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Thinking about “A calculation of value added by a law department”

According to Rees Morrison’s Law Department Management Blog, some legal departments claim that they are saving their companies millions of dollars per year by comparing their internal hours spent on matters to the billings they would have theoretically received from outside counsel for that same work.  Inside counsel work for less, evidently, so the differential in spending can be quite large. 

Rees points out a number of challenges to this approach to value estimation, including asking whether or not the inside counsel’s  “prices” include the full allocation of overhead, and whether inside counsel are actually performing the same types of work, and so on.  Challenges aside, billable hour comparison is a perfectly legitimate way to measure the value of a law department, though that value can also be assessed in a much more strategically compelling way. 

A legal department is, or at least should be, far more than just an alternative to an outside counsel law firm.  The General Counsel, and the department that he or she runs, has a huge responsibility for risk management that an outside firm hardly ever assumes.   The Directors of a corporation are tasked with a fiduciary duty to protect shareholder assets from risk.  As a corporate officer, the General Counsel is responsible for assuring that shareholder assets are as well protected as possible from legal risk, and in some cases, regulatory risk.   The GC must assess legal risks and take actions to mitigate those risks, usually in the form of contracts, intellectual property processes, and litigation.  At stake, in some cases, is nothing less than the asset value of the whole corporation! 

The outside counsel firm is typically a specialized tool used in the realization of these risk mitigation strategies.  In many cases, the outside counsel firm has specific expertise that is not available inside the legal department, so it is a symbiotic relationship.  However, from the perspective of shareholder value, the legal department plays a unique role that far transcends the simple providing of a billable service. Legal departments should not sell themselves short in their assessment of their value to the corporation.

Updating Our Insurance Claims Litigation Solution Framework

The recession of 2008-2009 has put the insurance industry in a three-way headlock.  The economic slump has resulted in an increase in both real and fraudulent claims.  Operational budgets, including claims defense, are under intense scrutiny and facing cuts across the board.  At the same time, investment returns from the stock market and real estate, two staples of insurance float management, are off 20 to 30% from the beginning of 2008.   It’s harder for an insurance company to earn a profit today than it has been in a generation.

For claims managers, it is quite a challenge to have to handle more claims and detect increasingly common fraudulent claims while simultaneously cutting back on costs.  To make things even more stressful, there is also pressure to reduce losses in this more litigious environment.  For every claim that looks as if it is going to go into litigation, the claims manager faces a set of complex resolution choices that are more fraught than ever with risk to the company’s overall financial performance.

To help our insurance clients manage these forces better, we are expanding the scope of our Insurance Claims Litigation Solution Framework.  The framework, based on the TeamConnect platform, has been in use at major insurers for more than twenty years.  The new edition of the framework includes upgraded capabilities for litigation trend analysis and fraud detection.  It’s designed to provide claims managers with accurate, real time data on how claims are being litigated across a large claims organization. This practical intelligence about claims enables improved productivity for the claims department, which contributes to an improved expense ratio for the carrier. By helping staff attorneys gain a better understanding of effective claims defense practices, as well as detecting fraud, the framework helps narrow the carrier’s loss ratio. 

Mashing Up is Hard to Do

When he talks about mash-ups, Rees Morrison raises a very interesting potentiality for legal operations management software, yet his parallel posts on queuing theory and audit trails question the practicality and desirability of mashing up legal information.  Taken as a whole, the three posts point to important shifts occurring in law department management, as well as the emerging “results vs. compliance” tensions that we all must work under today.

In enterprise software terms, a mash-up is an application, usually rapidly assembled, that combines and correlates information from multiple sources into one interface.  For example, as Rees notes, it would be interesting to pull in data about a lawyer from LinkedIn into a matter management system.  You could even further, of course, in matter management mashing (M cubed) – build a user experience where, for instance, you could correlate information about a matter, resolution of similar matters, outside counsel firms who handled similar matters, and so forth.  Indeed, with Mitratech’s TeamConnect Legal Suite, you have the ability to port matter information to industry standard enterprise mashup products, such as IBM’s Mashup Center.   Okay, ready for the fine print? 

Yes, of course this is possible, but let’s introduce Rees’ second article, which deals with audit trails.  Sure, you can mash away, but you better do it in a way that supports auditability.  Legal staff, outside counsel, and other participants in legal operations management are responsible for handing sensitive, privileged information.  Mash-ups, if they aren’t governed right, can mash a whole lot of data to the wrong eyeballs.  Whatever mashing or Web 2.0 stuff you’re planning in your legal operations (and we hope you are, because we’re heading in that direction, too) – you need to make sure you have the right security and accountability built into your collaboration model. We call this collaborative accountability.

And, let’s not leave out the final piece by Rees that should set the tone for any discussion of mash-ups and compliance.  Queuing theory, which Rees rightly mentions as a concept that ought to be on the lips of every legal department manager, is a mathematical model that explains how quickly groups of people can tackle a flow of work assignments.  As anyone who has called a customer support number knows, where you are in the “queue” of calls determines how quickly your issue will be resolved.

Legal departments aren’t that different, in that they work on a queue of matters that arise during the course of business.  The faster they can resolve the matters, the sooner they’ll get to the next one.  Sounds, simple, and at some level, it is. However, we all know that your matter, that special issue that you need resolved, isn’t just another sausage that needs to be rolled through the grinder, the faster the better.  No, each matter needs proper attention and quality… but in a quick and efficient way. 

Queuing theory, for better or worse, is likely to emerge as a guiding concept in the years to come as corporate attorneys come under increasing pressure to deliver, and document results in quantitative terms.  Any thinking about mashing up needs to be tempered with concerns for auditability and queuing repercussions. Such is the legal operations universe we live in today.
 

Afshin Behnia on Today’s Mitratech Product News

We are very excited today to be rolling out a completely new product line, TeamConnect Express, which is designed for use by smaller legal departments.  The first product in the Express lineup is TeamConnect Express | e-Billing, which offers a standalone e-billing solution that can integrate with other matter management systems. But, the product also comes with a core matter management functionality so it can serve as a complete legal operations management solution for a small department. It’s available on a SaaS basis only.

The TeamConnect Express concept is intended to bring the kind of collaborative accountability firepower that we typically offer to global enterprises into the realm of the smaller legal department and mid-sized organization.   A lot of smaller departments are not being well served by their legal operations management solutions, so we want to make the fruits of our enterprise experience available to them.  In terms of standalone e-billing, which TeamConnect Express e-billing also offers, we are answering a very frequent request we heard from clients who wanted our kind of high quality e-billing offering, but available to integrate with their incumbent matter management solutions.

We’re also bringing out version 3.1 of our flagship TeamConnect Legal Suite.  Based on a lot of customer feedback, our team has really worked on delivering new features for international legal operations, improved usability, administration, vendor collaboration, searches and reporting.    We are now offering best in class support for VAT – the Value Added Tax used in Europe - which can cause a hassle for legal billing review in a worldwide legal department.  This new version, which features credit memo capabilities and support for virtually any non-U.S. tax scheme, also makes it a lot easier for legal departments to sync up with their outside counsel on billing guidelines and make sure that everyone’s in alignment with the billing policies they set up for each particular outside counsel firm.  With custom searches and reports exportable to Excel and PDF, we are trying to make TeamConnect even more user friendly, helping our clients become more productive by letting them use the tool their own way.

In IT terms, we’re extending TeamConnect’s technological advantage on a couple of different fronts.   We’re announcing support for four new servers, including IBM WebSphere WAS 7.0, Oracle 11G, Microsoft SQL Server 2008, and JBOSS EAS 4.3.  TeamConnect now supports more than 40 different server platforms, making it the undisputed leader in platform support.  And, not only that, we’ve doubled the app’s processing speed so everyone can enjoy vastly improved system performance. 

Afshin Behnia
President and CEO
Mitratech
16 June, 2009
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What We Mean When We Talk about Collaborative Accountability

Mitratech pioneered the concept of collaborative accountability.  Collaborative accountability addresses the technological solutions to challenging business situations where a large number of people, often in multiple entities, must work together on highly sensitive information, such as lawsuits.  The challenge is to enable stakeholders to work effectively while at the same time preserving a high level of information security, confidentiality, and accountability for individual actions and communications.  Collaborative accountability applications (CAA) fill the gap between conventional enterprise collaboration tools and emerging specialized solutions for secure, traceable data management. In the former case, holistic capture, availability and traceability of all participative communications, document handling and distribution, time and expense accounting, and workflow are deficient relative to strict accountability requirements. In the latter case, data can be readily organized, found and retrieved, but the human element of collaborative participation is unassisted or ignored. Collaborative accountability applications combine modern group interaction functions with full-scope security, traceability, resource accounting and participation records to meet the expanding needs for high-accountability teamwork in business.  Mitratech’s TeamConnect products comprise the market’s first collaborative accountability solutions. The products combine easy workflow with accessible document management, holistic group communications, ready recall of collaborative content and traceable content handling.

Keeping Your Eye on the Tort Monster

In working with major enterprises on saving money in matter management, e-billing, and litigation holds, Mitratech is constantly focusing on the efficiency of legal operations and the productivity of the General Counsel’s office.  Indeed, research shows that large companies (with more than $1 billion in revenue) spend an average of about $31 million a year on legal operations, for a grand total of about $25 billion nationwide.  Wow, that does seem like a lot of money.  However, at the same time, let’s not take our eyes off the even more gigantic number: the settlements that American firms pay in tort cases. Towers Perrin reports that American businesses paid $252 billion in tort case settlements in 2008!  That’s almost 2% of US GDP.  The point is that while matter management efficiency is critical, the arguably bigger benefit of good matter management is the ability to optimize settlement spending and understand when to fight a case and when to settle – for how much and at what moment. That’s where a lot of the huge economic gains of matter management arise in the legal operations arena.

Yes! On Law Department Benchmarking... Just Do Most of it Yourself

Rees Morrison's latest post on Law Department Managment Blog resonates with me.  He encourages readers not to take to heart a recent suggestion, made in Harvard Business Review, "Don't Benchmark Competitors."  The General Counsel and Legal Department should have some idea of how they compare in terms of spend and performance with other firms of similar size and category.  The good news, from my perspective, is that a lot of the tools you need to do self benchmarking are already baked into the Mitratech product set.  With TeamConnect, you get an Executive Dashboard that shows how your department is doing in terms of budget, on a case by case basis, and more.   Adding our Business Objects integration adds even more potential for insight into your department's key performance metrics. As data emerges on norms and benchmark performance standards across legal departments in your industry, you can use TeamConnect's analytics capabilities to run your own basic benchmarking study.

Highlights of the IQPC Corporate Litigation Exchange

We just wrapped up three days at the IQPC Corporate Litigat ion Exchange at the lovely Lansdowne Resort in Virginia.  It was a lively conference, full of thought provoking presentations and engaging chats with clients and prospects.  We were very pleased to see our client, Douglas Stevens, Assistant General Counsel - Litigation at Aon, describe how his company has pursued a preferred counsel program, vendor scorecards, and constant case assessments to achieve improvements in his department's performance. Joseph Speelman, Associate General Counsel - Litigation for LyondellBasell Industries delivered an outstanding opening session for the event, where he argued for justice, integrity and consistency in defending against lawsuits.  Mitratech client Amazon.com's David Zapolsky, VP and Associate General Counsel, walked the audience through a focused and thorough look at conducting internal investigations, especially those related to HR issues.

Overall, it seems as if most legal departments are continuing to struggle to keep up increased litigation workloads in the recession, though most of the AGC-Ls we talked to are not overwhelmed... yet. 

Hugh Taylor

Welcome to the Mitratech Company Blog

Welcome to the Mitratech blog.  We are looking forward to connecting with you on a  regular basis to share news and information about Mitratech and TeamConnect software.