Shell We are active in more than 90 countries Worldwide, we have 93,000 full-time employees We produce 3.3 million barrels of oil equivalent per day Our fuel retail network has around 43,000 Shell service stations We annually sell 145 billion litres of fuel to customers In 2010… We generated an income of $20.5 billion; Invested $30.6 billion in capital; and Spent over $1.0 billion on R&D Royal Dutch Shell plc is listed on the stock exchanges of Amsterdam, London and New York Source: 2010 Annual Report and Form 20-F
Shell Legal Over 600 lawyers Approx. 65 intellectual property professionals Approx. 30 compliance officers and lawyers Over 250 paralegals and support staff In over 50 countries
Managing outside counsel spend Competitive law firm billing for projects Project budgeting Assessing performance Key tips for reviewing outside counsel bills
Questions to consider When should one use competitive bids for project? Should one engage the companys contracting and procurement department in the bidding process? How can one really estimate the cost of all of the twists and turns of a matter, especially in litigation matters? As long as the matters come in on or under budget, why spend any more time on assessing performance? How can I reduce the time I spend reviewing invoices and still ensure they are appropriate in time and amount?
Resources Invoice exercise Microsoft Office Project Performance assessment form Microsoft Office Excel 97-2003 Worksheet Microsoft Office Word 97 - 2003 Document Microsoft Office Word 97 - 2003 Document
Alternative Legal Service Providers Bertrand Alexis Senior Director Qtel International
Qtel is a leading fixed and mobile telecommunications operator principally operating in Qatar, Indonesia, Kuwait and Iraq Customer base of >75m as of March 31, 2011 Presence in 17 countries with operations in 16 countries Focused on 3 regions: Middle East & North Africa Asian Subcontinent Asia Pacific Incorporated in 1987 and listed on the Qatar Exchange (Doha Securities Market) in 1998: Market capitalization of QAR 23.88 bn (1) Strong sovereign ownership: 55% owned by the Qatari government (directly and indirectly) 13% by other Qatari government related entities Qtel at a glance Notes: (1) As of 31 March 2011 10 QAR Millions 3M 20103M 2011 Consolidated revenue6,4177,478 Consolidated EBITDA11,23112,465 Consolidated EBITDA margin47%48% Credit ratings (Moodys/S&P/Fitch)A2 / A / A+ (all stable) Qtel Summary Financial Results Qtel Revenue Breakdown Q1 2011 Business AreaGeography
Alternative Legal Services Providers Virtual law Firms – Former in-house counsel Contract (Locum) placement models Outsourcing legal or paralegal services (to India) Other knowledge process outsourcers
Questions to consider Why change law firms? What types of legal work could you envisage outsourcing to a specialised firm? How would you measure the savings? How do you manage the relationship with the outsourcing firm? (reporting, access to internal clients, renewal of contracts and pricing)
Alternative Billing Models offered by Law Firms Andrew Fleming Partner Norton Rose Group
Alternative Billing Methods offered by Law Firms Good Overview: ACC Value-Based Fee Primer www.acc.comwww.acc.com Alternative Fee Arrangements and Value Billing series by Jerome Kowalski http://kowalskiandassociatesblog.com http://kowalskiandassociatesblog.com Objectives Manage legal spend Improve efficiencies/productivity Improve client/law firm relationship Align interests Implementation Managing expectations Importance of data Key Issues Candid dialogue Transparency Trust
Alternative Billing Methods offered by Law Firms Questions Who goes first – law firm or client? How do alternative billing models affect quality of service Can we identify some of the challenges in alternative billing models? Can we identify some of the advantages of alternative billing methods?
One Stop Shop Model – one Companys Experience Andrea Goodrich Associate General Counsel Tyco International Ltd
TYCO INTERNATIONAL Global, diversified company with businesses in - Security products and services - Fire protection and detection products and services - valves and controls and other industrial products Industry: Conglomerate Revenue FY10 $17.0Bn Employees: 100,000 in October 2010 Legal Team includes about 100 attorneys and about 60 legal professionals
Tycos Single Regional Provider Approach: Path to Selection of an External Partner Problem/Opportunity –250 different law firms in EMEA and $9 million annual spend Assessment of Key Value Drivers for Legal Services –What is it that the client wants out of the engagement? –How is success defined? (Goals) –What are the measures of success? (Result, Cost, Time) –What are the factors influencing success? (Integration) Approach: Solicit partnership proposals –How does a firm compare value drivers and add value? –Do they have skin in the game and share risk/reward? –Will your partner develop and share metrics for success? –Is the firm willing the dump the hourly fee for service model?
Tycos Single Regional Provider Approach: Path to Selection of an External Partner EMEA Regional Representation by Eversheds Convergence of 250 firms to 1 firm Coverage: 27 jurisdictions Cost: Blended rate with target annual hours for basic counseling and litigation (with Cap and collar) Preference on additional work at discounted hourly rates Budget of $3M in FY11 for in scope work Consistency: Eversheds integrated into team meetings and operations Management data including reporting/accruals First Rule- Legal pre-approval of all cost estimates
Tycos Single Regional Provider Approach: Benefits & Challenges Key Value Drivers –Flexibility in resourcing –Transparency and Certainty for P&L leaders –Demonstrated firm investment –Consistency in provision of legal services in most matters Challenges –Initial Business Buy-in –Data management, incompatible systems, accruals –Some Affiliates/Best Friends provide inconsistent service Constant open and transparent dialogue critical to maintaining benefits for long term success
Stop Beating up on Outside Counsel Andrew Fleming Partner Norton Rose Group
Stop Beating up on Outside Counsel Establishing the relationship on a spectrum Partner/best friend Defined process/metric centric Important Factors: Using the procurement function Number of legal providers Size of legal function Direct access to business units Type of work – commodity vs. bespoke
Stop Beating up on Outside Counsel Questions Where does outside counsel provide exceptional value? When is it appropriate to premium bill? How can both client and law firm achieve each others objectives Efficiencies Value/cost Certainty Quality How does risk/reward assessment play into the relationship?
Managing the In-house Legal Budget Michael C. Wu General Counsel and Corporate Secretary Rosetta Stone Inc.
CompanyRosetta Stone Inc. Founded1992 IndustrySoftware MissionChanging the way the way the world learns languages Corporate headquarters Arlington, VA Other officesUS - Harrisonburg, VA and Boulder, CO Overseas – Beijing, London, Munich, Sao Paulo, Seoul, Tokyo Stock symbolRST (NYSE); IPO April 2009 Number of EmployeesApproximately 2000 U.S. Brand AwarenessBest known language learning brand – 75% awareness (Berlitz second with 23% awareness) Legal Department7 attorney and 12 other professionals (contract admins, legal assistants, anti-piracy enforcement) 26
Rosetta Stone - The Most Recognized Language Learning Brand 27
Managing In-house Legal Budget Optimal mix of outside counsel/in-house staff budget Benchmarking against peers (ACC, CLEX, etc.) Studies show that bringing in more in-house results in lower total costs Retain core practice areas in-house – commercial/contracts, financial, IP, administrative and regulatory; outsource large or complex litigation and other matters requiring specialized skills Key metrics for in-house department Legal dept. spend as a percentage of revenue Performance against budget Recoveries gained Liabilities averted Number of initiatives successfully launched/charting wins and losses Preventive efforts: training seminars/modules created and delivered
Managing In-house Legal Budget Justifying the value of the in-house team Increased legal department spending reduced legal liability Legal liability rising in recent years and risk of exposure growing Tenured lawyers company specific knowledge appears to reduce legal liability (CLEX data on damages, settlements and fines) Higher compliance budgets correlated with reduced legal liability, business interruption and reputational harm Managing outside counsel relationships and reducing outside counsel spend Board support – enhance board support: (i) improve board development, (ii) assist in corporate strategy, (iii) manage company- wide risk Aligning Legal Services with Client Needs – (i) client surveys to assess priorities and identify gaps in perception, (ii) educate clients on appropriate work to send to Legal, (iii) Enhance client self- sufficiency
Managing In-house Legal Budget Considering outsourcing the legal department Develop criteria to identify low-value work to outsource to the appropriate alternative service provider Run-of-the-mill contracts, legal research, document review, etc. Pushing work down to paralegals and contracts administrators Build an alumni attorney network – opportunities for moving work to contract attorneys Leverage value of alumni attorneys who understand company Leverage value of former in-house counsel colleagues
ACC Resources ACC Top Ten (2011): Top Ten Considerations When Evaluating a System for Managing Outside Counsel WorkTop Ten Considerations When Evaluating a System for Managing Outside Counsel Work ACC Presentation (2010): Legal Service Management 3.0 Core CurriculumLegal Service Management 3.0 Core Curriculum ACC Leading Practices Profile (2010): Leading Practices in Providing In-house Legal Support for Corporate Governance Initiatives and Compliance and Ethics ProgramsLeading Practices in Providing In-house Legal Support for Corporate Governance Initiatives and Compliance and Ethics Programs ACC Value Challenge: www.acc.com/valuechallengewww.acc.com/valuechallenge
Bibliography of Other Resources American Bar Association http://www.americanbar.org/publications/law_practice_home/la wpractice_archive/lpm_magazine_articles_v34_is5_pg47.ht ml- Legal Process Outsourcing http://www.outsourcing.org/Directory/Legal/1 http://www.lawgazette.co.uk/in-business/a-first-hand-look-a- legal-process-outsourcer-provider-india