counsel. In 2000, 79 percent of the litigation workload was kept in-house. The following year the percentage dropped to 77 percent, and by 2002 it fell to 71 percent. That’s where Russell stepped in. In the late 1990s he worked for two Kansas City, Missouri-based law firms � Spencer Fane Britt & Browne, as chief technology officer, and Wallace, Saunders, Austin, Brown & Enochs, as IT director � and was an associate member of the American Bar Association’s Law Practice Management Section. Russell says that when he started the Liberty job, he was shocked by the law department’s Luddism: “They had no matter management software, no document management, no standards, no automation in place, no tools, no HotDocs [document automation software] � pick your buzzword, but none of those tools existed.” His first task was to get the company a top-of-the-line matter management setup, crucial for a department whose bread and butter is litigation. At the time, many law firms had already adopted case management programs � software that helps lawyers organize client relationships, check on scheduling conflicts, record time sheets, and track progress on litigation matters � but the technology was virtually unknown in corporate legal departments. Russell wanted a system that would allow Liberty’s attorneys, who work on some 100,000 cases a year, to sort through caseloads and to-do checklists in easily digested formats. He wanted a program that would generate templates and documents easily � and make the documents shareable. Russell also looked to matter management as a way of integrating Liberty’s constellation of branch offices. “We have nine offices in New York,” Russell explains. “They were all using the same courts, using the same forms, the same boilerplate language. But when a lawyer from one office e-mailed a lawyer from another, and said, ‘Give me that settlement agreement you drafted for the slip-on-ice case,’ it just wasn’t possible. . . . The lawyer wouldn’t even know that other attorney had even ever done a slip-on-ice or a dog-bites-man case.” After surveying such software programs as Amicus Attorney and TimeMatters, Russell chose Legal Files, a program that had many of the features he wanted, like document automation and calendar scheduling. It wasn’t perfect, however: Legal Files was not built for the kind of loosely connected in-house departments that Liberty maintained. So Russell and his team used Citrix networking software to run and manage Legal Files from a central server. Russell then faced his second challenge: He needed Liberty’s lawyers to buy into the new system. Beginning in late 2002, Russell sent out two-person teams, composed of a trainer and an application developer, to customize applications to suit each office’s needs. The teams also conducted seminars about the new matter management software for each of the company’s 69 office managers. Soon after, Russell says, managers required attorneys to enter their notes directly into the system instead of dictating to secretaries. Everything, the managers insisted, had to be standardized. Managers started coming up with tech ideas of their own, and Russell invited them to Boston for a three-day tech symposium. “It was nice,” he says. “I’d sit back and let them present.” The symposiums are now an annual event. “I was one of those people who was very suspicious of computers,” says Helena Yuhas, senior counsel at Liberty’s New York office of Robin, Schepp, Yuhas, & Harris. “I kept hard paper diaries of everything because I didn’t trust that the computer was going to keep it. But over time, the way that it has improved the running of the office is remarkable.” As the only lawyer at her Manhattan regional office who lives in the borough, one of Yuhas’s duties is to get to the office when a snowstorm hits. Under the old system, when the office had a snow day, she says,”I would have to look through all the various diary books that various support staff kept, find the files, call people, and try to read to them where they had to go [the next day and tell them] what the case was about, so they could arrive in court with some general information. It took me the whole day to do it, and when these lawyers got down [to court] the next day, they’d have to move to adjourn, because they really didn’t know what was going on.” With Legal Files, Yuhas can pull up all the scheduling information within an hour, as well as case-related motions, judge and opposing counsel information, and anything else her colleagues need and e-mail the info to them at home. Russell’s most recent challenge has been to make sure not only that the technology works, but that the entire company knows about it. Last year he overhauled Liberty’s legal portal, which is housed on the company’s intranet. It includes an area for the insurer’s claims department, so claims officers can easily find an in-house lawyer’s contact information as well as other pertinent information on particular disputes. The portal’s law department section also lets Liberty lawyers nationwide post practice group information � everything from the locations of local law libraries to what kinds of documents the office is generating and keeping on file. Last year employees visited the portal 965,000 times � triple the portal’s 2002 traffic. The new matter management system’s timekeeping and reporting functions also let Russell and Liberty’s top brass measure the department’s productivity. At Rifenbark’s Los Angeles-area office, the average attorney has an annual billable hour goal of 1,850, comparable to the load of a typical law firm associate. But Rifenbark’s 12 attorneys process 1,375 cases a year, a number that’s way above the norm for a law office that size. Quantifying productivity makes the clients happy. “From my perspective as a buyer of [the law department's] services,” says the claims department’s Kratch, “in terms of efficiency � Are they more available to claims officers and policyholders? Have they gotten quicker and more productive?” From a nadir of just 71 percent of litigation claims being handled in-house in 2002, Liberty Mutual in-house lawyers last year handled 74 percent of claims litigation disputes. Russell says these statistics answer the question about whether the company is better off using more outside counsel. The answer, he says, is no, adding, “Staff counsel does more than twice the work at nearly half the price of outside counsel.”

This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.

To view this content, please continue to their sites.

Not a Lexis Advance® Subscriber?
Subscribe Now

Not a Bloomberg Law Subscriber?
Subscribe Now

Why am I seeing this?

LexisNexis® and Bloomberg Law are third party online distributors of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® and Bloomberg Law customers are able to access and use ALM's content, including content from the National Law Journal, The American Lawyer, Legaltech News, The New York Law Journal, and Corporate Counsel, as well as other sources of legal information.

For questions call 1-877-256-2472 or contact us at [email protected]

Reprints & Licensing
Mentioned in a Law.com story?

License our industry-leading legal content to extend your thought leadership and build your brand.


ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.