Eversheds Consulting World class management services for inhouse

Eversheds Consulting World class management services for in-house legal teams Paul Smith, Partner ©Eversheds Consulting 2011. A division of Eversheds LLP.

Eversheds LLP – Eversheds Consulting One of the largest full service law firms in the world with over 4, 326 people including more than 560 partners and almost 2, 500 legal advisers 46 offices in major cities across Europe, the Middle East, Africa and Asia Relationship lawyers – pioneers of partnering in the legal market Providing control over costs - championing the cause closest to clients’ hearts. Practising proactive legal and risk management: prevention not cure ©Eversheds Consulting 2011. A division of Eversheds LLP.

Eversheds LLP – Eversheds Consulting – A team of lawyers, certified project managers, auditors, IT and marketing specialists which delivers tailor made solutions to legal departments Drivers of change – experience of outsourcing and off-shoring ©Eversheds Consulting 2011. A division of Eversheds LLP.

Cost centre to profit centre Re-aligning your legal team to achieve success Today’s environment for Legal Departments: – Budgetary pressures – Drive to achieve more for less – Search for optimum effectiveness – Focus on added value – Outsourcing pressures – Showing the value of internal teams With the above in mind, this presentation can help move your teams move from a cost centre to a profit centre ©Eversheds Consulting 2011. A division of Eversheds LLP.

Cost centre to profit centre Steps to success – giving you the tools Analyse the effectiveness of your internal team Reducing external costs Working efficiently through project management Developing cultural change Integration of legal and business units Identifying revenue streams Profitable legal department ©Eversheds Consulting 2011. A division of Eversheds LLP.

Your legal team Re-aligning to achieve success Review of internal department Process mapping Focused KPI’s linked to objectives/strategy for the team Benchmarking Clear management information relating to financial performance Monthly reporting on KPI, strategy and legal spend ©Eversheds Consulting 2011. A division of Eversheds LLP.

Our processes ©Eversheds Consulting 2011. A division of Eversheds LLP.

Legal Work – Cost/Risk/Quality Matrix The starting point ©Eversheds Consulting 2011. A division of Eversheds LLP.

Process analysis Improved Inputs from the business A gatekeeping process is necessary to keep a check and balance on the inputs from the business, which drive the negotiation process. Introducing this new step in the process and ensuring its implementation will drive efficiencies throughout the rest of the process by reducing the level of rework and administrative burden placed on the negotiators by inaccurate and incomplete information. RECOMMENDATIONS No Is info received accurate & complete? Gatekeeping Yes Accurate and full information Negotiators receive full accurate information ©Eversheds Consulting 2011. A division of Eversheds LLP. Reduction of admin burden and rework

Process maps Incomplete and inaccurate information received by legal team Currently done by negotiators. Transfer responsibility to admin team? No unique identifier for cases transferred between systems ©Eversheds Consulting 2011. A division of Eversheds LLP. Delays in starting and considerable rework required due to missing or incomplete documentation

Process maps The team has automated much of this workflow to produce TMA within 2 working days Missing a step for the allocation process We recommend that this task is done by the admin team ©Eversheds Consulting 2011. A division of Eversheds LLP. Missing a ‘gatekeeping’ step which checks documentation is correct

Benchmarking CURRENT PROCESS BL ING EC II EH DOR ESC NR TR NI PI CL BAU IR 70 60 50 40 30 20 10 0 Firm Firm Firm Firm Comparison of negotiation times between 2004 and 2006 Surveys. Median percent by time bucket* 20 18 17 20 100 15 2004 10 10 10 5 0 10 10 2006 10 7 5 5 30 -60 days 60 -90 days 90 -180 days 6 -9 months 86 76 80 3 60 9 -12 > 1 year months ©Eversheds Consulting 2011. A division of Eversheds LLP. 20 0 90 92 100100 78 2004 66 2006 46 48 40 5 2 < 30 days Cumulative mean percent of agreements executed by given time buckets* 26 10 33 17 < 30 days 30 -60 days 60 -90 days 90 -180 days 6 -9 months 9 -12 > 1 year months *Source: International Swaps and Derivatives Association www. isda. org (ISDA Master Agreement Negotiation Survey

The legal department – metrics Steps to success Business strategic level $ Exposure Budget $ Legal spend vs budget ©Eversheds Consulting 2011. A division of Eversheds LLP.

Offshoring/outsourcing High Billing rates (£ per hour) High complexity Moderate complexity Skill set requirements High Low complexity Low ©Eversheds Consulting 2011. A division of Eversheds LLP. Low Onshore LPO Bristol Paralegal Support Title Hourly price Monthly rate FTE rate per annum Paralegal £ 20 £ 3, 200 £ 35, 000 Offshore LPO Lawyer Support Title Hourly price Monthly rate FTE rate per annum Junior Lawyer (India) £ 16 £ 2, 600 £ 31, 000 Senior Lawyer (India) £ 25 £ 4, 000 £ 47, 000 Junior Lawyer (Philippines) £ 19 £ 3, 000 £ 36, 000 Senior Lawyer (Philippines) £ 29 £ 4, 500 £ 55, 000

Working efficiently Project management of legal work Service excellence means that for all client matters, we must be able to say YES to all of the following: We scoped the matter fully; understood key issues; agreed expected outcome with the client We agreed a written fee quote, including scope of work and assumptions which must be reasonable We controlled costs, updated client as appropriate, agreed revised scope of work and constantly revised fee quote Updated client as to progress Obtained feedback ©Eversheds Consulting 2011. A division of Eversheds LLP.

Working efficiently – “Deal. Track” Project managing your success ©Eversheds Consulting 2011. A division of Eversheds LLP.

Reducing external costs Getting value from your external law firms 20** Panel reduction process Existing firms Firm Implementation of [* *] Legal Model 20** New external panel H. O. Communication to business Firm Create jurisdiction panel firms Firm Firm Review historical work with non-panel firms Firm Introduce invoice validation management system and global measuring against budget Firm Commence use of matter manager for new matters Asia Firm New matters only to be instructed to panel firms by legal team Firm Firm Implement instruction protocol to panel firms Implement value added strategy General contractor model ©Eversheds Consulting 2011. A division of Eversheds LLP. Europe Firm N. America Firm

Case studies ©Eversheds Consulting 2011. A division of Eversheds LLP.

Case study 1 The Du. Pont Legal Model “is an integrated approach for managing change within the law department and for continuously improving how legal services are provided to Du. Pont businesses in terms of quality, cost and efficiency” Founded on strategic partnering Requires ongoing re-engineering of work processes Focus on the bottom line has led to cost effective and client -centred legal services 350 to 40 law firms in US, UK, Canada and Mexico Total savings exceed $75 million ©Eversheds Consulting 2011. A division of Eversheds LLP.

Case study 2 To achieve significant cost reduction and improve legal representation Tyco held a competitive tender for its legal needs in EMEA Gap analysis of internal resources and external needs Eversheds replaced 285 existing law firms in EMEA and seconded lawyers to Tyco Legal costs reduced by 30% and Eversheds reappointed after two years ©Eversheds Consulting 2011. A division of Eversheds LLP.

Case study 3 Demonstrating value of legal team with key metrics? Case study: FTSE 100 Company Online business survey with face-to -face interviews. Benchmarking of legal team value to business units, as well as strategies for legal/business protocols Result: Report suitable for sharing with wider business showing legal team value, and identifying areas for improvement ©Eversheds Consulting 2011. A division of Eversheds LLP. Proving value Before § No way of showing team’s value § Under pressure from wider business § How to adapt to needs of business? After § Financial & Customer validation of team performance § Identified improvements for next stage of evolution

Case study 4 Managing spend Insource v outsource Case study: Fortune 500 manufacturing multinational Eversheds Consulting was approached to analyse and assess existing legal management and risk and compliance functions over 39 jurisdictions Result: Provision of detailed breakdown of £ 6 m legal spend, enabling benchmarking of internal v external legal spend and convergence programme of legal panel ©Eversheds Consulting 2011. A division of Eversheds LLP. Before § No processes § no decision criteria § ad hoc After § sophisticated decision tree § risk/quality/capacity assessment applied to different work areas in different ways – rigidly applied

Case study 5 Reducing spend Managing internal teams Case study: FTSE 50 financial services Engaged on a legal spend and process engineering project – the starting point being the wholesale banking legal team. Eversheds Consulting were responsible for delivering process improvements, optimal team structures, data integrity § and quality checking, as well as team KPI’s Result: We achieved a 32% reduction in the team caseload as part of the project ©Eversheds Consulting 2011. A division of Eversheds LLP. Before § No KPI’s § No MI § No regular meetings § No clear strategy After Focused KPI linked to objectives/strategy § 1: 1 and team meetings § Monthly reporting § Clear strategy

The challenge of contract management Getting the value from your contracts Maximise the value of your in -house legal work a pli m n ce an ©Eversheds Consulting 2011. A division of Eversheds LLP. Contract Management Lifecycle Co Make your legal team profitable – recoveries n tio Reduce your risks Reduce your costs and get full value from your contracts ia ot An g Ne Manage your suppliers effectively is s ly t Ac iv io at

The profitable legal department Achieving the ultimate goal How to create a revenue stream Identification of legitimate claims that otherwise might be missed Money on the table which is not picked up Proactive management of transactions, agreements, patents and other contracts to discover wrongdoings. Eg warranties and indemnities in M&A Not a Litigation Programme But needs a cultural change – proactive not reactive ©Eversheds Consulting 2011. A division of Eversheds LLP.

Case study 6 A legal recovery is defined as: “any recoupment in the form of cash (royalty payments, settlements and adjustments), products, services or other quantifiable rights obtained for a company or its affiliates, through the intervention by legal professionals beyond a normal business transaction” Du. Pont have recovered $1. 6 billion since it started its programme 5 years ago ©Eversheds Consulting 2011. A division of Eversheds LLP.

Not simply obtaining a favourable settlement Capturing value in contracts 35% outside US Du. Pont 2009 recoveries by cases § § § ©Eversheds Consulting 2011. A division of Eversheds LLP. Commercial/Contracts $248. 9 million Intellectual Property $60. 4 million Bankruptcy/Collection, Commercial/Sourcing $16. 9 million Trade/Customs $7 million General Torts, Antitrust, Pioneer Trade/Antidumping $941 million Solae $659 million <1%: Insurance $492 million; Tax $240 million; Environment $114 million; Corp. Securities $77 million

Action Evaluate litigation history and define profit and loss Implement structured programme between legal, finance and business units Educate and inform on the possibilities, eg: – Supply contracts – Over-billing – Power cuts – IP/Licensing fees Establish a programme to assert legal rights Change the culture Communicate success ©Eversheds Consulting 2011. A division of Eversheds LLP.

Developed to meet challenges faced by in-house teams Legal spend and legal management Environment, health and safety Helping your department to generate income ©Eversheds Consulting 2011. A division of Eversheds LLP. International records management Eversheds Consulting Risk and compliance Global corporate secretarial Recoveries

Paul Smith Paul is a Partner, environmental lawyer and litigator and has defended a number of multinational companies over the years in relation to criminal investigations in the UK, Europe and North America. The investigations have ranged from chemical plant explosions, insider dealing, railway disasters and price-fixing to environmental incidents and other major crises. Paul is a recognised expert on law firm partnering and convergence. He began developing this expertise as client partner for Du. Pont more than ten years ago. In recent years Paul has focused on how the law firm and the global corporate law department can work together effectively across multiple jurisdictions. Paul consults with many global corporate law departments on their structures, processes and practices to derive greater value from outside counsel. He is part of the ©Eversheds Consulting 2011. A division of Eversheds LLP. Eversheds team involved in the Tyco convergence project in Europe, Middle East and Africa, where Tyco used its innovative 'SMARTER' model to consolidate most of its outside legal services from more than 250 law firms across 37 jurisdictions to one: Eversheds. In February 2008, Legal Business magazine honoured Paul Smith as 'Lawyer of the Year', one of the most prestigious awards in the UK. He was awarded for his pioneering work in delivering new approaches to global client relationship management. Paul was also included in 'The Lawyer' magazine's list of the 'Hot 100 Lawyers' for 2008. Paul Smith +44 845 498 4464 paulsmith@eversheds. com

©Eversheds Consulting 2011. A division of Eversheds LLP.