Until recently, Subway restaurants' legal department used a litigation database that was a lot like their signature cold cut combo sub without the toppings. It was serviceable, but it could be so much better, with just a little more attention to detail.
The old system identified legal matters by store number, and the legal department could access all the cases related to a particular store. But the detail was lacking. Sometimes a case name would be attached. Occasionally there was a short description of the case. But there was no consistency.
"We were trying to develop a more robust database for five or six years," said John P. Pfannenbecker, the managing attorney in the finances and investments department, who is in charge of purchasing new technology for the Milford-based legal department. "It was taking too much time and the beta versions didn't have an invoice processing component."
That's when Pfannenbecker went searching for a system that could track and manage all legal matters for Franchise World Headquarters, which is the support company for franchises operating under the Subway, Taco Del Mar and Mama Deluca's Pizza brands. Its legal department has 37 employees worldwide, 31 of them in Connecticut. It's divided into 12 groups that handle an array of matters, including litigation, real estate, contracts, international law for overseas franchises and much more in support of 39,300 retail outlets, so there are plenty of ongoing matters that need to be followed.
Pfannenbecker tested software called Serengeti Tracker and convinced Franchise World Headquarters' officials to purchase the system over several similar products. They've been using the software since last summer, and their successful implementation has earned them the Connecticut Law Tribune's Legal Departments of the Year award for Best Use of Technology.
The program processes legal billing electronically and allows legal departments and outside counsel to track the status of any legal matter. Its technology includes a powerful reporting functionality that, for instance, can show a general counsel whether a case is taking too long to complete or nearing its budget ceiling. In short, it's a comprehensive tracking tool that Franchise World Headquarters uses to manage its legal work and its relationships with outside counsel in a central location.
One of the primary benefits has been the invoice management component, Pfannenbecker said.
"Our old invoice approval system was paper-based and manual, and the lag time for receiving and paying an invoice was typically 60 to 90 days," Pfannenbecker said. "Now it is shaved down to 30 days with this system."
Plus, Franchise World Headquarters has agreements with outside counsel to receive a 2 percent discount if an invoice is paid within 30 days using Serengeti's e-billing function. Overall, the company has reduced its outside legal spend by 25 percent over the past 12 months.
"That 2 percent discount over time has provided enough savings to pay for the cost of implementing the system," Pfannenbecker said.
For long-time General Counsel Len Axelrod, implementing the system was a radical change from the way his department managed cases a decade ago.
"Our initial central litigation database was a very rudimentary system keeping track of limited key case data," said Axelrod, who has been the company's general counsel for nearly 40 years. "During the last 10 to 12 years, our attorneys and staff have utilized [Microsoft] Excel or Word charts to track and manage their cases, but there were still obvious limitations."
Now the legal department is "capturing more case data than ever before."
To maximize the effectiveness of the new case management system, the legal department needed to commit a lot of time to determining which categories needed to be included in the program so that each case contained the appropriate details, such as the type of case, details of the dispute, managing attorney, budget information and more.
"The biggest hurdle was matching our old system with Serengeti," Pfannenbecker said. "All of that work was done upfront. You can always change the field codes used to track these cases, but the better job you do at the beginning, the better off you are when you launch."
The additional detailed information allows in-house attorneys to scrutinize cases to ensure they are on track in terms of both timeline and budget.
"This allows us to analyze bills closer than we ever have," Pfannenbecker said. "We can do line item reviews and have people doing multiple reviews in much less time." The company can identify cases where the work is lagging and determine how they can operate more efficiently.
Bethany L. Appleby, a litigation partner with Wiggin and Dana in New Haven, has handled litigation and arbitration for Subway for more than a decade and eagerly supported the shift toward electronic billing.
"Subway has regularly embraced and implemented new technology to increase efficiency," Appleby said. "The transition to electronic billing via Serengeti increased the speed of invoice submission, and tracking of invoices is easy for us and the client."
Jeffrey Zucker, of Fisher Zucker in Philadelphia, handles real estate matters for Subway. When a franchisee defaults on the rent to the landlord, Zucker works to get the franchisee compliant with the franchise agreement and lease. Using this new case management system enables him to track how much his firm billed Subway for various tasks within an assignment and then alter the billing accordingly.
"I can then reduce the amount I billed if I believe it is not reasonable for the task involved," Zucker said. "Before Serengeti, it was more difficult and cumbersome for me to make this "reasonableness" analysis."
Beyond the billing capabilities, Subway's legal department uses the tracking software to build a database of arbitration cases and decisions that's easily accessible. "When we go to choose an arbitrator, we have a history at our fingertips," Pfannenbecker said. "And if we know the history of results with an arbitrator, it saves us time. That information required manually searching through binders and paperwork in the past. It was never this immediate."
The transition to a comprehensive case management system also has enabled the legal department to become the first company department to go paperless.
Adopting new technology is "a necessity to properly support our department," Pfannenbecker said. "We have evolved from a department primarily dependent on paper files with only using technology for our legal research needs to a department that uses technology for document creation, management and storage, case management, invoice management, IP management and more." •