In-house ACCess : In-house ACCess: Association of Corporate Counsel : ACC : The In-house Counsel Bar Association

 Process Mapping Primer 

Week 12. Each week via the In-House ACCess blog, follow the promise and pitfalls of forming a new value-based client-firm relationship. ACC Value Challenge steering committee member Ken Grady, General Counsel and Secretary of Wolverine World Wide, offered to profile his selection and start-up process of launching a trademark portfolio management engagement with law firm Seyfarth Shaw. Ken's co-blogger is Lisa Damon, a member of Seyfarth's Executive Committee and leader of the firm's efforts to incorporate Lean Six Sigma into its business. The voice, views and stories expressed by the authors below are their own and not ACC’s. To catch up on the story so far, click here.

The client side

From Ken:

Lawyers are idiosyncratic workers. We do things differently when you compare one lawyer to another, and we do things differently when you compare how we do the same thing from time to time, such as preparing contracts. We justify much of this idiosyncratic behavior by claiming we do bespoke work – each time we do a case, contract or other matter, it is unique. Our idiosyncrasies, however, make us very inefficient.

We have designed the Wolverine/Seyfarth partnership to reduce process variability, using the SeyfarthLean techniques, so that we each become more efficient in providing legal services to our client. To know what Wolverine does today, we will make process maps. A group of two to eight individuals, drawn from both entities, will brainstorm and capture each step in a current process. In the old days, we did this by taping a long piece of butcher paper on the wall and noting each step in the process sequentially along the length of the paper. With all the mistakes, corrections and additions, it was busy when we finished. Today, Seyfarth does the same thing using computer tools that make the result much cleaner. Using the process map, we then (1) simplify steps, (2) weed out unnecessary steps, (3) re-sequence steps, (4) standardize steps and (5) create tools for steps. Each time we change the process, we update the map. We pull from a variety of metrics to measure our improvement – e.g., overall time to complete the process or number of steps in the process.

An obvious place to start with a trademark portfolio is the application process. The client sends an e-mail asking about the availability of MARK for use with a product. The in-house paralegal does a quick screening search and e-mails back saying that it looks like it is available, and asks whether she should do a full search and how the client will use the MARK. The client emails back saying yes to the full search, and gives a partial answer on use. The paralegal e-mails the outside paralegal requesting a full search. The outside paralegal requests the search and sends the outside IP attorney the results. The outside IP attorney has some follow up questions and sends them to the in-house paralegal, who in turn sends them to the client, who in turn responds to the in-house paralegal, who in turn responds to the attorney. Draw a line on your yellow pad and put each of these steps in sequence. Congratulations, you drew your first process map and already see several ways to improve the process. After each iteration, we want to achieve a steady state. That is, we want a defined process that we will repeat each time we do an application keeping variability to a minimum. One benefit of this technique is that you can apply it endlessly to any given process, always finding room for improvement,

We still can be brilliant lawyers. We just exercise our brilliance at the right time in a defined process that eliminates the unnecessary steps that cost our clients more, but don’t add value.

Next: So what is the status of those fee discussions?

The firm view

From Lisa: 

Ken has delved into the world of process mapping in his post this week. Okay, we love process mapping. We use this Lean tool often at Seyfarth -- we use it in very complex matters and those that are more repetitive. We may do it electronically, on a white board or even in our heads -- the trick is that it is a way to think about a problem.

When we first started working on process mapping, there was some resistance among our lawyers (and from me, as well). "Every matter is different," I kept saying. "This is complex litigation. How can we know what will happen?" We also heard: "My M&A work is highly specialized; a process map won't work." However, as we began to refine what we thought what a map could be and how we put it together, our lawyers began to see the magic of the tool. We think of our maps as "guides." We know that every legal matter is different, but we use maps to think through strategy, to organize our resources, to spot inefficiencies and to refine our strategy. They have become for many of our lawyers a true strategic tool as they think through complex issues for our clients. A quick plug: If you want to see how this works in real life, Ken and I will be doing a session at the ACC Conference, where we will have the audience on its feet, using a number of Lean tools, process mapping included. If you are coming to San Antonio, join us for some fun.

Another tool that we love to use to think through an issue is a "root cause analysis" tool. This can really force you to think beyond immediate problem-solving by requiring you to stop, think and ask tough questions. One of the tools, in fact, is called the "5 Whys" because it essentially demands that you probe for the root cause, using a series of "why" questions.

We also use other tools to guide our thinking. We find that other tools -- fishbone diagrams, for instance -- can be useful in working through client and internal issues to help identify the right solutions. I used one in a complex internal investigation last week, and it enabled me to get to an efficient solution that worked at the heart of the matter, not the periphery.

As we have said before, Lean gives us a way to think, a different approach to the practice of law. The tools support the thinking; they allow us to analyze and solve problems more efficiently and effectively. We would love to hear what kinds of tools and disciplines you are using. Let us know.

Next: A fee update and Ken teaches Seyfarth

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 The grocery-strategy connection

 Week 11. Each week, via the In-house ACCess blog, follow the promise and pitfalls of forming a new value-based client-firm relationship. ACC Value Challenge steering committee member Ken Grady, General Counsel and Secretary of Wolverine World Wide, offered to profile his selection and start-up process of launching a trademark portfolio management engagement with law firm Seyfarth Shaw. Ken's co-blogger is Lisa Damon, a member of Seyfarth's Executive Committee and leader of the firm's efforts to incorporate Lean Six Sigma into its business. The voice, views and stories expressed by the authors below are their own and not ACC’s. To catch up on the story so far, click here.

 The client side

 From Ken:

Nutritionists have told us for years that we should develop a strategy before we go grocery shopping. We should plan our meals for the week, deciding what we will have at each meal, and how to do things like sequence the meals to use leftovers. From that plan, we should develop our grocery-shopping list. If you are efficient, you group items on your grocery list according to where the store places those items. When you go shopping, you move efficiently through the store, without backtracking, and you buy only what you need. You don't go shopping when you are hungry, and you don't give in to the temptation to buy those goodies in the checkout aisle.

Lawyers love tasks and checking things off lists, but as much as we advertise our strategy skills to our clients, we often neglect that step ourselves. We don't develop our strategy before we dive into the tasks. Of course, we do use strategies from time-to-time, usually for lawsuits, acquisitions and other transaction events. However, typically, we don't develop strategies for routine work.

For the Wolverine trademark portfolio, Wolverine and Seyfarth are working to develop many strategy tools. These tools will guide our decisions on issues relating to each mark, streamlining pieces of the decision process that today are ad hoc.

We want to make decisions up front about what to do in various situations and know where marks fit into our portfolio before we are confronted with the question. For example, we want to know the relative importance of a mark, and which countries are more important for that mark -- based on factors such as sales levels, related marks and counterfeiting risk. We want to have a strategy for customs surveillance, and a strategy that ties the mark to our domain name strategy. Using these and other strategy tools, we can make decisions quickly. If something pops up on a watch list, we know whether that country is important for that mark, and that guides the decision about what effort to put into a response. We avoid ad hoc decisions that result in our buying things we don't need.

Doesn't it take time to develop these strategy tools? Yes, but not a lot. Once we have the template, the time is in filling out the templates with the assistance of our client. The savings potential is enormous. It can cost thousands of dollars to oppose a proposed registration of a competing mark in one country. If we decided that our mark in that country is not strategically important and we avoid spending the thousands of dollars, then we probably covered the cost of the strategy process for the mark. We avoided the temptation to buy something in the checkout aisle and stuck to our original strategic shopping plan.

Next: Developing a map to the future.

The firm view

 From Lisa:

Ken's entry this week talks about developing a strategy before you act. For us, Lean Six Sigma helps provide the discipline for that step.

When I look at how Lean has changed my life as a lawyer, one of the keys for me has been to develop the discipline to stop and think before returning to business as usual. Ken talks about this step in the trademark area; for us, it is a step we try to use in every matter across the spectrum.

A key feature of Lean is DMAIC, a structured way to look at a matter and plan an approach, a strategy. This discipline asks you to:

·       Define the problem first -- what are you trying to accomplish? What problem are you solving? It mandates talking to your client, standing in his/her shoes and understanding the issue.

·       Next, you Measure. Look at the information/data that you have available (not relying on your "gut" or on the way you have always done something).

·       You then Analyze and Improve -- or implement -- the strategy or the solution.

·       The “C” stands for Control, which is the discipline of not going back to the way you have always done something, not returning to "business as usual."

Using DMAIC as a framework for the way you think about a legal problem can be no more than a quick mental ‘stop and check’ before you begin a project or a longer more involved discussion. The important thing for me is the pause to think, to consider and to plan -- the strategy that Ken talks about.

Lean provides other tools that I find useful in the world of lawyers -- for instance, the concept of looking at the root cause of problems and the tools designed to help you get there are ones that I use frequently -- not just in law, but in my like life as a manager of people. Too often, instead of stopping and analyzing, we jump to a solution -- lawyers are trained to solve problems. Again, Lean gives us the discipline to stop and consider: Are we really solving the root cause, or are we simply putting a bandage on something that won't last or won’t truly solve the issue?

Like effective project management and process design tools, taking time to plan strategy on the front end almost always saves time on the back end. I believe that strategic planning is not a luxury or an option to use only when time permits, but instead, it is a step that should always be integrated in my thinking -- whether I'm planning the trip to the grocery store or planning a much more complex project for one of my clients. I guess that all of those law school professors were right in the first place: Keep your pencil down in an exam until you have planned the answer!

Next: Working with Ken to map out strategy

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The power of project management

Week 10. Each week via the In-house ACCess blog, follow the promise and pitfalls of forming a new value-based client-firm relationship. ACC Value Challenge steering committee member Ken Grady, General Counsel and Secretary of Wolverine World Wide, offered to profile his selection and start-up process of launching a trademark portfolio management engagement with law firm Seyfarth Shaw. Ken's co-blogger is Lisa Damon, a member of Seyfarth's Executive Committee and leader of the firm's efforts to incorporate Lean Six Sigma into its business. The voice, views and stories expressed by the authors below are their own and not ACC’s. To catch up on the story so far, click here.

The client side

From Ken:

First year efficiency gains in the trademark portfolio require that we know our starting point. To know our starting point, we must have our arms around 3,600 trademarks, all moving at their own pace. That requires a seamless transfer of 3,600 trademarks to Seyfarth, and that requires excellent project management. 

Let me talk about the Wolverine side of that equation. There are four of us who day-to-day touch the trademark portfolio. The old school way consisted of lots of e-mails, hallway chats, catch-up meetings and follow-up e-mails. We kept the ship running but it didn't look pretty. This transition brought us the opportunity to upgrade.

We established a several month transition schedule, rolling from our less complicated brand collections of trademarks to our most complicated collection. Approximately every two to three weeks, another brand moves to Seyfarth. Every week, we have a WebEx conference for the Seyfarth and Wolverine team. Using one of Seyfarth's project management tools, we work through (1) transition status and issues, (2) portfolio issues for the brands that have moved, and (3) general issues affecting the portfolio. The online tool lets us systematically work through each issue, coded using several criteria including importance and due date, to update the team. Since it is something we all can access at any time, the call gives us a chance to quickly identify any needed action items. We don't resolve many of them in the call - they are put on the list for separate in depth calls as needed. The call takes one hour, but keeps everyone on top of the issues.

Separate calls are scheduled, including one regularly scheduled call each week between Seyfarth's lead attorney and our lead paralegal, to cover in depth some of these issues. We have other ad hoc calls (and some e-mails) as needed. This sounds oh-so-straightforward and it is, but that is because the groundwork for a well-run project management process was put down by Seyfarth long before we darkened their doors. Oddly enough, I used a similar process some 16 years ago in the early ages of computer video conferences. The key here is that, while Seyfarth's implementation is much more elegant than the old version I did, the concept of project management isn't new and doesn't require huge amounts of time. In fact, properly done project management will significantly reduce the time it takes to keep things on track versus the ad hoc method we used and many of you may still use.

Another factor here is constant improvement. Each week the Wolverine/Seyfarth team improves the process management process.  We are handling more brands and issues as they transfer to Seyfarth, but we still do so in an hour or less. We also have started the real lean process - the team held its first process mapping session last week. Through a WebEx, team members from both entities started mapping out the process for trademark searches. This is the first step in defining what we do today to give us that springboard for improvement. Just as we break complex legal matters into manageable pieces to solve the legal challenges, we are breaking this complex portfolio project into manageable pieces to handle the transfer and start "leaning" the processes. 

Next: Strategy tools - how to get there by knowing where there is.

The firm view

From Lisa:

We have been pleased and excited about the reception that Ken and his team have given to the various project management tools we have adapted for our trademark practice. Ken's strong interest in Lean and his focus on the creation of a value relationship dovetail well with a number of previous projects we have undertaken to improve our global trademark portfolio management practices and file transition procedures.

We began our Lean trademark journey a little over a year before we met Ken, when the firm was already well into its larger adoption of Lean. The driving force behind the Lean trademark program was the perception that traditional law firm trademark practice, like many areas, contains various inefficiencies that increased cost and wasted time (increased "pendency" in our nomenclature). The net result? Ad hoc decision making and a focus on fighting day-to-day fires, at the expense of strategic thought and action. We tried to attack these problems through a combination of process standardization (we have "process mapped" ten standard tasks within the trademark practice), project management approach, and the development of new technology tools to improve client communication, collaboration and information management in the trademark practice.

As with any development project, the path wasn't always completely clear, and we made some mistakes before joining forces with Ken. In one case, we created a standardized process for a task that had previously been only loosely coordinated among various team members. After about three months, however, we realized that the new standardized process actually increased our cost and the time spent on that particular task -- costs that the firm absorbed as "R&D" for the program. After that experience, though, we developed "version 2.0" of that process map. Ultimately, we reached a solution that was an improvement over both version 1.0 and the prior practice.

We've also benefited greatly from our interaction with Ken's team. As we began to implement our trademark extranet product for Wolverine, Ken and his team were not shy about guiding us as to how the tools would best work for them. Ah, the power of feedback!

We then customized our platform in a manner that's actually much better than the original. Our experience reflects a critical point about building a relationship: Providing value and efficiency can't be a one-way street. While we have brought some innovative tools to the table, Ken's team has been extremely engaged in the implementation and adaptation of them. They have given us valuable feedback along the way. Had it not been for the level of engagement from Ken's team, the implementation would not have been as effective. That's where genuine partnership in the relationship becomes essential.

For those of you using project management tools in your practices, what is working? How has the collaboration been between in-house and outside counsel? What tips for success can you share for the benefit of others?

Next: Continuing the transition and working toward development and implementation of an effective strategy.

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Translating value and metrics into fees

Week 9. Each week via the In-house ACCess blog, follow the promise and pitfalls of forming a new value-based client-firm relationship. ACC Value Challenge steering committee member Ken Grady, General Counsel and Secretary of Wolverine World Wide, offered to profile his selection and start-up process of launching a trademark portfolio management engagement with law firm Seyfarth Shaw. Ken's co-blogger is Lisa Damon, a member of Seyfarth's Executive Committee and leader of the firm's efforts to incorporate Lean Six Sigma into its business. The voice, views and stories expressed by the authors below are their own and not ACC’s. To catch up on the story so far, click here.

The client side

From Ken:

In all the fun of setting up our new trademark portfolio representation and fee arrangements, one thing I can’t overlook is the equally fun world of accounting. Our company focuses on building brands, and with about 3,600 trademarks in the portfolio those marks are an important part of our brand building process. Since they are valuable assets, we need to track the asset value from day one. In the old days, this was relatively straightforward, yet somewhat tedious. For each mark, we captured the dollars spent on acquiring the registration. That meant hours times billing rate plus expenses. Once the mark registered, we expensed the costs of keeping the mark so they were not built into the asset value.

As we work out our new structure with Seyfarth, the accounting piece becomes a bit more complicated. While Seyfarth will keep track of the time it spends on each mark, our fee structure looks at the total work performed by Seyfarth (with some exceptions, such as litigation) and puts that under one umbrella figure. We then adjust that figure based on factors such as efficiency gains.

That means we need to develop a way to determine the initial value of a mark. The method I am considering is to take the total number of hours worked by Seyfarth in a given period (e.g., a quarter), divide the total payments to Seyfarth for the quarter by those hours, and take that resulting rate times the number of hours worked on a particular mark application as the “value” generated for the asset during the period.

While the calculation works, it raises some questions. Is the “value” of the mark really determined by this “hours times average rate calculation”? Should the initial value of a mark be determined by the average cost to obtain a mark rather than the specific time spent obtaining the mark (this assumes all marks are of equal value out of the box even though some required more work than others)? Should the initial value be unrelated to the costs to obtain the mark, and instead be based on something else, for example, some metric based on sales during the period prior to when the mark is registered?

I’m sure the valuation experts could chime in with many other thoughts on how to get to the initial value of a mark and would point out various flaws with the methods I have listed. I’m not trying to get to the right answer in this post. My point (and I do have one), is that as we push ahead with modifying the way we compensate outside counsel we have to work with other groups to modify their thoughts about valuation. Many of our colleagues have learned to think about lawyer’s services based on hourly rates and have adapted their systems to this model. Educating others--corporate controllers, CFOs and CEOs – that the hourly rate is not an appropriate model is part of the process.

By the way, if anyone does have a great model for determining initial trademark values, please let me know.

Next: What are reasonable first-year efficiency gains?

The firm view

From Lisa --

Ken's last few posts have outlined critical standards and metrics of value that he expects us to deliver at different levels -- strategic, artisanal, industrial. During this time, we also have worked to demonstrate to him that we have the right expertise, chemistry or fit, and that an ongoing relationship with our firm would make sense to him and his team. (Chemistry and fit is important from our perspective, too, but hey, Ken’s the client!)  We also have begun to build the principal process design and project management mechanics of the first big project, the trademark initiative.

Now, our team is challenged to take all those needs and address them in a cohesive fee package that reflects Ken's definitions of value and also provides us with an appropriate return.

Here are some of the considerations and challenges we are working through as we develop our pricing structure:

As Ken has pointed out, some part of the value we deliver must be understood in terms of what we can contribute to asset development and enhancement, starting with what it costs to create the asset in the first place -- a specific trademark, for example. This work is the “industrial” activity that Ken has described. It is the core blocking and tackling that has been the mainstay of outside providers in recent years. 

From our perspective, the development of the pricing model for this “industrial component” offers deep potential for innovation. It is one of the places where we have a real chance to advance the model from the traditional "hours times rate approach" -- with its inherent inefficiencies -- to a strategy that rewards both quality service and efficiency minded delivery. Early examples of innovation in this area involved moving away from straight billable hours to applying simple flat fees for a menu of individual tasks associated with trademark prosecution. A more advanced, qualitative model would charge a flat fee for a trademark registration, all-in, from filing to registration, thereby having the law firm bear some of the risk for issues that might arise in the registration process. More recently, fee structures have evolved into a single flat annual fee for the management of all activities for an entire trademark portfolio. And to this model can be added a gainsharing feature whereby the law firm and the client both participate in the benefits of reduced costs that result from greater and greater efficiencies.

By taking this kind of an approach, we are creating rich opportunities for ourselves (1) to develop a pricing alliance with our clients, (2) to build efficient workstream processes and effective project management capabilities, and (3) to enable us to then turn around and share the benefits with our clients. As our discussions with Ken on pricing advance, we expect and look forward to the development of a model centered on these principles.

We will focus on driving efficiency through the volume of 'industrial' work we will do on trademarks, so that we can focus on adding greater value to the strategic use of those marks. This is the 'artisanal' level of value that Ken has mentioned. We will be proposing strategies that will create value for the business through better deployment of intangible assets -- trademarks, patents and other forms of IP -- that are chiefly a creature of the law. One way we can do this for Ken is to through the better management and communication of data about his trademark portfolio -- his active matters, his registration coverage, his enforcement activities, his risks, etc. -- to enable him, his business units, and us to rise above the fray of day-to-day trademark issues and make strategic decisions about the global direction and objectives for his brands.

This type of value may be measured with additional tools that fall more into the kit of the financial analyst than the accountant, using metrics like discounted cash flow, or comparators, or whatever. Although efficiencies are also important in this context, this may be more the place for discussions about the client’s subjective, gut level, sense of contribution by the outside provider. In this context, our pricing model may need to build in metrics or drivers beyond cost-efficiency -- such as strategic contribution and trademark value improvement -- that appropriately measure success and value.

To be successful at the 'artisan' and strategic levels relies on a strong relationship between client and outside provider, so our fee and metrics package also to measure the level of trust and confidence between client and firm. We have metrics in place to both measure the success of our efforts as a relationship. These come from our initial 'voice of the client' discussions, as well as scoreboard metrics, derived from the ACC's Value Index. We think that’s why Ken started with relationship in the first place.

Next: Delivering on first-year efficiency gains

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Balancing strategic roles and tactical delivery

Week 8. Each week via the In-House ACCess blog, follow the promise and pitfalls of forming a new value-based client-firm relationship. ACC Value Challenge steering committee member Ken Grady, General Counsel and Secretary of Wolverine World Wide, offered to profile his selection and start-up process of launching a trademark portfolio management engagement with law firm Seyfarth Shaw. Ken's co-blogger is Lisa Damon, a member of Seyfarth's Executive Committee and leader of the firm's efforts to incorporate Lean Six Sigma into its business. The voice, views and stories expressed by the authors below are their own and not ACC’s. To catch up on the story so far, click here.

The client side

From Ken:

Lisa and I have been talking about the role of outside counsel as we discuss this burgeoning relationship. I suspect this discussion is controversial, because to some in-house counsel it sounds like a threat. It has taken decades for in-house GC’s to evolve into their current role as valued senior executives. Not long ago, the GC’s role was to channel work from inside to outside. Why should GCs now invite outside counsel to sit at the table and potentially drain away that power? In the context of these posts, why should I invite Seyfarth to sit at our table?

The answer is more complex than a 500-word blog post will allow, but here is my quick take on it. A good GC, and increasingly a good global GC, should emulate many of the same behaviors as good global CEOs. Good CEOs consistently recognize that their companies benefit by having many minds at the table. Their personalities help them channel those minds to achieve goals more effectively than each CEO could do through his or her own efforts. With an ever-expanding regulatory environment, business models increasing in complexity, and black swans circling just out of sight, even GCs of relatively simple businesses need that collective power working through the risks their clients face. 

I think some GCs feel threatened that having outside counsel at the table will result in the CEO seeing the outside counsel as the true advisor. More effective GCs will overcome this hesitation and have confidence in their own abilities, in their relationships with their internal team and with outside counsel. Outside counsel who have a weak relationship with the GC or who have interests that are poorly aligned with the company’s interests won’t be good partners and may show that the GC’s fears were well-founded. That, to me, is another reason why I want to spend the time building a strong relationship with outside counsel and why I want a fee relationship that aligns interests.

Another way to think about the goal of a value fee relationship is to compare it to the compensation structure for senior executives (beware the metaphor). In simple terms, a well-constructed compensation structure should, among other things, (1) align the interests of the senior executives; (2) align the senior executives’ interests with corporate goals; and (3) provide clear rewards for achieving well-defined goals. Since my outside counsel are an extension of the in-house team, I would like to see our interests aligned, I’d like to have our outside counsel’s interests aligned with our corporate goals, and I’d like to provide them with clear rewards for achieving well-defined goals.

So, Seyfarth and I are talking about Seyfarth’s role at the table. This means drawing them into the strategic discussions with our internal business partners, but it also means understanding that their fee drives off that strategic work. In linkage terms – our portfolio is a risk management tool and a strategic tool. We tend to understand the risk management piece, so now we are working on the strategic piece – how do we tie Seyfarth’s role to the in-house team’s role to our corporate strategic objectives.

Next: Tying in some of the messy accounting stuff.

The firm view

From Lisa:

As Ken notes, one of the roles of outside counsel in delivering value must be that of strategic business advisor. Done right, we know that this advisory role can both complement and strengthen the GC’s position with his or her executive leadership. While Ken, or his GC counterpart at another company, will always know the organizational issues, context and culture better than we as outside providers, our very exposure to a host of different clients, with a range of risks and risk management strategies, may put us in a very good position to round out the GC’s and legal team’s analysis. We can bring a depth and diversity of perspective to the GC’s table, fully participate as a team member, and add value at the highest level.

While these strategic role discussions continue, we also have to manage the other half of the value equation -- the ‘industrial role’ that Ken referenced last week -- and get things done quickly and efficiently.

For our weekly readers, you may be wondering what we have been up to on the ground? Well, a lot. To date, we’ve transitioned six of the Wolverine brands, or about one sixth of the company’s portfolio (roughly 600 of a total 3,500 marks). And, working with Ken and his team, we’ve done this rapidly and efficiently in less than 60 days.  

Because Wolverine’s trademark assets are central to the company’s business, we knew the transition process had to be delivered on-time, on-budget and on expectation. We have been using project management resources to help us get the job done. As we have adapted lean six sigma to the world of a law firm and its clients, project management has been a key component of what we have implemented. We combine it with a set of Lean tools and disciplines but we rely on our client-facing project management office to help drive our internal and external teams.

There are a number of successful ways to apply project management skills and tools to legal work, such as those identified by LegalBizDev blogger Steve Barrett (link to: How Should Law Firms “Gear Up” to Manage Projects Better? – A 50,000-foot View (Part 2 of 2). For our work with Wolverine, we wanted our project management role to play an integral and strategic role in delivering client value and help drive the success of our relationship:

·       Program Management: To begin the transfer process, Wolverine provided us with an initial schedule, which served as our foundation for development of a high-level timeline and accompanying detailed project plan. To ensure we stay on track, our internal team meets weekly to obtain status, discuss issues and share lessons learned to improve processes for the transition of the remaining brands. 

·       Collaboration: An essential element to this partnership is collaboration with Wolverine's former trademark firm. To facilitate an aligned effort, we developed a process map, checklist and protocols for the intake processes of these files to ensure data accuracy and to procure knowledge of Wolverine's trademark portfolio.

·       Knowledge Management: In our ‘Voice of Client’ interview, Wolverine emphasized the importance of transparency and real time knowledge management capabilities. In response, we created a shared knowledge platform, using our Firm's extranet capabilities. The tool is designed to improve knowledge transfer, minimize risk and provide full transparency of status and priorities including key documents, metrics, etc. 

·       Process Management: We have scheduled the first of several joint process mapping sessions to be facilitated by Seyfarth's Project Management Office. We will conduct virtual sessions with key stakeholders to develop an improved process for handling various aspects of the trademark portfolio. We will also use these sessions to identify and/or develop template documents, checklists and guidelines to further enhance and promote best practices for the newly defined streamlined processes.

The effort to define the ‘rules of the road’, our relationship needs to move ahead on multiple fronts. So far, we’ve used several Lean tools and a healthy dose of project management to ensure a successful transition, and it will be vital to our ongoing strategic partnership with Wolverine--both from the industrial and artisinal perspectives. All of this though, is just the tip of the iceberg. We haven’t thought of everything and as they say, ‘more minds are better than one.’ 

That said, how have you used legal project management and how has it contributed to your client-firm relationships?

Next: Next stage of the fee discussions and more reports from the ground.

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Someone tell me I’m having a bad dream and will awake soon.

The greatest gift offered to law firms in the recent economic downturn was the first realistic opportunity in decades to break their own cycle of shame/pain to rebuild their compensation structures. They had the economic justification to cut back on some of their more extravagant hiring practices (like hiring 100 associates each year when they only intend that 20 will make it to partner). As a result of the client-led (r)evolution, firms started to push forward a focus on “value” rather than “prestige” pricing based on top-level comp and regularly rising rates. But now it seems that law firms are turning up their noses and are returning the gift they were given: maybe it wasn’t exactly what they wanted.  

I’ve been hearing rumbles, now confirmed in articles such as this one that firms are proudly announcing that they’re returning to pre-2008 salary levels and upping their starting associate comp back to $160,000+ (and therefore the salaries of everyone up the ladder in firms that still use lockstep comp systems also goes up). Seems that firms are doing gangbuster business “selling” their entry associates’ work to clients — they can’t get enough! Or maybe it’s just that there aren’t enough entry-level lawyers for all the first year jobs that firms have to fill? Not.

Let’s just pretend that this is truly a necessary step for firms (which I’m not buying for a minute); the optics of this are so awful that I’m shocked anyone would want to announce their intentions to raise salaries where clients will read about it. Set aside the issue of whether increases like this will really attract the best associate candidates or only the ones most interested in the money.   Do firms think that raising entry-level salaries and then raising rates to pay for it actually impresses clients? Is this how law firms flex their muscles so we can see how strooooong they are, even if it does nothing to promote their intelligence or value? We at ACC know that too many clients are still too beholden to the “prestige” or legacy factors inherent in hiring the most expensive firms. Sometimes those firms truly do provide great service; but an increasing number of other firms are capable of delivering similar results without the higher costs and clients are more and more likely to try them out. And the latter firms are getting more and more attention — firms that ignore this, do so at their own peril.

Many large firms have been caught for decades in a ridiculous and self-fueled cycle of “Keeping Up With the Joneses”, wherein firm management bitterly complains that while they know their comp systems are not based on sound business principles, they claim to be victims of a marketplace in which they can’t hire anyone worthy of their firm if they aren’t paying more than the other firms in town. Since we see no shortage of smart talent graduating from law school each year, many of us had a sneaking suspicion that the reason the firms kept raising starting salaries was more connected to a decision about what the partners in the firm were making or wanted to make.

In general, I have no problem with firms paying whatever they want for talent, especially lateral talent. Frankly, clients shouldn’t have to be worried about what firms set as their standards for comp if the firm is pricing its services in a manner that the client finds reasonable and valuable. But most firms are about to approach their clients and suggest they need an increase in fees, dictated by rising costs, that they’ve just invented. 

Wouldn’t it be wonderful if more firms adopted a different approach that might include:

1) a commitment to hire new entry lawyers at whatever they believe those lawyers are worth, and they plan to invest in them and train them so that they will succeed;

2) offering new lawyers promotions and higher compensation as they master certain competencies, and that clients thus will not be charged for their services in a manner that is not commensurate with the value of the work they can provide; and

3) a commitment not to raise salaries and therefore costs and thereby request an increase in fees, but rather a commitment to take a page from the client’s business management book, and look for ways to lower client costs by increasing the firm’s efficiency or productivity, or structuring their staffing or costs based on what the client wishes to afford.  

There are a lot of firms out there doing this, and their efforts are far too often not noticed — visit ACC Value Challenge to read about firms that are working hard to do better: And let me shout out a few here that are putting their money where their mouths are in terms of deploying new comp systems that incent value: Howrey, Drinker Biddle, McKenna Long, Valorem, Morgan Lewis, Sutherland, and many more. Have they figured it all out? Probably not and they’ll continue to struggle to get it right. But they’re positioning themselves not just for profitable relationships with their own lawyers and clients, but for long-term success as firms.

To leaders in firms considering whether to return us to the madness of ever-upward-spiraling salaries: Please stop. Your clients know that the emperor has no clothes. Are you really going to tell them you can’t hire talent unless you increase the rates of starting associates in your firm? Clients are watching to see what you do. So I’d suggest this is your chance to lead, rather than claim you have no choice but to follow.

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Linking metrics, fees and value

Week 5. Each week via the In-House ACCess blog, follow the promise and pitfalls of forming a new value-based client-firm relationship. ACC Value Challenge steering committee member Ken Grady, General Counsel and Secretary of Wolverine World Wide, offered to profile his selection and start-up process of launching a trademark portfolio management engagement with law firm Seyfarth Shaw. Ken's co-blogger is Lisa Damon, a member of Seyfarth's Executive Committee and leader of the firm's efforts to incorporate Lean Six Sigma into its business. To catch up on the story so far, click here.

The client side

From Ken:

Last time I talked about some easier metrics, so now I’ll address a more challenging one.  Remember, we measure where we are today and then we measure periodically.  We set goals for improvement and then we use “lean” to find ways to meet or beat the goals.  For this metric, the lower the value the better.  Here it is:

Trademark Services Value Rate equals:

(Licensing Revenue + Recoveries) – (Trademark Expenses + Payouts)

the result of which is divided by the total number of marks in the portfolio.

What am I getting at?  On the revenue side, we have licensing fees and recoveries from things like infringement and counterfeit claims.  On the expense side, we have the costs to acquire and maintain the trademarks, and we have payouts due to infringement claims.  Spread across all 3,600 of our marks, this equation captures most of the inputs and outputs and yields a service value per mark. 

It has flaws.  For example, it doesn’t capture our internal time and those fixed costs (office rent, etc.) associated with providing those internal services.  Since those costs remain relatively constant for us from year to year, I decided to make the equation simpler by leaving them out.  It also doesn’t capture mix.  Each year, we add and drop trademarks.  New marks are more expensive given the acquisition costs.  We should probably have a mix metric to see if the proportion of new to old marks changes significant from year-to-year as that could affect the portfolio value equation.  The metric probably can’t be used to benchmark against other portfolios (a company using all in-house lawyers would have a different value profile than a company doing everything externally).  That problem doesn’t bother me as I am using this as an internal comparison from period-to-period to measure whether we are improving compared to our past performance (though I could argue that it is still a valid comparison – a company with lower expenses to manage its portfolio generates higher service value per mark). 

The next question is:  should this metric (or any of the other metrics) be tied to the fee arrangement?  Does Seyfarth have enough control over the equation inputs to make this work?  Is it okay to make that connection as long as Seyfarth has an out clause (and what should that out clause be)?

Here are some of the “pros” for making the connection.  The most meaningful driver is outside legal fees (a part of trademark expenses), so incenting Seyfarth to drive those fees down gives them a big lever to drive value to the firm.  For counterfeiting, low costs and high recoveries (creative strategies from Seyfarth) also have high value. 

Using metrics like these raises another question:  is it the law firm’s role to raise the portfolio value or to provide high quality services at acceptable cost for those things the firm is asked to handle?  If you believe it is the latter, then the metric I showed above may be fine for measuring portfolio improvement, but not for setting the law firm’s fees.

Next:  Continuing the fees discussion.

The firm view

From Lisa:

As I hope comes through in these posts, we have been on a mission to understand and participate in the development of a different (and we hope better) relationship between client and law firm. Ken's post hits at one of the core elements of that mission - the fee structure. I would like to talk a little bit about Ken's last point, the role of the Firm in delivering value.

Our experience has been that most discussions revolve around the ability to deliver high quality legal services at an acceptable cost. That is, of course, the principal driving premise of our Lean program. An output of that system, we hope, is an enhanced ability to define the scope of services, find efficiencies and develop a fee structure which reflects those results. That means things like flat fee pricing, per case pricing, portfolio or task-based pricing etc., etc., etc.

What excites us, however, is Ken's first point: the role of the law firm in the value proposition to the client’s business. How can Seyfarth be tied to the business and incented not as a vendor but as a business partner? Certainly, there may be tranches of legal services where the core goal cannot really be much more that the point made in Ken’s first paragraph. The value to the enterprise is, in fact, handling the matter at high quality and acceptable cost. At the same time, there are many areas, like the trademark area, where - based on the right relationship between client and firm - the opportunity ought to be there for the firm to participate in and it (the firm), should be charged with the goal of adding economic value to the enterprise. I say "right relationship" because this requires a collaborative relationship that goes beyond the traditional role of the law firm and has to be one embraced by both sides of the equation. In turn, making that success (or failure) a component of the fee structure validates that relationship and creates the right incentives.

In a sense, Ken’s model takes the sometimes “cloudy” concept of value and adds substance to it. He is asking us as an outside provider to do more that simply meet the threshold requirement of delivering quality services at compelling prices. He wants more, a business partner that will help strategically deliver value to the enterprise. Although Ken’s focus in his post is on the trademark portfolio specifically, we read his meaning to extend to many other disciplines. At our best, we should be helping to build enterprise value across many different areas of service by supporting productivity, appropriate risk management and higher level development of strategic planning. Bottom line, we believe that Ken is on to something by helping to really define the concept of “value” to mean something more than cost for services rendered.

Next: Getting to “yes”

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I was recently reminded that in 2007, when ACC was still creating a vision of what we’d try to do with the ACC Value Challenge, the emerging Steering Committee leaders all agreed that if we could simply make the word “value” a dominant concept, regardless of whether folks associated their value conversation with the ACC Value Challenge, we’d have succeeded in some part.   I’m happy to report that by that standard, we’re doing well.  

Perhaps too well.

Value has become a word that is so popular in the legal service conversation today that it is ubiquitous with quality, efficiency, productivity, innovation, and results. And lots of talk. By any standard, we’ve succeeded in moving folks to talk the value talk.  But for many, that’s still all they’re prepared to do. Talk.  

So I’ve made it my mission in 2010 to roll out the next steps: how to help folks walk the value walk.  Everybody embraces value theory and enjoys reading or hearing about value success practices implemented by others; and for many, it’s easy to discount the applicability of some of the most touted success stories by saying:  “that’s fine for DuPont and Pfizer and Cisco and others: but not for my lower leverage, bread-and-butter, work-a-day legal stuff.” 

Don’t cop-out on value. What that says to me is that folks are afraid to admit that they don’t have experience or comfort or skill in actually implementing “value-based” changes in our own practices. We need to re-build our toolkit and develop the confidence that we can get value done, regardless of department size or legal matter or subject expertise.   We need to figure out what value means to us (not to Pfizer and DuPont), and how we get there from here, since it’s Summertime and the talkin’ is easy but the livin’ ain’t free.

So ACC is pleased to raise the curtain tonight onLegal Services Management 3.0 – the Core Curriculum. This pilot initiative has been in the works for months, and is being delivered for the first time in Washington, DC on July 13-14 to about 50 top-level in-house legal managers; if you’re not one of the lucky few who got a seat for the pilot program, no worries – you’re going to see it repeated and re-tooled or customized in the coming months into a series of executive/business education offerings for managing lawyers in departments and firms across the spectrum. 

In ACC’s LSM 3.0 we’re not telling participants what others did so they can nod their heads and murmur appreciation; we’re teaching registrants how to apply these concepts in their law departments, large and small, in every industry and in every kind of legal work done. Our registrants want to learn HOW to save money, drive efficiencies, create better and stronger relationships with firms and vendors supporting their work, and improve results for their clients.

What are we offering/what are registrants becoming expert in?

-Fee and staffing structures that drive value;

-Metrics and evaluation strategies to assure that improvement is quantifiable and sustainable;

-Knowledge management concepts that avoid “re-inventing the wheel”;

-Process management, including concepts such as lean six sigma in legal services;

-Mining technology and data to drive better results;

-Project management to assure that complex matters deploying diverse teams succeed; and

-Change strategies and incentives, since the hardest part of all is getting lawyers to try something new.

This two day session, taught by an all-star faculty including in-house counsel, outside firm leaders, and consultants/vendors offers a rare opportunity to sample the broad set of skills that lawyers are going to need to develop to succeed in the next decade and beyond. We hope you’ll watch our homepage for snippets of the video from the sessions (we’re taping them) and information on the resources and upcoming classes that might benefit you and your client that will be available to you online.

Time to stop talking about value and just get it done. Time to become value-able.

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Picking the metrics that matter

Week 4. Each week via the In-House ACCess blog, follow the promise and pitfalls of forming a new value-based client-firm relationship. ACC Value Challenge steering committee member Ken Grady, General Counsel and Secretary of Wolverine World Wide, offered to profile his selection and start-up process of launching a trademark portfolio management engagement with law firm Seyfarth Shaw. Ken's co-blogger is Lisa Damon, a member of Seyfarth's Executive Committee and leader of the firm's efforts to incorporate Lean Six Sigma into its business. To catch up on the story so far, click here.

The client side

From Ken:

Now to metrics. To get Lean, you need measurements. When I did Lean in the manufacturing world (I ran a large plant), we measured productivity (revenue per hour worked), quality, safety, and orders complete and on time. Easy on the shop floor, but how do you measure legal work? 

Many lawyers argue that legal work is bespoke – each matter is custom designed to fit the facts and circumstances of the occasion. That, my friends, just ain’t so. (Richard Susskind does a nice job of explaining this in great detail in his book, "The End of Lawyers"). These posts are about our trademark story, so I’ll stick with trademarks but the same analysis could be used for any legal project (and by the way, Lean works on the one, multi-year litigation matter, just as well as it works on the 1,000 slip-and-fall cases). 

I divide legal work into two categories – industrial services and artisanal services. Industrial services are commodity services, such as trademark applications. We do lots of them and they typically involve the same steps each time. We want to do these as efficiently as possible to keep the costs and the time to issuance low and brief. Artisanal services are custom (to a degree), such as an opposition matter before the Trademark Trial and Appeal Board. While artisanal services have more custom steps, there still is a lot of room to make them efficient (just because a tailor makes a suit that fits only you, it doesn’t mean he has to do so inefficiently). 

We need metrics to measure both the industrial and artisanal trademark services. We need to measure today, and then to measure in the future, to determine how much we improve. Ideally, we want quantitative metrics. We need to measure them periodically (in the plant, we measured daily but for this project, monthly, quarterly and annually should work). We also want at least some metrics that tie back to our business objectives. Efficiency is great, but having a very efficient trademark portfolio that doesn’t do much for the business makes no sense.

The Seyfarth team pulled together some draft metrics. I’ll let them tell you about the ones they proposed. I put together some alternatives. Remember, there are no perfect metrics. They all have flaws and we can manipulate them. The goal is to pull together metrics that will help take inefficiencies out of your processes and measure whether you are increasing the value of your processes.

Here are just a few of metrics that I proposed (in no particular order):

• Trademark Risk Rate (total dollars spent defending trademarks, divided by total number of trademarks defended)
• Counterfeit Recovery Rate (total dollars spent on anti-counterfeiting actions, divided by total number of units seized)
• Specimen Response Productivity (days from first request for specimen to receipt of acceptable specimen, divided by number of trademarks for which specimens requested).

Tell us what you think. 

Next: The mother metric and starting the leap: metrics to fees.

The firm view

From Lisa:

As we have been on our Lean journey, we have come to understand and even embrace metrics. Measuring performance and rewarding internal teams can allow you, as the in-house client -- to bring laser-like focus on what you value in your business. There is much truth to the Tom Peters maxim, "What gets measured gets done."  Historically, in firms, internal metrics focus on hours and realization, and when we work with clients, it is often (and sadly) just cost.

When you start to expand your definition of metrics, however, amazing things happen.

To see the power of this, pick something you value. In a litigation, it may be something as simple as comprehensive early case assessment being performed in all matters within 45 days of filing. It might be resolving a matter under a certain number by a certain date, or it may be winning a trial while staying on budget and keeping your business folks engaged and satisfied. (See what fun this is? You can have it all).

Once you start with what you value (and it can be several things), then step back and design the metrics. Our friend, Jeff Carr, has worked his terrific FMC ACES model so that he can do this in a systematic way across the spectrum of legal services, but you can employ simple value-to-metrics steps on any matter.

As I mentioned in last week's post, we often start with cost and satisfaction/quality (we love the components of the ACC’s Value Index), but then we try to work with more specific measures, tailored to the individual client. Ken led us into this discussion beautifully -- but then pushed us even further. As you can see from Ken's post, we are right in the middle of this discussion now.

We initially proposed three buckets of metrics: transition-related (we were taking over a very large trademark portfolio), ongoing metrics and qualitative measures. Here are a few of the overall categories of metrics we proposed:

• "Success" rate, measured by things like first action allowance, watch hit outcome
• Overall satisfaction
• Timeliness of communication
• Effectiveness of "lessons learned" sessions
• Strategic participation/understanding of Wolverine business
• Proactive issue identification
• Budget variance
• Cost management effectiveness

When we got Ken's metrics back, they pushed into far more creative thinking. Internally, we are now thinking through how we approach fees that are tied to a client's business performance - we know it makes sense from a "value" perspective but how to get there is key. it is certainly not the norm for the law firm world.

Please let us know how you have used metrics. What works for you? What has not worked? Thoughts on different metrics that the Wolverine/Seyfarth team should use?

Next post: Responding to Ken’s ‘mother metric’

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Determining the metrics of ‘value’

Week 3. Each week via the In-House ACCess blog, follow the promise and pitfalls of forming a new value-based client-firm relationship. ACC Value Challenge steering committee member Ken Grady, General Counsel and Secretary of Wolverine World Wide, offered to profile his selection and start-up process of launching a trademark portfolio management engagement with law firm Seyfarth Shaw. Ken's co-blogger is Lisa Damon, a member of Seyfarth's Executive Committee and leader of the firm's efforts to incorporate Lean Six Sigma into its business. To catch up on the story so far, click here.

The client side

From Ken:

We built a relationship and chose the law firm, and we haven't talked about fees. To discuss fees, we also should discuss metrics. This will probably take a few posts, so bear with us. I'm going to start by stepping back and getting philosophical. When I talk about value fee relationships, part of what I'm talking about is a way for the company to lower its costs, and the other part is for the firm (and the company) to become more efficient. I want the firms to be profitable, and I think they can be just as profitable working efficiently as working inefficiently. The following example might help: 

Suppose a firm will bill for 12 hours at $300 per hour, for a total of $3,600. Let's assume the firm could do the same quality work, but do it in 6 hours rather than 12 hours. If the firm charged $2,400 for 6 hours, I would have saved $1,200. The firm would have been paid $2,400 for 6 hours, versus $1,800 for 6 hours under the old arrangement. The firm also “saved” 6 hours and can use those hours as it wants: work for another client and be paid another $2,400 for 6 hours (a total of $4,800 for 12 hours versus the previous $3,600 for 12 hours), or maybe work the associates less and only use 3 hours (putting it at $3,600 for 9 hours versus the prior $3,600 for 12 hours).

This all makes sense except for one thing:  How does the firm do the same quality job in 6 hours instead of 12 hours? The answer is to tackle the efficiency issue.  In my opinion, law firms are extremely inefficient (okay, airlines are much more inefficient, but that is a separate story).  Throwing that statement out usually creates some heated discussion.  Many partners tell me about how they work very efficiently.  But, I don't see that lawyers (private practice or in-house) have anything to brag about.

So how do lawyers become efficient?  There are many ways to improve, but the one I find the most sensible and I think works well with the legal world is "Lean" or its hybrid cousin, "Lean Six Sigma."  In simple form, Lean is about removing everything that doesn't add value, leaving only value added steps.  It sounds simple, but Toyota (which has been doing this for almost 70 years) would tell you they are still in the early stages of learning about Lean.  So, how does Lean work in a law firm?  I'm going to let Lisa tell you the story. Lean is important to metrics in our story, because that is how we have chosen to find ways to make ourselves more efficient internally and externally, yet make sure this isn’t something where we benefit at Seyfarth’s expense – we want Seyfarth to benefit from helping us become efficient.  Put another way, efficiency has value to us, and we are willing to pay for that value.

Next:  The metrics story continued.

The firm view

From Lisa:

So how DOES Lean work in a law firm? In many ways, the cards are stacked against it. Lean requires the discipline to step back, look at data, talk to clients, examine root cause and then design a way to work more efficiently -- cutting out steps that don't add value, adding steps that do and re-aligning what remains to deliver superb service that meets the client's definition of value. Read: Do a better job in less time. 

Law firm economics, however, taken to their logical end, incentivize inefficiency. Historically, law firm reward systems relate to more time -- more minutes, more hours, more billings, more money. So, the first paradigm shift you need to make is: Believe that doing a better job in less time makes the clients more delighted (Kano Model for those of you doing Lean-speak), and that more delighted clients means more great work. Lucky for us -- the formula actually works. And any firm can do it -- it just takes investment, discipline and some knowledge.

Second paradigm shift is Lean itself. Cue the eye rolling. We have heard it all -- that’s for cars, not lawyers; process discipline has no place in the art of law; only good for commodity work; too hard; too complex; too simple; too much jargon; just marketing; and, the current favorite, "Look where it got Toyota." There have been times along our journey-in-progress when we have thought each of those things. But, what we are doing is working, and we believe there is a lot that can be relatively easily implemented by all -- large and small firms and legal departments.

Take any project. Let's take a complex litigation. We have invested our lawyer and staff time to study the way we approach different types of litigation -- so we have process maps, technology tools, resource banks, and data we have collected and analyzed from our own work. Doable for any Firm whose partners have a core concept of investment time. So now, a client comes and asks for us to work with them on a piece of complex litigation.

If we were approaching this with a Lean frame, we would spend much more time up front with the client, understanding what they wanted, customizing our process maps (for both the client and the matter), putting a plan into place to execute according to the client's definition of value. We then set metrics to ensure we were satisfying their needs and driving the result.

For instance, we might measure a variety of things . . . Some clients value "cycle time" -- how quickly we can move the case through mediation or to trial; some value results -- a trial win under a certain price or within a certain time frame; others may value a thorough early case assessment or budget predictability. The "voice of the client" provides us with the information we need to decide what Lean tools we will use and how we will measure our performance.

In educating lawyers about Lean, we find it is sometimes better to talk about what it is not -- it is not rigid and inflexible; not about commodity work; not about statistics; and, not confined to an area of practice. For us, the simplest way to approach Lean is to remember that Lean is a way to think, a way to break out of the way we have done things and to look at a problem -- very complex to very routine - differently - and then work to deliver the highest quality, directly in synch with the client's value, at a lower cost.

Being a lean bunch, metrics are a big deal for us -- we love to measure things and look at data (amazing what it often tells you). So we often start by sticking to a few basic measures --lowering cost and increasing satisfaction. When we started talking metrics with Wolverine, we knew they were also a metrics-loving group, but we had no idea what was next. We started by proposing a set of metrics that related to client satisfaction, cost and cycle time.

Next: Ken comes back with a set of metrics far more finely tuned to what he valued. Just wait…math is required.

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To fee or not to fee?

Week 2. Each week via the In-House ACCess blog, follow the promise and pitfalls of forming a new value-based client-firm relationship. ACC Value Challenge steering committee member Ken Grady, General Counsel and Secretary of Wolverine World Wide, offered to profile his selection and start-up process of launching a trademark portfolio management engagement with law firm Seyfarth Shaw. Ken's co-blogger is Lisa Damon, a member of Seyfarth's Executive Committee and leader of the firm's efforts to incorporate Lean Six Sigma into its business. To catch up on the story so far, click here.

The client side:

From Ken:

How do you chose a law firm without talking about fees (and, was I out of my mind)? It really isn't that different from what in-house lawyers did from the 1970s until recently. We talked to our friends, asked for some client references, talked to attorneys at the firm, listened to their speeches, read their articles, and so on. But, when we talked about fees, it was often an awkward conversation about billing rates:

"So, how much do you charge an hour?" 

"Well, I'm at one gazillion now." 

"Ow, that seems higher than where some other firms are at." 

"Of course, for a matter like this, I think I can convince my managing partner to let me go to our discount schedule where I'm at a bazillion." 

"Oh great, that seems more like the market - and the same discount for others on the team?" 

"You bet!" 

We knew the rate, but not how many hours. I didn't look at that as knowing the fee, at least not like I know the fee of the guy who paints my house: "That will be $2,561, Mr. Grady, and that includes whatever wall prep and patching we need to do to give you a great job." (Remember, I'm in-house counsel so we have small houses.)  Now, I know many of you have a more sophisticated approach, but there are still plenty of in-house lawyers for whom the script above will seem all-too-familiar. 

Instead, I employed a "new-old" strategy. I went back to the days where you spent time getting to know your lawyer, made the choice, and then worked out the fees, based on the value you were getting. You chose the lawyer (referral from friends at the club), he did the work, he sent you a bill, and then (for those of you with chutzpah) you discussed adjustments, based on how you perceived the value of the services (for those without, you just paid the bill). Our difference was to meet and talk to the lawyer, chose the lawyer, discuss the mutual value structure, and then re-evaluate as we go along.

So, we met with the lawyers, and met again. We talked by phone, and talked again. We emailed, and emailed again. Overall, we spent about six months in discussions. "We" included all members of my team talking to members of Seyfarth's team, including paralegals talking with paralegals without an attorney. Trademarks are a major part of our practice, so really getting to know the Seyfarth team was important. 

To us, it was important Seyfarth understood our company, its culture and what value legal services had in that culture, and for us to understand how the SeyfarthLean culture would mesh with us. We shared how much we spent on our trademark work and we gave themportfolio information, so Seyfarth could gauge the value of this engagement to the firm.

To me, I would be out of my mind if I didn't build a relationship first, and then look at ways both parties could profit from the relationship.

Next post: Let's talk metrics.

The firm view:

From Lisa:

Ken relayed a typical conversation in house to outside and it resonates in many ways…although 10% off a bazillion is often discussed. Just kidding. Sort of.

On a serious note, we as outside counsel experience a good deal of frustration right now in dealing with the fee discussion. While many clients may express they want to move toward new "value" or an alternative fee structure, in actuality, there has not been much change. Now, the conversation often goes like this:

"Can you do an alternative fee?”

"Of course." [Then we lay out the options - flat, fixed, risk-reward, pure value, portfolio, phased, periodic...]

"Thanks. Interesting. But, you know, those fee arrangements are all well and good, but they [fill in the blank: 'don't fit in our chart'; 'don't let us compare the firms'; 'aren't what we are ready to do yet'; 'are not acceptable to procurement'; 'are scary']. Can you just give us your lowest possible billable rate?"

Ken's approach was so different because there was no fee discussion – really, none at all. The initial focus was on the relationship, the core values and the business fit. Often, in the press to find new business, many of us in outside firms can easily forget that relationship fit is key for us, too. Our best stories have to do with clients that we know, like, trust, understand and vice versa. The cornerstone of trust makes all the rest work out. In these times of a much more business-oriented relationship, that concept may seem old-fashioned, hearkening back to the days of Lincoln and candlelight. In reality, it remains just as true now as it did then. That's why, in retrospect, Ken's approach worked so well.

In his post, Ken talked about the relationship building we went through and the pace we moved. Let me give you context from our side: It was excruciating.

Our team wanted this work so much. We loved the brands, we loved the people, we even looked like the people in their ad campaigns (okay, not the Harley brand). We already wore the shoes (okay, not the Harley brand…yet). Why didn’t they just pick us? Ken told us right up front that he was going to go slowly -- very slowly. He told us that the trust and relationship had to be right, that we needed to be patient. It was hard.

After our first web meeting, we met in person in Michigan. We brought our team, they brought theirs. It was a phenomenal two days. We really liked the people, but what we came away with was an appreciation for the collective passion of the Wolverine groups and what they were doing. We will always remember Ken and his team taking several hours and walking us through the shoes -- every brand, its distinguishing features, its history, and then showing us the signature shoes. We were on our feet, handling the shoes, looking at showrooms and feeling their passion for their company. When it was our turn, we were on our feet, showing our SeyfarthLean and walking through all of the exciting things we were doing. Hopefully, they too felt our passion.

What followed were several months of more meetings and extensive reference checks where Ken spoke to our clients, questioned us on SeyfarthLean, pushed back on the program and challenged our ability to do what he needed. In the end, it worked, and here we are.

Now, Lean Six Sigma. I promised you three painless sentences to set the stage. For the blogs to come, it is important to the story, so here goes:

·       For us at Seyfarth, Lean Six Sigma is a structured data-centered discipline, driven by client requirements, and designed to eliminate non-value-added steps, reduce inefficiencies and improve key components of processes.

·       In a nutshell, it is delivering the highest value services, to ever-more delighted clients at an efficient price, so what’s not to like?

·       At Seyfarth, we follow DMAIC (for the Lean-friendly crowd), but have adapted the discipline for the legal environment – one that is wildly variable by nature and, at a distance, seems to resist any process methodology.

More as we go.

Next post: Ken proposes metrics, and we wonder what we have gotten ourselves into.

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The Challenge: Building a new (or even improving upon an existing) client-firm relationship is never easy, especially in the fast-paced, high pressure world of sophisticated corporate legal practice. Add to that the weight felt by so many firms and departments to evolve to a higher form of practice and cost management, and companies’ increasing attention on measuring results associated with the legal spend, and you’ve got a lot of people involved who are grappling with all kinds of problems -- from establishing metrics, to choosing appropriate staffing and outsourcers, to change management problems with your staff, to managing up and doing more with less. 

Setting the Stage: So what should you do? And more importantly, how do you do it? Do the risks of changing outweigh the potential rewards? ACC and our Value Challenge steering committee believe that maybe the ability to literally “see” how it’s done will help you reassess whether or not value-based change really is too risky. So we’re offering a real-time case study for everyone out there struggling to find a path that works; kind of like “legal reality TV.”

A Forum to Learn, Benchmark & Comment: Below is the inaugural post of an in-motion case study that allows you to judge the promise and pitfalls of forming a new value-based client-firm relationship . . . one that isn’t built along traditional lines. And the best part is this project will be done in the bright light of day via our In-House ACCess blog, rather than behind the curtain. While it’s the parties in this relationship who have skin in the game to get it right, we’ll be looking for you to comment as well as observe, by sharing your questions, reactions, sidebars, relevant experiences and more. But no, you won’t be able to vote them off the Island and there is no elimination round: this is TRUE reality relationship building. The gripping tension here is that the stakes are real and the parties don’t just get to walk away with a consolation prize if it doesn’t work; they have to make it work. What we’ll watch unfold is what we all have to do: figure out how to drive the right results for the right price with the right staffing and succeed based on whatever expectations are established at the outset.

The Show Will Go On: This project will be openly chronicled on this blog over the coming weeks and months, so stay tuned and join the community by engaging in this first and in future posts.

The Leads: Our “players” are not Thespians, but real folks who are actually crafting this relationship and trying out their ideas for new value-based models of working together. ACC owes its thanks to the open and visionary nature of ACC Value Challenge steering committee member Ken Grady, who offered to profile his selection and start-up process of working as General Counsel and Secretary at Wolverine World Wide with law firm Seyfarth Shaw. We owe our gratitude to Seyfarth, as well: not many firms would be “out there” – exposed in the transparent fashion. We’ll all be watching as both Ken and Seyfarth figure out how to make it work. The project they’ve selected is a new approach to managing a large trademark portfolio. Each week or so, you’ll see twin posts from both Ken and Seyfarth, chronicling the progress and challenges of their evolving relationship. And we’ll be linking in lots of relevant content and other experiences from the ACC Value Challenge and our resource pages at www.acc.com/valuechallenge.

Lifting the Curtain: The goal of this effort, as one of the bloggers notes below, is to ‘lift the curtain’ in order to help you assess how you can earn from this example and apply value-based practical solutions.

Join in: Please be sure to join in the conversation with your comments and observations, and enjoy.

Susan Hackett, Senior VP and General Counsel, Association of Corporate Counsel and the ACC Value Challenge (hackett@acc.com)

The Client’s Situation

Blogger Ken Grady is general counsel at Wolverine World Wide, Inc.

Over 3,600 trademarks, 800 domain names, 180 countries and territories, and 10 major footwear and apparel brands, Wolverine World Wide, Inc. is the company you may not know with the brands (we hope) you love: Hush Puppies, Merrell, Sebago, Wolverine, Cushe, Chaco, and so on. Midwest born and bred for 127 years, today we have a global, publicly held, $1.2 billion, very complex business model. Handling the legal side is our small Legal Department: four attorneys (including me, Ken Grady, the General Counsel and Secretary) and four paralegals.

Eighteen months ago, we (the Legal Department) set a goal of moving our trademark portfolio from a traditional service and management structure to something better. About 30% of our annual outside counsel spend goes toward trademarks. To make life interesting, we threw on the constraints: no dedicated in-house trademark attorney or paralegal, an efficient operation that keeps our costs low as our portfolio grows, a strong culture fit between the company and our outside firm, and a dynamic and constantly improving portfolio services and management model.

A key question was the law firm. Moving from our existing outside counsel would put a heavy burden on our team and introduce some risks. Staying with the current firm eased the burden, but also had risks and potential downsides. We decided to start by satisfying the Greek aphorism "know thyself." Twelve months later, we were talking to law firms. 

Actually, it wasn’t quite that straightforward. We started by drafting an RFP. The more we gathered information about ourselves and potential law firm partners for the RFP, the more we realized that our keys to success were really understanding what we wanted and being very open when talking to potential firms. We decided the RFP process was a good way to learn about ourselves and what we wanted, but probably not the best way to evaluate potential law firm partners.

While 12 months may seem like a long time, we are small and had a few other things to handle (there was this global economic crisis thing). Much of the information had not been gathered before and there were two of us working on this very part-time, but this was a major project so it was worth investing the time.

We pulled together quantitative and qualitative information. We focused on understanding what our client needed from the portfolio, and what we needed as the Legal Department to meet our client's needs. What became clear over the 12 months was that we needed something other than just a solid trademark practice. We needed a firm that would bring a new approach, an open mind, willingness to experiment, and a value orientation to structuring the financial side of the deal.

In the next post: How do you choose a law firm without talking about fees (and are you out of your mind)?

The Firm’s Story

Blogger Lisa Damon is a member of the Executive Committee at Seyfarth Shaw, and has been leading the firm’s efforts to incorporate Lean Six Sigma into its business.

Our story starts back in 2005, when things were good in the law firm world. Years of history across the industry allowed firms across the country to raise rates every year, pay associates in lock step and increase revenues. But there were signs of change, even in 2005 when we started – change that has only escalated with time.

But, I’m getting ahead of myself. First, a word of introduction: Seyfarth (we say “Si - farth,” but answer to most anything) is a large, full-service firm, with 10 offices nationally. We have about 750 lawyers and are known for our culture and client service. That is important as you get to know us, and provides a context that will help you understand how some of the things you’ll read about in this blog came to be. We are a “metal desk” culture -- low on frills and high on value. Turns out that our cultural underpinnings were (and are) vital to where we are now . More on that later.

At the time we started down the road that eventually lead us to Lean Six Sigma, our biggest clients were increasingly talking of flat fees and alternative billing. We provided numbers, but realized that the numbers were really based on assumptions and the little historical data that we could put together. Seyfarth made a decision to take a different route. We wanted to understand our own internal processes – to figure out how we actually practiced law and then make it better and more efficient. Said simply, we knew we had to learn how we could work differently to increase value and quality to clients and provide lower, predictable cost.

Since then, we have been on a journey to better understand and consistently deliver real client value: to learn the art of putting our own interest as a law firm aside and concentrating first on our client’s interest -- knowing that the firm would benefit in the end, if we did it right and true.

As we will talk about in later posts, we adapted the principles of Lean Six Sigma (which we call SeyfarthLean) and began the journey. That road led us many places – from the ACC Value Challenge to many client relationships and now to Ken Grady and Wolverine.

This blog will trace our new and evolving relationship with Wolverine – through thick and thin; establishing project management teams, setting rates, transitioning files, grappling with joys and problems – everything that is part of a client/law firm relationship. We hope by lifting up our curtain, we will help others to grapple with the “how” and “why” of changing the way we work together to serve our collective clients. None of us have it all right and at Seyfarth we are firmly in the midst of the journey but we thought sharing might help. Please post your thoughts and comments as we go forward.

In the next post:

•                Lean Six Sigma in three painless sentences; and,

•                What do you mean you agreed to represent Wolverine and never talked      about fees (are you out of your mind)?

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