But We re Not DuPont How All In-House Departments Can Add Value Through Business Discipline Notes on the remarks of Thomas L. Sager, Sr. VP & General Counsel, DuPont Company WMACCA Luncheon on May 28, 2014 You can download Tom s slides for this presentation from http://tinyurl.com/lsgcwen Phase I: Creating the Vision & Selecting the Partners: Convergence o Started in 1992 when company chairman challenged staff to cut more than $1 billion in operating costs! Legal department was inundated with mass tort litigation, with which it was unfamiliar and was using more than 350 law firms with little to no coordination of effort.! Legal department developed key strategy of convergence law firm partnering o Convergence:! Looking at entire firms with depth that meets DuPont s needs in a number of different practice areas not just individual attorneys.! Convincing firms that the relationship is for the long- haul, not to focus on a single matter. Core Principle - Strategic Partnering: The value of the relationship is defined by more than the next case.! Program includes use of ancillary suppliers, including temporary staffing agencies. These providers are not second- class citizens and helped drive big cost savings (in areas such as document review).! The network is a fragile ecosystem. The firms and services providers who participate have to buy into the collaborative nature of the system.
For purposes of this network, you put your competitive interests aside, and do what s in DuPont s best interests. Participants have responded very positively and see participation in the system as a seal of approval that they use to leverage themselves with other potential clients.! Phase II: Vision Into Action: Creating the Model o Strategic Partnering! DuPont s goals were savings, having the best in class working for us, growing our business, operating with outside counsel as a virtual law firm, and having women and minorities representing the company.! Partners goals were being DuPont s preferred providers, having a competitive advantage in the business, growing their business through referrals, and getting recognition for their participation. o Because the program launched with litigation, its first focus was Early Case Assessment.! Make sure the DuPont managers/executives realize that litigation is a business problem that the client needs to own client involvement in the process early and continuously.! Reducing cycle time of litigation results in cost reduction and better results.! Develop a comfort level with evaluating strategies and actions based on limited information. ( Prudent risk- taking. )! Phase III: Action Into Results: Measuring Success o Metrics! Had to have something to demonstrate to senior management the savings the program was generating. Had Arthur Andersen do six months of bill reviews documented $13.5 million in savings
Performance metrics for providers and staff followed, to ensure they were complying with the program (delegating to the lowest appropriate level, utilizing paralegals and temporary staff appropriately, being efficient). Also established a system of recognizing and highlighting best- in- class creative approaches to DuPont s work. o Developed a $2MM Challenge recognizing firms for extraordinary contributions beyond the cases they are handling. o Each year, firms do a self- assessment of how they are contributing to DuPont s objectives o DuPont reviews these submissions and selects a handful that they recognize with a cash award, a trophy and a letter from the DuPont GC. o Note: If you are willing to give bonuses for good outcomes, you can drive the behavior of your services providers and how they assign resources.! Phase IV: An Era of New Leadership: Emergence of Practice Groups o Two important goals:! Ensure knowledge transfer to the next generation of DuPont lawyers and professionals with DuPont s partners.! Use technology to share information among in- house and outside counsel to eliminate duplication of effort and increase collaboration, ensure more consistency in approach. o Also, practice groups allow company to more effectively utilize an attorney s skills across its entities.! Phase V: Global Convergence o Apply lessons learned in US to certain legal issues/matters faced globally
! Found would be most effective in M&A work and patent prosecution! Phase VI: Power of Collaboration o Use of Six Sigma to drive continuous improvement by providing business value, addressing cost and legal risk- management, prioritizing problem solving, and promoting teamwork! Arose from transformation of DuPont from an old- line chemical company into a biotech, science- based company focusing on solutions that will help feed the world.! How could the lawyers contribute to this change? No more perfection need to execute with speed. Increase agility speed, responsiveness, execution. Increase volume of work by leveraging resources. Define value and measure effectiveness Reduce risk Roadmap: o Pick team players o Build trust o Define team goals o Legal Recoveries Program. o Encourage communication o Build a reward system! Had Deloitte look back 3-5 years to identify potential opportunities for legal to work with businesses and functions to generate revenue.! Legal not just a cost center, but potential for revenue generation.
! Recoveries is mostly in- house driven, not through litigation, and through a collaboration with those other disciplines and/or businesses: Message to the business people: You owe it to your shareholders to recoup what you can.! Phase VII: New Reality o Many new challenges new foes, new competitors and the global marketplace, new business models, increased regulation o Message to the lawyers: Your decisions and actions have value to the extent they preserve or enhance business options.! Essential that your time be spent on identifying business critical issues before they emerge e.g., cybersecurity, protecting trade secrets! Essential to possess collaborative intelligence.! Other Pointers: o Use of temporary staffing was an aha moment. Continuing to expand outsourcing of legal support services. o Better paralegal utilization for is now an important part of the legal model (do much of the work on bankruptcy, immigration, trade, for example). o With the convergence model, you need to spend significant time with your firms educating them about your businesses. o For smaller organizations/departments creating a network of law firms as an extension of your in- house department the size of the network is completely scalable. The essential feature is that they buy into the collaboration and realize the benefits they can reap.! Q&A o Imagine post- DuPont, a friend asks you to serve as the general counsel of her $200 million/year company that specializes in software licensing. You would be the first in- house counsel and you would have the support of one paralegal and one secretary. Drawing from your experience at DuPont, what things might you
do right off the bat as you create your new department, understanding that you have less negotiating leverage than you did at DuPont?! There are 3 things he would immediately put in place: Invest in your firms. Develop a network that shares your vision. There is a value to the law firms irrespective of the size of the client. Put an early case assessment process in place. Use temporary staffing law firms don t have to do all the work (e- discovery, document review, etc.). Huge cost- savings possible. o A lot of what in- house lawyers do is ensuring their organizations avoid bad situations and liability. How do you measure these risk- management successes and report them to management?! Tom compiles a year- end letter that includes that information. But for our intervention, this would/would not have happened. He tries to quantify. o How do you promote diversity in the profession, as the number of minority- owned firms has declined?! In the past, some larger companies banded together to place work with minority- owned firms. NAMWOLF now manages this Inclusion Initiative. Companies also recently announced an initiative to place high- end IP work with minority partners and women in majority firms. o Have you had to de- partner with any firms in your network, and how does that go?! Early on, there were a number of partings, as some firms felt the system didn t work for them.! Now, few and far between because the vetting process works well.! Big problem now is posed by law firm mergers. Things suffer because of Cost (firms may think they aren t getting the ROI they want, or they price themselves out of the network) Culture change ( We can do it all mindset, rather than collaborative) Client conflicts o Do you ever go outside the network for matters?! 85 percent of the work stays in- network.
! All new matters are published to the network on a regular basis. They always let network firms make a pitch. But if they feel the network firm is not the best- suited, they will go outside.! Three exceptions: Joint- defense situations. A firm not in the network has a unique capability or expertise Using their minority/women network. o Do you add new firms to the network?! Maybe 1-2 every 3-4 years.! Question: Do we have a need and is it sustainable, beyond a single matter at hand?! Additional Resources o DuPont Legal Model website at http://www.dupontlegalmodel.com o 20 th Anniversary supplement to Corporate Counsel magazine: http://www.mediafire.com/view/?92f42gs18ngslj3 o Resources on ACC website:! Achieving the Common Goal: DuPont s Performance Metrics - - http://www.acc.com/legalresources/resource.cfm?show=106237! Toward a Common Goal - - http://www.acc.com/legalresources/resource.cfm?show=105746! Building the Virtual Law Firm Through Collaborative Work Teams - - http://www.acc.com/legalresources/resource.cfm?show=148134! Competitive Collaboration - - http://www.acc.com/legalresources/resource.cfm?show=1355757! Plaintiff Thinking Can Grow Your Bottom Line - - http://www.acc.com/legalresources/resource.cfm?show=14400! Litametrics: Analytics for Selecting Your Dream Team - - http://www.acc.com/legalresources/resource.cfm?show=1336224! Early Case Assessment Online - How Technology Transforms Case Assessment - -
http://www.acc.com/legalresources/resource.cfm?show=20516! Five Years Into the Experiment: An Evaluation of DuPont s Legal Model - - http://www.acc.com/legalresources/resource.cfm?show=104596! Firms Should Take the Plunge Into Value Billing - - http://www.acc.com/aboutacc/newsroom/accinthenews/firms- Should- Take- the- Plunge- Into- Value- Billing.cfm! Streamling the Business of the Law Department - - http://www.acc.com/legalresources/resource.cfm?show=20689! Affirmative Recoveries Programs: How a Law Department Can Pay for Itself - - http://www.acc.com/legalresources/resource.cfm?show=1334010