The art of tailoring an approach that aligns to an organization’s unique needs 

As corporate law departments continue to look for ways to do more with less, the concept of shared services frequently enters into the equation. For most organizations, centers of excellence (COEs) represent a generally familiar approach. Historically, a “typical” COE model was often thought to rely upon lower-cost/administrative resources focused on lower-risk tasks that arise with frequency. And while this type of COE most certainly still exists, gone are the days where this one-size-fits-all approach to shared services is the only option on the table. This blog post will outline the considerations most heavily influencing the design of shared services models today, identify a few potential challenges (most of which can be proactively mitigated) and provide guidance on the next steps toward designing a (successful!) shared services model. 

In exploring how a COE might drive value in an organization, where should a corporate legal operations department start? 

There are many reasons to consider legal shared services: improving client service, reducing costs, standardizing processes, lowering legal costs or spend, supporting corporate strategy, eliminating redundant processes, or helping to introduce new technologies. So — where to start? 

1. Define  short- and long-term goals in collaboration with stakeholders for the shared services initiative 

Shared services centers appear to be underused, according to findings from a 2021 EY study in conjunction with the Harvard Law School Center on the Legal Profession. While 73% of companies use them to support the legal function in some capacity, only 9% use them extensively. One frequent driver of this lag in shared services adoption is the absence of a clearly articulated set of goals and objectives for the initiative. In the absence of this, shared services models can stagnate, thereby reducing overall value and leaving internal resources frustrated by the lack of progress. To avoid this outcome, formally define goals at the outset and include all impacted stakeholders in the process. 

2. Solicit executive feedback on shared services goals and enlist leadership support to drive stakeholder buy-in 

The implementation of a shared services model can be challenging under the best of circumstances. However, with a well-articulated set of goals and buy-in from appropriate members of an organization’s leadership team, the likelihood of success with a COE initiative will increase exponentially! Once the goals for the shared services initiative have been defined, pressure test them with leadership to confirm alignment with other strategic initiatives that may or may not be in the COE line of sight. Finally, ask for a commitment from leadership or an executive sponsor to help drive stakeholder messaging, thereby confirming a top-down approach to promote enthusiastic acceptance of the shared services initiative and the organizational changes it will bring. 

3. Develop an implementation strategy  

There is no substitute for a well-defined strategy, except a well-defined and documented strategy. With this in mind, be sure to formally capture the requisite details of the implementation plan, socialize and gather feedback as required, and identify a resource to maintain and update the COE plan as required. 

4. Communicate early and often 

No one likes to be surprised by changes to organizational strategy and/or structure. Thus, a change management and communication plan that contemplates stakeholder outreach both early and often is likely to drive the best outcomes. 

Realistically, what legal work can be managed in a shared services setting? 

The law department’s move toward shared services does not necessarily mean making wholesale changes all at once. Typically, law departments will start a shared services journey with activities that are high volume or low risk that have clearly defined and standardized processes, for example, e-discovery, template automation, document review, entity management or contract life cycle management. Starting with high-volume or low-risk areas, companies can design specific workflows and can measure performance according to standard metrics and process guidelines. Begin with one, two or several of these activities during the initial move to this delivery model. 

However, there is a trend for companies to also look at expanding the legal shared services model beyond those traditional activities to include more transactional-type support. These activities may include regulatory remediation and repapering programs, contract drafting and negotiating (vendor or customer) intragroup service agreements, and IP rights management. These types of activities were previously thought to be too high risk to be handled by a shared services format; however, with detailed workflows and proper oversight, there has been success with expanding beyond process support. It should be noted that the expansion typically requires a legal-driven shared services model with the right mix of legally trained professionals or a COE that utilizes professionals with the right legal skills to provide the necessary amount of legal expertise to offer guidance when needed.  

Is it a COE or something different? 

There is often a lot of confusion about the differences between COEs and shared services teams. A shared services center (SSC) usually refers to a dedicated unit, including people, processes and technologies, that is structured as a centralized point of service and is focused on one or more defined business functions. Shared services may come from several different physical locations (regional or global) and can operate onshore, offshore or virtually in some cases. Service delivery may be executed by internal resources or external providers, or a hybrid combination of both, and can involve a single or multiple business functions. Companies sometimes engage external providers to consult with various elements of the design, structure, location and execution options.  

Comparatively, a COE is typically thought of as a specialized knowledge center. A COE is a team that provides leadership, leading practices, research, support or training for a particular focus area. The focus areas of COEs vary and may include technology, business concepts, strategic initiatives or specific legal skills. In other words, they are smaller groups within an organization that can get better results by devoting themselves to a particular activity or set of ideas. Within COEs, there is an emphasis on advanced training and certification, knowledge sharing, and development of standards and methodologies. For COEs to gain acceptance within an organization, they must be given a clear mission and then provide demonstrable value to the business units. Like SSCs, COEs have many variations and should be implemented to meet an organization’s individual legal needs. COEs can be centralized at the enterprise level, within business segments or in the form of smaller communities of practice.  

This is a big change — what is the best way to bring the shared services vision to life? 

The deployment of a shared services team can represent a big change from a cultural and resourcing perspective. A strong business case that clearly illustrates the overall benefits to the organization and the impacted resources will establish a solid foundation on which to build. From there, internal socialization of both project goals and project approach is key, although a methodical change management and communications plan is equally important to determine the right messaging at the right time. Finally, a flexible, phased approach to shared services implementation will allow for adjustments as needed.  

The views expressed by the author are not necessarily those of Ernst & Young LLP or other members of the global EY organization. 

EY member firms do not practice law where not permitted by local law or regulation. Ernst & Young LLP (US) does not practice law or offer legal advice. 

Co-authored by: 

Christine Sanz, Senior Manager, EY Law – Legal Function Consulting, Ernst & Young LLP 

Melissa Miller, Senior Manager, EY Law – Legal Function Consulting, Ernst & Young LLP 

Legal operations professionals are the cornerstone in any corporate legal department with wide ranging impact across an organization. They are the process visionaries who make sure the legal work gets done on-time and on-budget, that the right stakeholders are included, risk is identified and mitigated, and that the best technology and service partners are tapped to make everything run smoothly. 

When it comes to working with outsourced service providers from managed services or alternative legal service providers (ALSPs), there is both a science and art to managing the vendor relationship to extract maximum value.  Done right, the outsourced relationship can bring tremendous support and expertise to the legal operations function as well as other departments and external law firms.  Handled poorly, the outsourcing effort can fail, creating unnecessary risk, reflecting negatively on the legal operations team and other teams within the organization. 

So how can legal operations pivot to extract maximum value from its outsourced service providers and ensure success?  By focusing on five key areas including Building Trust, Communication, Metrics and Reporting, Active Engagement, and Honesty. 

Building Trust

If trust cannot be established between legal operations and the outsourcing provider, the relationship is doomed; trust is a two-way street.  The outsourcer must consistently and predictably provide excellent communication, quality work, and accountability with proper metrics and reporting to back it up.  All of this instills confidence in their services.  However, the legal operations person also has to become an internal advocate for the outsourcer, someone within the company who is committed to their success. Change can be frustrating so legal operations must ensure that all of the internal stakeholders remain informed and involved as the relationship grows. 

Whether it’s a one-off project or a long-term managed services contract, the legal operations professional has the power to be a champion of the outsourcing effort.  Legal operations often has to make the case for outsourcing, to show proof of concept, anticipated value, and a vision for how it can work best.  There may be some initial resistance and objections at the company, and a preference to use in-house resources.  Legal operations needs to be vocal about the reasons and benefits for outsourcing in order to overcome and address concerns. Service providers need to be very aware that their champion will also be the person taking the brunt of criticism when partners are not performing up to expectations, so their goals must include supporting that champion proactively and substantively wherever possible.

At the outset of the relationship, the provider needs to get connected to the right people and necessary information.  Their client contact within legal operations must help get them what they need to get them off to a flying start.  When both the client and the outsourcing company trust each other and have one another’s backs, the relationship really takes off. 

Legal operations people working at large organizations often face a long process to get an outsourced vendor approved for a Master Services Agreement.  Therefore, it behooves them to support the services provider so that they are able to leverage that resource to the hilt once they finally have the agreement in place.  The company doesn’t need multiple vendors if it makes the most of the ones it has vetted.  Once vendors are approved, give them the training, information, and access they need to succeed.  Document the process with playbooks, briefing documents and workflow maps to establish clarity and uniformity.  Ensure that the company’s legal operations team and in-house lawyers are on hand to provide quality control at key junctures.  Any changes in process, even slight modifications, need to be checked and approved.

Communication

Communication with outsourced providers is more than emails, conference and phone calls – it’s a mindset and modus operandi.  The communication flow must be immediate and mutual between legal operations and the external resource regardless of the information being shared.  This includes sharing good news, relaying bad news, or discussing a process change.

From a troubleshooting standpoint, if an issue or problem arises, the outsourcing company should notify the client immediately and vice versa.  By definition, the outsourcing company has one degree of separation from the company itself, so delayed notification can cause the issue to get exacerbated and potentially more out-of-control.  Communicating the problem promptly and clearly allows for a solution to be devised so resolution comes more swiftly.  Quick issue notification, communication, and resolution are primary factors in building trust in the relationship and being a true partner.

Communication is also crucial from a billing standpoint, and the onus is on the outsourcing company to keep legal operations contacts informed of the financial status of ongoing projects.  Perhaps the work is clicking along fine but the bills are totaling up much higher than the budget allows – that’s a problem.  Or maybe there is not enough work being supplied by the client and the budget is not being used to its full extent; the outsourcer needs to communicate that, too. 

As a legal services provider, there is value in establishing a client’s preferred method of communication. Important emails can be lost in a busy mailbox and phone calls can go unanswered during a hectic day.  Understanding when a short conversation would be more effective than a flurry of email messages should not be underestimated.

Metrics and Reporting

Any discussion about communication these days inevitably leads to accountability through metrics and reporting.  The outsourcing company must track and provide status updates and reporting to the satisfaction of legal operations and its stakeholders.  At any time, legal operations should be able to ask the provider for status on team size, productivity, bottlenecks, and delivery dates and get a quick, thorough response.  Where physically is the work being done, and is the location secure?  Where are the work assignments coming from within the company, and are they in line with the outsourcing agreement?  Weekly check-ins may be necessary at the beginning of an engagement and then less frequent as the relationship becomes more established.  The more granular tracking and details the outsourcer can provide, the more prepared and forthcoming legal operations can be when reporting on progress to the GC and company executives.   

Tracking and reporting on metrics can provide more than updates and status reports. They can deliver valuable insights into a client’s processes, resourcing, data and help frame conversations around methodology or delivery improvements. One of the first operational tasks in a project should be the mutual agreement of the key metrics required to manage the process and risk. Both teams will obviously have different perspectives, but the core metrics needed by both teams will be very similar.

Metrics and reporting can be enormously helpful from a diagnostic point of view if something goes wrong.  Outsourcing companies have human beings on their delivery teams, and they are going to make mistakes, despite their best efforts.  Discovering these errors and mitigating or eliminating them as soon as possible helps to keep risk low and iron out kinks for a smoother, more flawless process.

Active Engagement

Outsourcing companies cannot work in a vacuum – they need frequent interaction to operate as a seamless extension of the corporation’s own team.  The outsourcing resources must be actively engaged with the client via email but also on calls, especially now that in-person meetings are uncommon and most are done virtually. 

The legal operations/outsourcing partner relationship is ever-changing and it can grow over time to serve the client organization more adeptly.  The more the outsourcer becomes familiar with the company’s priorities, protocols and deadlines, the more successfully it can support the client.  Both sides are equally invested in a quality result, both sides are careful not to waste time and money going down the wrong road.  Ideally, both legal operations and outsourcer are empowered to call an audible if a project is going astray. 

One of the secrets of successful outsourcing companies is the personalities of the people they employ.  Client-facing outsourcing team members must be able to speak up, push back, and earn the client’s confidence.  More passive individuals who are less forthcoming may be highly intelligent or knowledgeable but they are not always well suited to client-facing positions.  The best outsourcing providers have client-facing team members who have terrier-like perseverance and who develop the confidence to speak up at the right time.  These inherent tendencies are improved by empowerment and guidance provided by experienced managers.

Honesty and Transparency

The pandemic has brought about a new level of humanity and honesty in the working world.  How many times has a dog barking or child bringing in a school paper appeared in business meetings over the past two years?  Many of the formalities of business have fallen away, giving people the opportunity to be more “real” and connect on a more level playing field.

Honesty and transparency are essential elements to building strong legal operations/outsourced provider foundations.  This involves the culmination of all the principles mentioned above including communication, metrics and reporting, building trust and active engagement.  Over time, the outsourced provider earns trust through being honest and transparent with legal operations and vice versa. 

An honest outsourcing company will admit when a project is out of its wheelhouse and will not overstate its capabilities. While legal operations may be disappointed at an initial no, this is much preferable to the outsourcing company saying it’s capable and then the project fails.  An honest answer paves the way to a possible solution, and the companies may be able to work together to co-create a solution that benefits both.  Both legal operations and the outsourcing resource must be equally transparent about what each is providing and how they meet in the middle to get the job done right.

Conclusion

Legal operations are in a central position to leverage outsourced providers to bring about successful outcomes.  By combining key principles like establishment of trust, communication, measurement and accountability, active engagement and honest transparency, they ensure that outsourcing relationships pay off and deliver on their promise.  Over time, the relationship will shift from being client and outsourcing vendor to an equal partnership.  When legal operations cultivates outsourced teams which are true extensions of their internal resources, that’s a win-win.

About the Authors:

Clare Chalkley, Robert Daniel and Randi Salzberg are all subject matter experts (SMEs) in their respective fields at Integreon, a global ALSP and managed services provider. 

• Clare Chalkley, Vice President – Legal Services, is based in London and runs managed document review and litigation services projects for Integreon, having previously been a litigation support manager at Clifford Chance law firm and other roles in the field for 25+ years. 
• Robert Daniel, Senior Director and Financial Services SME, is based in the U.S., having previously worked for Bank of America in legal discovery and related positions for 25+ years.
• Randi Salzberg is Vice President, Marketing and Creative Services in Integreon’s Business Enablement Services division. Before Integreon, she was a Managing Director in Marketing at investment firm Alliance Bernstein for 25+ years.

A note from Mike Haven & Betsi Roach, CLOC Leadership. Read the full message.

We enter 2022 primed for growth and impact.

We are living through one of the most challenging, but exciting, times in our history, a crossroads in the development of legal operations. After many years pushing for change, our community has helped drive a wave of investment and adoption that has transformed the face of Legal. Even a historic multi-year pandemic has not stopped the momentum and growth of our movement.

Let us resist the temptation to slow down or tamp down our ambitions. This is no time to stop moving forward. Our organization has always been about solving problems; it is what has made us great, and what defines our community. Collectively, we have innovated powerful new ways to work smarter, faster, and with greater scale and focus to the delivery of legal services. We will keep pushing in these areas, but it is now time to apply that same problem-solving power to the stubborn challenges of equity and access.

We can, and must, make our industry work better for everyone. We have to look at access at all levels, particularly when it comes to the pipeline of young people entering the field. We have to make Legal more compelling and accessible for a new generation of diverse professionals. When we bring more diverse candidates into our space, we shift entrenched systems and culture in deep ways. Let’s work together to find ways to push Legal forward in this, the most important challenge of all.

As we move forward, our problems are only becoming more complex. To solve them, we have to reach across the ecosystem. We have to stop relying on our own limited toolsets and start pulling in other experts and voices. One of our clear focus areas for 2022 is to continue to engage with law firms, legal service providers, technology companies, and law schools. No one has all the answers. Almost everything requires a combination of skills and approaches. We will keep broadening our community to find the ideas, expertise, and perspectives we need.

Our progress is a testament to the strength of this community. The real power of CLOC lies in the ingenuity, determination, and collaborative spirit of our members. Our greatest assets have always been the capability and generosity of our people. We are honored to have the opportunity to help steer this incredible organization. Thank you for your support and trust. We look forward to an amazing 2022!

A survey of this year’s digital trends in over 800 global legal teams.

Organizations all over the globe rely on legal resources to manage a majority of contracting responsibilities. To keep up with the demand, in-house legal teams are looking for innovations that can improve today’s contracting workflows with an eye toward interoperability and automation. As the speed of business and the need for functional remote work increased in 2020, it became even more important to solve modern agreement problems in a way that set the stage for sustained, scalable digital transformation.

To study the way modern, in-house legal teams operate, DocuSign conducted a survey of more than 800 global corporate legal professionals, focusing on their contracting responsibilities and the tools they use to manage their work. This report summarizes the research, highlighting key trends in the way legal teams prepare and manage contracts today. You’ll also see predictions about the future of contract automation and details of the robust, interconnected contracting processes that legal professionals are central to building and implementing.

It’s 2021, and AI is ready. Are you using it?

The last two years have been a doozy with an unprecedented curveball, within a tornado, within a hurricane for businesses. Survival depended on adapting to the new norms COVID presented, supply chain disruptions, regulatory changes (and then invalidations), and customers’ changing expectations. 

What’s in store for 2022? 2023? 2030? I have no idea, but as a co-founder and EVP of Evisort I’m going to prepare my business and team to be as agile and streamlined as possible, so we have the best chance of tackling any challenge that comes our way.  

Intelligence and adaptability are critical. Businesses will either be left behind by digital transformation or embrace it to keep their competitive advantage.

Business intelligence is critical to adaptability. Unfortunately, many businesses have a massive intelligence blind spot – their existing contracts. Existing contracts are the most important intelligence source in a business – contracts are data and data is the lifeline of a business.

The blind spot is getting bigger and feeding a long-term problem: when companies digitize their Contract Lifecycle Management (CLM) processes for generating new contracts they replicate their existing workflows without fundamentally improving them. This means sub-standard terms, pricing, and other trends get replicated in every single new contract. Pouring salt in the wound, businesses waste time and money negotiating the same clauses over and over because they didn’t analyze their historical contracts and learn from past negotiations. 

Change is here and it’s due time that Legal, Legal Ops, and any team that works with contracts demand more from contract management technology.

Contracts are data. And because it’s 2021, your company has either started or has already transformed most of the business to be digital and data-driven. 

Except. For. Contracts. 

In-house legal departments have historically been viewed as a cost center and legal and contract management tech have lagged behind software for profit centers like sales or product. 

Not. Any. More.

Legal and Legal Ops should expect to survive and thrive on the data buried in their contracts – instead of resorting to one-off anecdotes. Contracting teams should have access to analytics and insights in real-time. It should be as simple as uploading contracts to the cloud and using out-of-the-box dashboards that instantly break down your contract components and allow you to filter and drill down into vital information business leaders need, such as: what percentage of our contracts have a termination for convenience and when do they renew? Which of our contracts have non-standard negotiated language we should be aware of? Can we put their logo on our website?

Even more importantly you should be able to easily show the value added by teams drafting and reviewing contracts by automatically measuring and reporting on backlog trends, aging contract drafts, and transaction cycle times.

We need a new standard. That standard is Contract Intelligence.

For too long, AI has been a buzzword in legal tech – or any tech company for that matter. You’d be fired from marketing at a contract management software company if it wasn’t on your website. Vendors are vague and oversell clients who buy platforms only to find that they had to train AI algorithms themselves with frustratingly low levels of success.

AI has not been well defined in this industry for a decade, so let me be very clear.

In 2021 you should be able to upload any document to your contract management system and automatically track clauses, dates, fields, and metadata that can be easily searched and visualized in seconds – without lifting a finger. Furthermore, you should be able to access and analyze all your contracts and data – be it third-party paper or terms unique to your business allowing you to optimize future negotiations for efficient execution – learning and improving from the data-point derived wisdom in your historical documents.

We all need to start demanding Contract Intelligence from our legal tech vendors. It has three critical capabilities:

• Intelligent Contract Lifecycle Management – streamlined, data-driven deal-making tools and workflow processes that make contract request, generation, redlining, and approval workflows transparent, efficient, and optimized for execution    
• AI-based Contract Analytics – answers to your most important contract questions and ability to visualize and report on vital contract info and key performance metrics without manual data entry, data migration, or IT involvement    
• Central and Secure Contract Repository – a single source of truth for all contracts that works with your existing systems, without migration or IT involvement

Contract Intelligence enables businesses to learn from the past to improve the future. Legal, Legal Ops, Sales, Procurement, Finance, and IT teams can now instantly turn contracts into searchable data, answer any question about existing contracts, and optimize new agreements for negotiation and execution so you can make better, faster, less risky deals.

This isn’t pie in the sky thinking.      

Businesses are transforming their contracting with AI today. When COVID-19 hit, NetApp, a provider of data management and solutions for the cloud, was challenged with hardware and supply bottlenecks. To respond to these unforeseen challenges, NetApp quickly needed to understand which customers would accept partial shipments and what recourse it had with key suppliers across most of its product and service lines across the globe. Agreements weren’t historically tagged with “partial delivery” terms and there were tens of thousands of contracts. Fortunately, NetApp transformed their contracting processes with AI and was able to search across all agreements to quickly locate specific provisions, enabling      them to invoice for partial shipments while maintaining customer satisfaction. Within a week, NetApp was able to run a search on partial shipments across their entire contract repository—cutting 24,000 contracts down to 600, with 90 different variations of partial shipment provisions.    

Okay, but what about creating and optimizing new contracts?       

McKinsey estimates that AI technologies could potentially deliver up to $1 trillion of additional value      annually for banks.^[1] Bank of New York Mellon, the bank of banks, uses AI to review new custodial agreements based on their internal rules, guidelines, and processes. They then use AI technology to automatically create customized initial contracts and digitally coordinate with the necessary internal stakeholders for approval of special terms. BNY Mellon then takes it to another level and uses AI to automatically flag non-standard language and alert the necessary legal team members to automate the decision-making process, allowing attorneys to focus on more strategic tasks. 

Now is the time to transform and gain a competitive advantage

Law is changing, capabilities are available today that no one could fathom even five years ago. Today it’s exciting to use these tools, but tomorrow, it will be negligent not to. You need to go beyond digitizing your contracts and processes, you need to datatize them.

^[1] https://www.mckinsey.com/industries/financial-services/our-insights/ai-bank-of-the-future-can-banks-meet-the-ai-challenge#

May I ask, what have you actually built and what did you learn that might help us?

Thinking of innovation as only big tech-driven initiatives misses a critical element of the realities and effort required to produce innovative outcomes – controlled experimentation. Firms that can de-risk their innovation efforts while accelerating their progress gain a competitive advantage regardless of the ultimate commercial success.

Summary

This case study shares the story of Koenig, Oelsner, Taylor, Schoenfeld & Gaddis, PC (“KO”) and its efforts to test and build a new contract management service that would complement its legal work.  Their effort earned recognition from the Corporate Legal Operations Consortium in 2020 when the firm was recognized for their Legal Innovation in Operations (LIO) submission. 

KO’s experience in prototyping and building contract management as a service offering holds instructive value for legal operations professionals as well as law firms. For in-house teams, the KO story offers insight into how to empower outside counsel to direct innovation efforts toward initiatives that matter most to their legal function’s business customers. For law firms, this story provides a case study on the steps that can be taken to position a firm’s innovation efforts for the maximum chances of commercial success. 

Dialogue questions

To spark business ideas and create meaningful yet de-risked progress towards innovation, in-house teams can use the following questions to guide a dialogue with their law firms on how to collaborate on and instigate experimentation:

1. What can we, as one of your many clients, do to help de-risk your attempts to build something new in terms of a service, product, or business?
2. Recognizing that “failure” is not commonly sought after or celebrated within the legal profession, what can we do together to begin shaping the narrative that experimentation is okay and should not just be tolerated, but actively sought?
3. How can we help you build something that serves many clients, not just us?
4. How are decisions made in the firm in terms of shifting from talking about doing something to actually doing something that could lead to innovation? Would you say this is an effective an efficient process? Why?
5. Would you be willing to partner with one or more of our other providers to build and test a new offering?

Narrative

KO’s contract management service was developed in response to insights formed in relation to KO’s two primary practice areas: corporate transactions and commercial transactions.

“Oftentimes on the commercial side, we never actually see the final version of the contract,” explained KO partner Ben Oelsner. “Additionally, we do a lot of M&A work on the sales side, so we help our clients get organized for the sale of their company. Buyers conduct due diligence on those companies, reviewing all their contracts, and we assist in that work. Frequently, the client is scrambling to get its contracts organized for the other side to review. We help clients with this task but we also try to help them get organized before they are involved in an M&A transaction.”

Oelsner had worked with a number of companies that employed in-house contract managers and understood their value to the contracting process. He saw the opportunity for the firm to offer contract management as a complimentary service to complete the scope of their offerings to clients. 

Development

Oelsner teamed up with industry advisor Bill Mooz, as well as Andrea Policky, a veteran in-house contract manager who KO hired to help lead this initiative. The three had discussions about what would be required for KO to actually offer a contract management service. Their discussions quickly led to planning, and before long, they started approaching KO’s existing clientele about their nascent contract management capabilities.

They spoke with clients about KO’s ability to come in, assess where the client was in their contracting process, help them figure out what they needed to do to improve that process either from a technology perspective or from the perspective of staffing, training, or process design.

The approach that KO took to developing this service is one that emphasized action over discussion and prototyping over planning.  In short, they experimented to learn rather than build first and hope things worked out. To do this, Policky went full time with KO, and Oelsner and Policky collaborated to develop proposals for clients on an ad-hoc basis. The thinking was “this is interesting to us. We think it will help our clients. We have the capability and a client that has requested our help. Let’s just go for it,” said Oelsner.  

Oelsner’s view of the initiative was that it was low risk. “The thing for me was, you can talk about this for a long time, but you have to start doing something. That’s really what I did – talk to the partners and say we’re going to do this. What’s the worst thing that happens if it doesn’t work? It fades away. We’re in a pretty good position to try this. There’s not a lot of downside if it doesn’t end up working.”

Their focus was simply creating and testing out a prototype – not going into full bore development and implementation. Because of this approach, the contract management prototype did not require a fundamental permanent change to the operating model of the firm, nor did it require a significant investment of cash. 

Learnings from Commercialization

Once they had a prototype, KO began stress testing it with eight clients. They were learning and refining while generating actual revenue. In the process of doing this, KO developed several key learnings about their service.

1. The sales cycle was long

The sales cycle for getting people to commit to a contract management service provided by a law firm was long. “There were several clients that thought it was an amazing idea but getting them to actually commit to hiring me to do those services for them, it was a little bit more of a challenge,” explained Policky, “so the sales cycle was just longer than we had anticipated it was going to be.”

2. The positioning of their offering within the market was suboptimal

KO defined a profile for their target customer. “We felt like startups weren’t going to be the right type of clients for this initially because they’re not ready yet,” explained Oelsner. “You could tell them about this service, but they’re not going to need somebody for that work because they don’t really have a lot of contracts or deal flow. The companies who had gone through a round or two of financing, depending on where they were in selling their products, were likely a better target for our service because they would have started to feel the pain from a lack of contracts management.”

Targeting later stage companies came with several consequences. First, later stage companies are more likely to get acquired, which runs the risk of disrupting the type of long-term business relationships that KO was hoping to establish. Second, later stage companies have the resources to hire in-house contract talent, which placed a greater need for KO to articulate why their offering would be superior to hiring someone in-house.

3. The pricing was a sticking point

KO provided clients with an initial assessment on a fixed fee basis. After the assessment, everything was done on an hourly basis, as is conventional for law firms. “It was harder for companies to find the funds to support an undefined amount” explained Policky. “If it wasn’t on an hourly billable rate and instead on a fixed fee basis, I think that would have been easier for clients to swallow”

In general, the monthly price came out to around $5,000. “The key for the service,” Oelsner explained, “was making sure that they understood exactly what we were going to do for that amount because that fee did not include the legal services such as the creation or negotiation of the contract.”

The benefit of prototyping and experimenting is that it gave KO a way to measure the upside and downside of continuing the development of this solution. Ultimately and based mostly on the reasons above, KO chose not to mature the contract management service beyond the prototyping phase. Policky and KO parted on excellent terms, and Policky returned to doing legal operations in-house. However, Policky feels that her time spent working inside a law firm has enriched her perspective and capabilities as an in-house legal operations professional. “Being part of building something like that at KO was incredible. I learned so much. And now, I have that much more depth to my experience because I now have an appreciation and understanding for both sides of the coin.”

Most of KO’s investment in prototyping the contract management service was recuperated by the revenue that it generated. In other words, it was truly low risk. The main benefit of the experience is that it generated many insights and lessons learned that will pay forward for other services the firm may decide to prototype and test. As Oelsner predicted, the downside risk was very limited, and he is happy to have gained this valuable experience.  

Future Options

Oelsner still believes that there is a market for an outside contract management service, but that “it has to be a separate business. It really shouldn’t be the province of a law firm to do this because of the nature of what businesses do.” 

In other words, KO designed a service but stopped short of actually designing a business around that service. If they had taken those next steps, here’s what it might have looked like.

• They might have developed a B2B marketing competency to educate earlier stage companies about the value of contract management to expand the top of their funnel pipeline.
• They might have achieved greater standardization in the scope of their service, enabling them to design fixed and transparent pricing.
• They might have established a sales team to help usher prospective clients across the finish line in terms of committing to their service.

Each of these initiatives would consist of a series of experiments, and each of those experiments would require time and attention. KO implicitly recognized that these types of experiments would be beyond its operational comfort zone.  

CONCLUSION

The lesson in this case study for firms is that there is a virtue in courageous experimentation. Even experiments that do not commercially succeed still generate valuable learnings, and the risk of downside, if planned well and vetted appropriately, can be minimized. For in-house teams, this is important to consider and discuss with your current law firms. Failing is likely viewed as a risk to the firm and perhaps their relationship with their client. By recognizing the merits and positive outcomes of experimentation, in-house teams can prompt more action and behaviors that drive towards innovative outcomes.

May I ask, would you call your firm a ‘learning organization’?

What a law firm actively seeks to learn as an organization and culture, beyond legal knowledge and expertise, is a signal to in-house teams of its true ability to help their client solve real human challenges – whether legal, business, or administrative.

Summary

This LIO case study shares the story of Kelley Drye and its commitment to learn and apply new thinking and execution methods geared towards addressing unmet needs of their clients.  The firm is building a methodical innovation capability that is informed by client conversations that are unconventional for law firms.  This effort earned recognition from the Corporate Legal Operations Consortium in 2020 when Kelley Drye was recognized for their Legal Innovation in Operations (LIO) submission. 

In 2020, Kelley Drye launched a business solution for one of its clients.  The story of how Kelley Drye developed this offering and where it will take them holds instructive value for law firms seeking to create a culture of innovation as well as for corporate counsel trying to promote value-driven innovation in their outside counsel relationships. Their story provides insights into meaningful innovation efforts that directly benefit the client and can be markers for in-house counsel to seek out when analyzing their legal service provider’s value-generating capabilities.

 These include assessing whether their law firm:

1. has designed a structure and culture of problem solving into their compensation model (e.g., innovation hours’ credit)
2. makes cash investments to produce bespoke innovations for their clients
3. directly involves the client in defining, creating and integrating client business solutions
4. has developed and socialized a framework to evaluate, prioritize and execute client solutions

Encouraging your law firm to make similar investments and change their perspective on how firms and clients should interact requires the in-house team to not just sit back and wait for the firm to act. Clients have a distinct role to play. It begins with having a different type of conversation than perhaps the legal team is used to.

Dialogue questions

To prompt a helpful dialogue on the topic of being a learning organization, these model questions are recommended for raising the topic in a polite and non-threatening manner:

1. How does your firm utilize not just legal talent, but its business talent as well, to learn about us and find ways to generate new types of measurable value?
2. What type of professional development – formal or informal – is your firm driving that helps your people become more business aware and empathetic to their clients?
3. What would you suggest is the most effective way for your clients to engage you in a conversation about their business and professional challenges and goals?
4. Do your partners actively and openly embrace having business talent from the firm directly engage with your clients? If so, what have you learned from this that might be valuable to us? If not, how can we help you start doing this?
5. What does the concept of “innovation” mean for the firm and what do you consider its most critical ingredients?

Narrative

More and more corporate law departments look to their service providers to do more than provide expert legal advice. Clients expect their investments in these partnerships to add measurable value to solving their business problems, not just legal problems. For the traditional law firm model, this can be challenging and their efforts to meet this client desire can result in titles, committees and efforts cloaked under the “innovation” moniker.

Kelley Drye has taken a similar yet fundamentally more meaningful path. They didn’t want to just say they were innovative; they wanted to demonstrate it through client outcomes and a clear commitment inside the firm to learning how to increase the likelihood of generating innovative outcomes. They built a methodical innovation capability that is informed by client conversations that are non-traditional for law firms

Background

In 2018 Kelley Drye established KD Skunkworks, an internal working group focused on innovation.  Based on its exposure to the concept of design thinking, in June 2019 KD Skunkworks conducted empathy interviews with five different clients seeking to identify unmet human needs of the actual individuals within the in-house team. The goal of each interview was to identify opportunities to potentially create client value in ways not just inclusive of legal outcomes.  Those conversations generated five innovation ideas that were “pitched” in a firm Shark Tank-style competition. The winning pitch was to be funded by the firm and led to an organized effort to execute on it.

One of those ideas related to the firm client, META Advisors, whose Chief Compliance Officer Dana Kane participated in an empathy interview.  META specializes in post-confirmation administration of bankruptcy estates under plans of liquidation, plans of reorganization and out-of-court workouts. Large commercial bankruptcies can involve claims from untold numbers of creditors.  For each claim, various data points must be updated and cross-referenced, including the overall status, amount, priority level and documentation of the claim. META must also communicate information (including personally identifiable information) to and from creditors, outside counsel, financial advisors, and others.

The key insight that emerged from Dana’s interview was the sense of personal frustration she felt from hours spent reconciling data from different spreadsheets. This was not legal work; it was administrative and costly. A team from Kelley Drye collaborated with Dana to generate ideas on how automation might improve META’s workflow and create some operating efficiency.  This opportunity was chosen as the winning pitch to be executed and funded by the firm.  

Kelley Drye engaged a project manager and technology developer to bring this idea to reality.  After analyzing the existing process, Kelley Drye was able to automate key components of the workflow to reduce error rates, decrease cycle time, and minimize drudgery in the process and in Kane’s daily life. Now, META’s claimants and creditors are able to track the status of claims in real-time.  META is in their second year of using the solution, and recently, other bankruptcy trustees have begun to approach Kelley Drye about adopting the same solution.

Committing to Learn

When KD Skunkworks was started in 2018, Judi Flournoy, Kelley Drye’s Chief Information Officer, approached the firm’s managing partner to ask if the firm would support the idea of giving attorneys billing credit to spend time thinking about solving problems using technology.  He said yes, and that decision has provided Kelley Drye’s lawyers with a meaningful incentive to participate in the innovation-seeking process, all without necessitating any change to accounting systems or the fundamental operating model of the firm.

Since then, KD Skunkworks has matured into a more formal structure within the firm, and in the process taken on a different character.  Initially, KD Skunkworks was an informal working group consisting of technology enthusiasts.  Today it has evolved into the Client Services and Innovation Committee (CSIC).  This is an important milestone on Kelley Drye’s strategy roadmap because it defined a formal protocol for advancing learning and experimentation throughout the firm.  “I really do see a big difference because we have this very nice formal partner engagement with the CSIC at the highest levels of the firm,” explained Guy Wiggins, Kelley Drye’s director of practice management. Kelley Drye’s lawyers and professional staff now have a forum in which they can communicate their ideas and insights for how to make the firm more innovative and competitive, and the firm has a mechanism for evaluating, prioritizing, and executing such ideas.

The other significant change that has taken place is that the CSIC is not limited to technology enthusiasts.  “I don’t have any math or science background,” explained CSIC Chairman Bob LeHane. “In fact, I went to law school so I wouldn’t have to take statistics.” Jokes aside, LeHane takes the responsibility seriously, acknowledging that he faced a significant learning curve in his new role.  But the fact that the committee dedicated to innovation is led by someone that does not have a background in STEM is emblematic of a broader and very positive trend at Kelley Drye, which is that innovation is no longer the exclusive province of technologists.  Innovation is derived from an exploration about problem-solving, and diverse voices need to be present in that conversation from clients to legal practitioners and business professionals.

“Kelley Drye has been around for a very, very long time,” Flournoy explained. “It’s an old New York firm. I would go so far as to characterize all of the innovation-related efforts up to probably the last five years being purely driven by someone like me,” referring to her background in information technology. “Now, what’s happening and what needs to continue to happen is, those changes are being driven by others, which is really important to not only the culture of the firm but its survivability in a very competitive market.”

Focusing on Humans

An area that Kelley Drye has steadily been exploring is design thinking.  Design thinking encourages organizations to focus on the actual people for whom they’re providing services or products.  When you sit down to create a solution for a client’s business challenge, the first question should always be: what’s the human need behind the business challenge?

“What we’ve heard from clients over the last few years,” explained Flournoy, ”is that they don’t care about what we’re doing with innovation, what they care about is its impact to them personally, and how we can make things easier for them, more cost-effective, help them solve a business problem. That’s what they care about.”

Design thinking is a set of principles and processes that facilitates Kelley Drye in identifying, understanding, prioritizing, and ultimately fulfilling the needs of their clients.  “The design thinking methodology for us was instrumental in helping us get to what we wanted to focus on and then how to go about it,” said Flournoy. “The empathy interview component of design thinking was really important, particularly around META. It asks questions like ‘what frustrates you, and how might we eliminate that?’”

While design thinking is ultimately about identifying potential solutions, special emphasis is given to properly defining problems and their human roots.  To this end, the design process requires developing a human-centric understanding of stakeholders, which often necessitates asking questions about emotions, contexts, and processes.  Some lawyers might feel uncomfortable asking questions like these because:

• they are outside the scope of traditional legal conversations, or

• they perceive that it would violate some norm of privacy, or

• they are reluctant to ask questions they think could be perceived by the client as not knowing how to do their job or understanding the client’s needs.

Part of what makes Kelley Drye distinctive is that they are comfortable with and even excited about engaging in conversations like these with clients.  

CONCLUSION

Kelley Drye is evolving the scope of their services, and it’s not an accident.  They have become a “learning organization” that seeks to complement its legal expertise and brand with a distinctive problem-finding and solving capability. This is the logical consequence of specific decisions that were undertaken to unlock the potential of everyone at the firm, namely:

1. Creating a forum for submitting, evaluating, and executing innovation ideas

2. Providing a financial incentive for lawyers to participate in innovation projects

3. Intentionally pursuing ‘out of the box’ conversations with clients

Law firms that want to promote a culture of innovation can learn a valuable lesson from Kelley Drye.  The mere fact that an idea is approved by a committee does not mean that it will be successful in practice.  Some ideas will succeed, and some will fail.  But by establishing a protocol for experimenting with new ideas, a set of principles for first deciding which experiments should be run, and an organizational memory for studying the outcome of each experiment, Kelley Drye is maximizing their chances of discovering commercially successful innovations.

May I ask, how you incentivize your law firm workforce?

Thinking of pricing as only a financial exercise grossly undervalues the power it has to fundamentally shift the behavior of people of a legal team – both in-house and law firms.

Summary

This LIO case study shares the story of Husch Blackwell and its commitment to reengineer its compensation and incentive model. Over the last several years Husch Blackwell completed an overhaul of the incentive structure in their compensation plan. The novelty of this new incentive structure went on to earn recognition from the Corporate Legal Operations Consortium in 2020 when Husch Blackwell was recognized for their Legal Innovation in Operations submission.

Husch’s new incentive structure enables them to price engagements in ways that most firms simply cannot match – not just in terms of the financial components but more so on their approach to drive behaviors directly linked to the client’s personal and business objectives. This has made Husch Blackwell more competitive in the market. Their story offers a valuable lesson for in-house teams as it demonstrates the potential impact that incentive design can have on the success of engagements with outside counsel.

Dialogue questions

To help promote healthy communications around incentives, these model questions are recommended for raising the topic in a polite and non-threatening manner:

1. How does your firm motivate lawyers to work efficiently, identify and work to solve client business problems, and achieve desired legal outcomes?
2. What do you need from us, your client, to help you start, manage, or improve your ability to align the personal incentives of your legal workforce with our business objectives?
3. How are members of your client teams measured on discrete client engagements? Are all matters and engagements treated equally?
4. What levers or options does your firm use to create incentives for all members of a legal matter?
5. Are there incentives you believe would improve our relationship and motivate your people to help us achieve business objectives and legal outcomes?

Narrative

“Our national coordinating counsel team, the Innovāt Alliance, is built around a business model designed to fully align incentives and purpose with our clients. Once we determine the business outcomes our client is trying to achieve, what our role might be in driving those, we then configure the service model and fee arrangement around those desired outcomes,” J.Y Miller, Husch Blackwell Partner.

If you work in the legal department, chances are you don’t have many conversations with outside counsel about how they incentivize their workforce. But perhaps you should.

There can be a sense of taboo around discussing incentives between a client and firm. Clients can make the mistake of thinking that asking about their firms’ incentive structure will offend some norm of privacy. Firm lawyers can make the mistake of thinking that clients would find their firm’s incentive structures to be boring or irrelevant. As a result, the topic is most often left unaddressed, leaving critical and measurable value untapped.

Discussing incentives can be very illuminating. In the worst-case scenario, the firm and client will learn where incentives are not aligned. In the best-case scenario, they’ll discover opportunities to better align incentives, and that is the foundation of a strong business partnership.

A great example of how Husch’s new incentive structure makes them more competitive in the market is their work for SPX Corporation. SPX has exposure to asbestos related litigation. In 2019, SPX appointed Husch as its National Coordinating Counsel (NCC) to drive one of its major portfolios of asbestos litigation. Husch works almost daily with Brenda Godfrey, Assistant General Counsel, Litigation & Claims, of SPX to develop strategic plans, evaluate risk, and manage a number of local counsel across the United States who handle the day-to-day litigation in individual cases. 

A core feature of the engagement is that Husch was contracted to reduce SPX’s defense spend by at least 20% relative to the 12-month period before the engagement through the use of a creative fixed fee arrangement. That commitment is counterbalanced by a set of incentives offered by SPX for Husch to achieve targets within the key performance indicators (KPIs) that matter to SPX, namely, reductions in open claim inventory and indemnity spend. If Husch achieves the target KPIs, then there are paid bonuses.

What makes this model appealing for the client is that it shifts the risk of poor performance from the client to the firm. For most firms, they would consider this risk too great. But Husch was able to accept the risk – in large part due to their incentive structure and the confidence they had in their award-winning business model.

Client KPIs, like those embraced by SPX such as reduction of open claim inventory and indemnity spend, are quantitative measurements. Husch has essentially incorporated these measurements into the incentive structure of their compensation plan. In short, Husch can confidently undertake engagements on terms that are very client friendly because Husch’s attorneys aren’t incentivized based on the number of hours they bill but rather based on their contributions to achieving a client’s desired outcomes, among other factors. Similarly, clients like SPX can be confident that their counsel are focused on outcomes.  As Brenda Godfrey explained, “With Husch, I can direct my attention to the goals we’re trying to accomplish without having to require case budgets or enforce cost controls.”

Husch has now completed its second year as NCC for SPX for this particular portfolio, and the results of the engagement speak to the effectiveness of the model as the performance is judged against the benchmark period.

Long-term Investments

The process of winning this relationship with SPX took 11 months from beginning to end, but the story of how Husch came to this position started much earlier. The foundational work that positioned Husch to win this relationship was five or six years in the making.

In 2015, Husch started another major NCC engagement for a different company, and the magnitude of that task drove them to look for new solutions. “We started discussing the approach to managing these large portfolios and what technologies we had in place,” explained J.Y. Miller. “We got our operations team involved in a number of ways, including looking at our processes and trying to clean them up, trying to be more businesslike. We brought in our IT professionals and outside technology partners who worked with us to design technology solutions that would underpin and drive those efficiencies.”

A great illustration of this drive toward efficiency is the process of checking conflicts. The first time Husch brought on a major portfolio, the conflicts check took them 4 months. The second time took them 4 days due to the incorporation of Robotic Process Automation designed by Husch IT professionals.

“We know some of our innovation efforts are going to require investment beyond a 12-month or 24-month time horizon,” explained Kevin Bielawski, Director of Legal Operations for Husch Blackwell. “Those investments are worth it in the long run. They’re going to make our client service and client experience better, plus put us in a position of competitive advantage so that our partners like J.Y. can go out and tout our capabilities in a very easy way.”

Thoughtfully Designed Incentives

Husch’s previous CEO, Greg Smith, pushed the partners to look long term and challenge themselves to break free from the status quo. “We convened a large, diverse working group to analyze the most successful teams in our firm and really study what drove their success. Working with consultants, we also evaluated lessons from successful teams in other industries. We brought all this information together, and, as a result, we completely revised our partner evaluation and compensation system to focus on incentivizing the positive behaviors that lead to client success. This model now also includes our associates,” Bielawski explained.

He further stated, “We spent a lot of time developing metrics around positive behaviors because we know and recognize that if we drive those positive behaviors, we will drive success long-term for our clients and firm.”

Husch made several key changes to their incentive structure.

• They no longer offer bonuses for simply hitting billable hour targets. They have expectations and targets, but they don’t want attorneys to focus on billing hours. Rather, they want them to focus on contributions that lead to client success (such as the KPIs measured in Husch’s NCC relationship with SPX) so they remade their entire system around that principle.

• They eliminated origination credit. “Origination can create a lot of negative behavior,” Miller explained, “and it was behavior that we didn’t think served our clients or served our people, so we eliminated that from our model.”

• They now incentivize teamwork and collaboration, which is measured in part by proliferation or true collaboration among firm lawyers. “One of the goals that we have is to earn trust so we can bring in other partners to the client relationship and expand it,” said Miller.

• They also incentivize client service, innovation, and commitment to diversity, equity, and inclusion.

“A true commitment to core values requires you to incentivize those values in your compensation system. If it is truly important to you, you must make it the centerpiece of how you reward your people. That’s what we’ve done at Husch,” Miller declared with an earned measure of pride.

Challenges

Change is always hard, and this was no exception. Key challenges in adopting the new incentive structure included designing, communicating, and integrating the new metrics into the firm’s operating model and culture. For the SPX engagement, it also required refining relationships and expectations of engaging local counsel.

“It took a little time for folks to get their arms around some of the newer metrics,” Bielawski remarked. “It was new, and so that newness took some adjustments and getting used to.”

“There’s always some level of resistance to every change,” Miller said, “especially in a law firm. One thing that we’ve learned in our firm is that if we take the time to really do our due diligence and communicate effectively, then our partners are willing to take those leaps of faith. We do our research, present it to our partners, give them time to think and respond, iterate based on their feedback and then come back at it again in a revised version. By earning our partners’ trust, we are permitted to vault our firm forward in new ways.”

CONCLUSION

Husch Blackwell made robust changes to the core operating model of their firm. They took a studied approach, hired outside experts, and adopted a long-term mentality. They developed a consensus among their partnership to make a bold change that came with real risks. The result is that they are now reaping real rewards in the form of enhanced competitive advantage in the market, increased matter flow, and stronger client relationships.

Advice on building an organization that can adapt to new challenges

Two popular sayings in the legal world are 1) people, process, technology, and data are what make a firm unique, and 2) change is constant. So how do those two elements work together? How can you ensure that you have the right people, processes, technology, and data for today’s constantly changing world?

Shearman & Sterling, a 150-year-old law firm, recently asked themselves this question as they undertook a massive data analytics project, as shared in a recent Ask the Experts session for CLOC. The firm had one billion documents, only 4% of which were in their document management system (DMS), that they needed to quickly get into ship shape to meet new compliance standards. By the end of the 18-month project, not only were all documents in an easily searchable cloud repository, but the firm was also able to roll out features that are beneficial to the client like partner dashboards, more accurate forecasting, and revenue models for value-based pricing.

Here’s a look at their pillars of people, process, technology, and data, that empowered their success as a data-driven firm.

People

“The people aspect cannot be underestimated,” said Meredith Williams-Range, Chief Knowledge and Client Value Officer at Shearman & Sterling. “You have to bring your people along in your [change] journey. Your processes won’t matter. People are your culture and culture will trump your strategy any day of the week.” In the Shearman & Sterling’s case, that meant truly making the initiative firm-wide, as opposed to the responsibility of a certain team, with top-down support from the C-level executives.

Part of the success of the people aspect can be attributed to hiring and involving the right people. Lawrence Baxter, Shearman & Sterling’s Chief Technology Officer, touts the strategy of balancing IQ, EQ, and AQ — that is, intelligence, emotional intelligence, and adaptability — in new hires. (A former marketing executive, he has seen his share of companies go under because they are unable to adapt). He also likes to create teams with equal proportions of, 1) veterans with strong institutional knowledge, 2) tenured employees who are willing to learn new skills, and 3) newer employees, especially those from other industries, who can bring in fresh new ideas.

The success of the project also depended on a fundamental understanding that this effort was not about replacing people with machines. As Williams-Range explained, “It’s simply about adapting the processes that we have and enhancing those processes because the amount of information and the amount of data coming at us as lawyers is growing each day. The technology holds the hand of the lawyer.”

Process

In terms of process, Williams-Range believes there’s no one right place to start — the important thing is to simply start. For Shearman & Sterling, the beginning point was understanding clients and regulations at a global scale. Baxter also recommended asking clients what’s working and what isn’t, and using those answers to drive internal change, since what the client wants carries weight. Of course, unforeseen circumstances can also drive change — Baxter said he has seen years of innovation in the past few months.

The team agreed there are no shortcuts when it comes to process improvement. As Glenn LaForce, Global Director of Knowledge & Research at Shearman & Sterling put it, “You can’t shortchange the pre-work that goes into getting to what we call the sexy stuff, all the cool analytics projects. You have to go through, you have to look at your data and be sure it’s clean and in order, make sure you have the right governance behind it and make sure you have the right policies behind it, and that takes time.”

A whole-firm initiative also meant involving the whole firm. The company created a multidisciplinary data steering committee to get an understanding of how each part of the organization was using data and the downstream effects of making any changes. How will a change to a process in HR affect the DMS in eDiscovery? How should workflows be adjusted for the unique needs of finance and the research team? How do you ensure there’s an audit trail?

For Jeff Saper, Global Director, Enterprise Architecture & Delivery Services at Shearman & Sterling, a lot of the process work comes down to reducing complexity. “We create complex environments and at the end of the day, they need to be simplified,” he said. However, this process of simplifying and streamlining cannot compromise compliance, regulatory processes, or confidence in your work.

Saper and LaForce also stressed that failure is an important part of the process and should not be viewed as a negative — if it happens within a development environment. Finding processes that do not deliver value is just as important as finding ones that do. The important thing, they agree, is learning how to adapt and move forward.

Technology and Data

Again, when evaluating which technology to use, the question ultimately comes back to what benefit will the client receive. For example, Shearman & Sterling decided to move their DMS to the cloud. However, as Saper pointed out, “It’s not about cloud. It’s the agility of what we can do to make things work faster or leaner and hopefully have a better return for our firm.” People wanted to be able to access data anywhere, on any device — a desire that was certainly fast-tracked by the COVID-19 pandemic — and the cloud enabled that.

Similarly, the firm found success in using established technology in new and different ways. For example, the firm used DISCO eDiscovery to sort through and classify emails. Using the platform’s artificial intelligence capabilities, the team was able to classify some 30 million emails in 12 days.

The team developed a clear strategy around who they would partner with to find the right technology. “We’re never going to be a firm that builds technology,” said Williams-Range. “We have talented lawyers and that’s our sweet spot, but we need to provide the right technology and the right system to our people to be as efficient as possible to deliver the best value to our clients. What we do is we look for those partnerships that are going to really work with us.” 

As someone who spent 16 years on the technology vendor side and has seen a lot of finger-pointing, LaForce emphasized the importance of looking for partners as invested in the success of the project as the internal team is, who have governance procedures and skin in the game. “Otherwise, they’re just selling us a product,” he said.

Baxter also noted that the legal landscape has become complicated. A service provider you are in a joint partnership with on one proposal could be a competitor pitching against you in another matter. Cultivating a friendly relationship throughout these complicated dynamics is an art form that will serve law firms well.

Parting Words of Advice

Ultimately, the work of digital transformation is never done, but with the right people, processes, technology, and data in place, the Shearman & Sterling team feel confident they can tackle new challenges that come their way. Their advice to others looking to make the leap? “Just start somewhere,” said Williams-Range. “It can be overwhelming, but just start.”

“Change is not the devil,” added Saper. “It’s ok to continue on a journey as long as you do it safely and securely within compliance. We’re in a different world and law firms have to adjust to it.”