Lisa Girmscheid, Rockwell Automation Mike Russell, Ingersoll Rand Vendor Management Lisa Girmscheid, Rockwell Automation Mike Russell, Ingersoll Rand

ACC Legal Ops Maturity Model External Resource Management

Challenges the LegalOps Role faces with service provider oversight Many types of service providers involved Varying types of service provider relationships Uniquely “legal” requirements potentially at odds with traditional corporate procurement policies and procedures Necessity to train and monitor service provider performance

A Wide Range of Service Providers Arbitrators / Mediation Information Governance / Records Management Court Reporters Legal Process Outsourcing (LPO) Legal Research Legal Technology Discovery Outside Counsel

Relationship & Engagement Matter / Attorney Level Individual Requests for Proposals (RFP) Master Service Agreement (MSA) Statement of Work (SOW) Panel of Providers Preferred Supplier Programs Reverse Auction

Getting started with Vendor Management Document Current state process Organization Goals/Strategies General Counsel guidance Identify Gaps / Issues Makeup of providers Efficiency / Cost / Capabilities Prioritize Actions that need to be taken Produce a short-term and long-term strategy Consider convergence where appropriate

Why consolidate (“converge”) the number of legal service providers – what’s the objective? Can facilitate closer partnership & collaboration Potential cost savings & predictable work volume Establish best-of preferred providers by Practice Area/Specialty/Matter Type and/or Geography Improved in-house relationship management More personal direct contact, reduced administrative overhead Things to watch out for – risks

Holding providers accountable Budgets Holding providers accountable Aligns strategic objectives with spending Manages spend proactively vs. reactively Ensure tools in place to monitor Works to support in-house and external ongoing collaboration

Data-driven Decision Making Actual/Budget performance history Internal business client focus on chargebacks Budgeting process governance Rate comparisons by timekeeper Benchmarking for type of work and geography Avoids surprises – remain proactive Facilitates ongoing management of matters Risk of too many matters with one firm Results – outcomes, spend management *** provide specific decisions that could be made from the various data points ***

Additional Supplier Value-Adds CLE credits Educational Workshops Pro bono or other philanthropic support Secondments Diversity Industry involvement & support ACC, ILTA

Supplier Evaluation Understanding of the client’s business Appropriateness of effort Results - Outcome Service - Responsiveness Resource management Overall satisfaction Including collaboration / 360 degree feedback Would the in-house team use this provider again? The results can then help with quantitative comparisons between firms, with legal spend added into the equation for context

Alternative Fee Arrangements (AFAs) Encourage efficiency by the provider Application of Legal Project Management methodologies Can enhance predictability of spend Greater share of the risk Potential to leverage supplier competition Must monitor quality

AFA Type Pros Cons Flat or Fixed Fee: can be monthly, annual, or life of matter. Easy budgeting/forecasting. Useful in managing large practice areas (i.e. Patent Prosecution, asbestos) that have high # of matters + common work elements. Hourly data still needed for future statistical reporting and performance evaluation. Mechanism needed to include all hourly details + heed the flat or fixed fee. Capped Fee: agree upon a “not to exceed” cost for a matter or group of matters, for a specified time period (annual, life of matter). Consider offering a “rebate” if total $ is X% under the cap. Law firm shares in the risk – onus is on them to manage the cost. Easy to forecast, especially in high cost practice areas (i.e. asbestos litigation). Must monitor costs regularly and compare data to firm data. (This is an example of why the need for prompt and accurate billing). Potential for paying high cost for low quality work. Contingent Fee Firm has “skin in the game.” Difficult to forecast spending if firm only bills once at the end of the matter. There is the risk of overpayment. Success-based: mutually define a target for success, and offer a bonus if met. One variant is the “80-120”. Firm bills at 80% of normal rate, but if goal is achieved, they get a bonus and are paid at 120% of rate. Risk sharing tightly tied to quality of work. Somewhat difficult to measure success. Billing at 80% causes some difficulty in forecasting total cost. Blended Rates: fixed rate/timekeeper role (Partner, Associate, Paralegal). Freeze rates – no worries about rate increases. May get high quality representation for lower than average rates. Little or no control over who is billing (so approve timekeepers up front). Must consider what to do if Associate is promoted to Partner. Hybrid – one or more AFA Flexible way to manage costs by phase (i.e. fixed for phase 1, contingency for phase 2). Need to pay close attention to detail, and firm’s administration must be well versed in AFAs.

Value Billing What is the service worth to the organization? Definition of success… at what cost? Trust, but verify

Characteristics of successful vendor management programs Ensure in-house support throughout the development process Including IT/Data Security where necessary Continually improving vendor management through periodic data review Evaluate metrics to ensure they clearly communicate the health of the relationship A small, focused number of metrics is more effective than pages of data Monitoring should clearly show Normal vs. Abnormal & countermeasures Share expectations and scores with outside counsel to improve relationships and performance

Summary / Q&A Cost effective vendor management is optimized as a result of thoughtful process mapping and resource allocation, leveraging technology and data analytics tools and streamlined communication.