Corbitt, Hankins Publish Roadmap to Sustainable Change Management for Legal Operations in Corporate Counsel Magazine
Creating a Roadmap to Success: Five Questions Every Change Champion Should Ask
By Taylor Corbitt and Steve Hankins[1]
Change management is a constant for corporate legal departments, as it is for everyone else in today’s rapidly changing business world. Companies are in a constant state of transformation, be it organic or as a function of structural changes such as a merger/acquisition/divestment, restructuring, leadership change, technology adoption, or evolving corporate priorities. Corporate legal departments are increasingly expected to manage these transitions in a way that is nimble, efficient, and aligned with the often-shifting strategic goals of the business.
Legal departments face two primary challenges to intentional and sustainable organizational change. First, time and money are limited. Legal departments are increasingly asked to do more with less, and deliberate change management can divert already-limited resources to longer-term goals at the expense of short-term productivity.
Second, the traditional process tools employed by other parts of the business to manage change and promote efficiency and predictability — for example, Six Sigma projects, consulting firm studies, process mapping—track clumsily onto legal functions. Common legal department tasks such as assessments of risk, exposure, and compliance concerns can prove a stumbling block to efficiency, and the inherent uncertainty of litigation outcomes can buck predictability.
The answers to the following five questions can form the backbone of a sustainable transition plan for a corporate legal department, whether the change you face is incremental or systemic. This process tracks the change management process often used by our business counterparts, but it is specifically tailored for the realities of the in-house legal department.
1. What are my “quality-critical” metrics for my internal clients/customers?
Goals are a prerequisite to effective and sustainable change. And for goals to be meaningful, they must be measurable. To the rest of the business, “quality-critical” metrics are usually derived from feedback of the ultimate consumer of the goods or services. Whether an outcome is acceptable or unacceptable to a consumer is generally dictated by consumer satisfaction with one or more of four categories: (1) features, (2) integrity, (3) delivery, and (4) efficiency/cost effectiveness of the good or service.
For the in-house legal department consumer, these benchmarks comprise, for example, breadth of in-house expertise, efficiency, creativity, quick response time to queries, soundness of advice, accurate projections, and timely flow of information. A change champion should solicit feedback from the business to determine which areas deserve special focus during transition planning and maintain open lines of communication throughout the measurement phase. Once quality-critical features of the legal services are identified, metrics can be developed to track and measure progress towards internal goals.
For example, if a legal department is managing a transition associated with a merger or acquisition, the business may be primarily concerned with cultivating efficiencies and minimizing waste associated with two departments while reducing cost and creating a cohesive culture. The primary metrics for measuring the transition plan could then be tracked in part by employee idle time, overall spend and engagement survey responses.
The quality-critical metrics will vary depending on the situation and may even vary over the course of the transition as new information comes to light. But the choice of metrics by which to measure success is of paramount importance to maintaining the support of the business, particularly where, as below, unpopular steps must sometimes be taken.
2. Where is there waste in my outside spend?
Where the cause of the transition is alignment with corporate priorities, efficiency and cost-cutting is almost always at the fore. There are two primary drivers of inefficiency for in-house legal departments—internal and external waste. As a threshold issue, waste can often be eliminated by a realignment of the division of labor between internal and external resources. The rule of thumb that fixed costs should be internalized and variable costs should be outsourced is a good place to start, but the breakdown should be audited regularly to avoid “mission creep.”
There is no single best way to identify waste in outside spend. We are partial to running a Pareto analysis to try to categorize the spend and focus on the biggest “offenders” in a budget, but other methods can be equally as effective. An in-house change manager should look closely at outside counsel—review billing arrangements, preferred providers, and billing practices. Ensure that limits on untimely bills and billing for administrative costs, duplicative work, client communications and internal communications are clearly spelled out in outside counsel guidelines. Ensure that those guidelines are enforced. Engage a third-party to help re-negotiate outstanding invoices, if necessary. Carefully consider outside counsel selection processes. For years, companies maintained “preferred providers” lists with discounted billing arrangements, but a recent landmark study published in The American Lawyer found that approach ultimately less efficient than encouraging open bidding.[2] Above all, ensure that outside counsel relationships are truly mutually beneficial. Avoid selection and reselection by “inertia.” Invite new perspectives to analyze comfortable relationships where objectivity may have waned.
Ultimately, the success of outside spend reduction is predicated on the support of the business stakeholders. The change manager must be empowered to make difficult decisions to meaningfully impact spend—there can be no sacred cows.
3. Are my internal resources aligned with my work flow needs?
Internal resource audits can be one of the most difficult pieces in the puzzle of spend reduction, and for that reason, it can be tempting not to ask this question. However, when framed properly, a regular audit of internal resources, including personnel resources, will ultimately improve department morale as well as performance.
The first step in assessing internal resources is to map personnel competencies to departmental work flow. This does not only mean looking for redundancies, but also competencies that should be reassigned. Are there employees with skill sets that are not presently being used, or that could be plugged into a process not usually handled by that job function? By mapping skills to work flow processes, rather than to an organization chart, the change manager is able to visualize needs to better inform assignment, hiring and training, as well as redundancies. In our experience, internal personnel are not asked frequently enough “Are you doing what you want to do?” and “Where do you see your talents best directed within the business?” Assuming that the queried personnel were selected for their good judgment (if not, another type of change is warranted), their answers to these questions are inevitably valuable.
A prerequisite to this analysis is an accurate representation of work flow. This can be done using any traditional tool, including process mapping or swim lanes for visualization. One thing we often see that can cause internal inefficiency within legal departments is overstaffing of decision points. While it is usually not feasible in large companies to have a single decision-maker for each process point, individuals should have specific roles (and know their specific roles). Is it clear for each decision: who is accountable, who is responsible, who is consulted, and who is informed? While not original, taking the time to ask this at the process planning stage can avoid “traffic jams” down the road. The more established the legal department, the more likely there are artifacts from outdated processes or personalities that need to be identified and shed.
Finally, consider the role of technology in improving efficiency of internal process. Particularly in areas with heavy drafting components, such as supply chain and intellectual property transactions, targeted application of technology tools can capture work product and streamline future processes.
4. How can I make my outcomes more predictable?
For companies that use the Six Sigma methodology, in-house lawyers may be frustrated by the emphasis placed on predictability of outcomes as an ultimate goal, especially if the company is a frequent litigant. While litigation may never be as predictable as manufacturing or even sales and marketing processes, it is still important to ask: can the legal department improve predictability and narrow the distribution of outcomes?
Here, new technology options, including predictive analytics and detailed statistics on court and judicial outcomes, even at the level of the type of motion, can be leveraged. A change champion should also consider whether improvements can be made to case intake and triage to allow for early assessment of exposure and settlement options, and whether the case is a candidate for administrative proceedings (for example at the Patent Trial and Appeal Board), or alternative dispute resolution.
Another frequent culprit of misalignment at the expense of predictability is settlement practices. Over time, an emphasis on predictability can lead to more risk-averse behavior, including more often defaulting to settlement, which is inherently more predictable than trial. But regular payouts can create a cumulative burden, and can also sometimes have the undesired effect of encouraging unscrupulous litigants, particularly in industries that are frequent targets for patent assertion entities. For these reasons, a change champion should carefully align settlement processes with the business stakeholders to ensure that the balance between predictability and risk is in keeping with corporate culture and priorities.
5. How can I make the change sustainable?
Making change sustainable is a team commitment that requires buy-in from everyone involved - from the C-suite to the administrative assistants. This is why, in our view, the most effective transitions are participatory and follow listening, transparency, patience, and trust-building. Respect for corporate culture, particularly following divestments, mergers and acquisitions, is critical to breaking down silos and building a cohesive department during an inherently tumultuous time. The best change champions use transitions as an opportunity to clarify expectations for performance. Team members are more motivated to buy in to prescriptive actions if they have participated in the diagnosis of the department and its components.
Culture and cohesion are often the last thing on the minds of those managing a complex transition. In many cases, merely keeping the “trains on the tracks” with an overworked, understaffed department and too few hours in the day takes a Herculean effort. But periods of transition can be clarifying. These times provide windows for business alignment and communion of purpose that is matched by few other periods of corporate life. Openness to fresh perspectives and courage to allow participation in asking and answering the important questions, can ensure a team engagement that will carry the new processes forward sustainably.
[1] The authors are partners in the Change Management/Legal Operations and Intellectual Property practice groups at the law firm of Riley Safer Holmes & Cancila LLP. They have recently completed a ten-month secondment to manage a transition of the worldwide litigation departments of Motorola Mobility and Lenovo. The opinions expressed are those of the authors and should not necessarily be attributed to Riley Safer Holmes & Cancila LLP, Motorola Mobility, or Lenovo.
[2] https://www.law.com/americanlawyer/2018/06/26/law-firm-panels-part-i-are-they-designed-to-fail/
Corporate Counsel Article Link
Reprinted with permission from the November 27, 2018, issue of Corporate Counsel. © 2018 ALM Media Properties, LLC. Further duplication without permission is prohibited. All rights reserved.