Q&A with ACC Value Champion 2013: British Telecommunications
British Telecommunications (BT) has been named one of this year’s Association of Corporate Counsel (ACC) Value Champions. Value Champions are legal departments and law firms recognized for implementing client service models that deliver results while keeping efficiency high and costs low.
BT’s winning innovation came about largely through the efforts of Chris Fowler, General Counsel for UK Commercial Legal Services at British Telecommunications, and David Eveleigh, General Counsel of BT Global Services. Chris and David describe here how this process innovation came to be, and the benefits and challenges in it implementation.
Q. Briefly describe the client service innovation that recently won an ACC Value Challenge award.
A. BT’s initiative aimed to optimise legal value within a corporate in-house contracting environment by implementing ‘best-sourcing’ initiatives to track demand, complexity and consequently deliver the right-size blend and cost of, in-house, off shore and external resources to the appropriate task. By ‘legal value’ BT means, that the complexity/value of work determines the appropriate resource to be used and cost to be incurred.
BT pursued several initiatives to improve legal value and reduce its total cost base, by focusing on the consistent definition of tasks and use of its Legal Process Outsourcer (LPO) to:
- Implement a ‘legal front door’ to ensure all legal work requests are logged and independently triaged and subsequently sent on to the right resource at the optimal cost. This also enabled the legal department to better forecast demand for its services;
- Provide on-going cost/value analysis of the work undertaken by all levels of internal and external legal counsel;
- Set personal objectives for internal staff to financially incentivise increased LPO usage themselves for discrete sub-tasks which allowed the in-house team to move up the value chain by spending more face-to-face time with external BT customers and less on higher cost external counsel;
- Increase legal training and use of contract template generation software to facilitate self-service by BT’s business communities;
- Move the in-house BT legal team up the value chain by focusing them on complex / higher value customer facing activities
Q. Describe the forces in your company and/or your environment that resulted in the innovation(s).
A. BT’s business was evolving from a UK-centric telecommunications provider to a broader global IT infrastructure service provider but in a scalable way in which costs were transformed and service improved. As an integral part of BT, it was incumbent on BT Legal to demonstrate how it was contributing to optimising its costs and improving service quality. This required us to put greater operational focus on “what” we were doing rather than “who” we were doing it for, identifying and optimising internal and external costs and operational focus (by conciously mapping task complexity with cost), broadening our LPO usage and reducing our external spend. The savings generated allowed us to invest in moving high skilled resource to growth markets such as Asia Pacific.
Q. You have taken an innovative approach to sourcing legal services. Please explain what legal service provider options you considered before arriving at your solution.
A. We considered a variety of insourcing and outsourcing options but quickly concluded that regardless of who did it and how it was to be undertaken in the future we needed to build a consistent baseline to the collection and reporting of what our internal and external resources where doing and how much it was costing. The project was split into stages:
Stage 1 – Evaluation
A detailed time-motion study was undertaken to understand in detail:
- What tasks team were being undertaken (e.g. drafting, negotiating, administration, project management, research)?
- Were they being done efficiently, consistently and were there productivity opportunities?
- Was the team structured appropriately?
Stage 2 – Best Sourcing and Tracking
Next, the following measures were put in place for 2012:
- A ‘legal front door’, managed by the LPO, requests for all legal work are routed to the LPO initially to better help us manage the demand for our services. Using a process matrix, the LPO triages the request (which is provided in a web-based form) based on its complexity, then either does the work itself, or passes it to the BT in-house team. This ensures low value/repeatable/high volume tasks are undertaken by the LPO on a consistent basis and high value / complex / external customer intensive work is directed to higher cost UK resource. By the end of 2012, approx. 30% of all work requests were handled exclusively by the LPO.
- Expansion of LPO Work. BT increased the number of tasks performed and people engaged by the LPO. At contract commencement the LPO handled approximately 38 legal and non-legal work request types. Currently, 76 different work request types are undertaken by the LPO. In addition the LPO team has grown from 12 to 20 (see graph below).
- Targets. The team was set objectives to increase use of the LPO and to consider cost/benefits of using external counsel. Our target was to increase Legal Value overall by a minimum 10%.
LPO Work Request—Volume Distribution
Stage 3 – Focus and alignment
Changes were made to achieve a right-size legal team focused on core legal requirements:
- Senior UK-based lawyers were moved to posts in Asia and the US. This put experienced lawyers closer to customers in BT’s growth markets rather than supporting from a UK headquarters. Significant consequential expense reduction took place;
- Common ways of working were adopted and a standardised deal manual was introduced. This meant that on-shore resources could be supplemented by short-term contractors and not law firm associates;
- Playbooks were developed for the LPO to standarise their approach to volume / low risk tasks;
- Investment in core legal services capability to address growth areas such as compliance, data protection and environment.
As a result of these measures, the internal team was able to manage a broadly comparable workload with 40% less people than in October 2010.
Stage 4 – Results
Ongoing monitoring showed that the BT Legal team increased utilization of the LPO, allowing in-house resource to undertake higher value work, resulting in decreased use of external firms for overflow work. The table below shows how in-house work has changed by deal value (typically higher deal value equates to greater complexity).
|End of 2012||36%||43%||21%|
In 2012 the team exceeded their target of a 10% Legal Value increase
Prior to BT using an LPO, all legal transactional activity was handled internally but where demand required, or there was a specialised requirement, BT instructed external counsel. The challenge for the in-house legal team was to deliver best value by maximising use of the LPO on repeatable, commodity transactions, move internal legal resource up the legal value chain, and give greater scrutiny to use of UK external counsel, all while ensuring that quality was improved.
Q. How long have you worked with your law firms or legal service providers? From your perspective, why have these relationships worked?
A. We review our panel firm arrangements approximately every three years and modify them to best meet our strategic objectives and to ensure they remain competitive. We have ongoing relationships with a number of firms who we have worked closely with who have been able to adapt to our evolving buisiness environment.
We set out a clear vision to our internal teams and our external partners about our need to standarise our operating environment and drive efficiencies and they have worked with us to develop and implement it.
It is important to address any naturally drawn misconceptions which people might have and for the exercise to be seen as an opportunity. Our internal staff now have more time to focus on more complex activities, our LPO provider is a key component in our operations, and our external firms have adaped their behavour and offerings to meet BT’s needs.
Q. What were the greatest challenges in implementing this innovation? What advice do you have for other law departments implementing a similar change?
A. Fundamentally it’s about addressing the uncertainties of change and articulating the opportunities it may bring. Our internal team might natually worry about job security from increased LPO usage, but if they have a personal financial incentive in driving up LPO utilisation and see that their quality and complexity of work is improving, the LPO can be percieved as a tool rather than a threat. Similarily a front door can be perceived as a barrier to customer service if an internal client is used to dealing with a specific person, however once a baseline has been set it allows us to predict demand and proactively respond by either moving resources from declining areas to growth areas, creating development opportunities in growth markets or support business cases for new resource / expenditure with underpinning data.
Creating detailed playbooks or deal manuals can also help new recruits better understand our processes and procedures and provide an objective baseline for assessing performance. If enough time is invested into the underlying collateral, the business is less dependent on individuals and can establish detailed key performance indicators / service levels over elements of work where subjective discretion adds limited cost benefit. Ultimately it’s a risk-based approach which each organisation needs to evaluate but if done consistently it does allow the Legal Department to proactively manage its cost base and move the conversationaway from metrics such as the number of lawyers employed relative to a corporation’s revenue which can bear limited relation to specific risks of certain tasks or geographies.
Q. How are you measuring success?
A. We are continually looking to drive greater efficiencies from our internal and external teams as ultimately it directly contributes to business performance; but it is important to stress that it is concious resource optimisation and driving value, not pure cost cutting.
We monitor this by generating a monthly Legal Value Index (which is integrated into our performance objectives) and gives visibility not only of whether we are proactively driving our LPO usage in appropriate areas but also that we are instructing our LPO on the right type of tasks for their skillset. If we are able to beat the previous year’s out turn for the Legal Value Index, staff are appraised (as part of the annual review cycle) depending on the overall achievement and the part they may have played in achieving it. The Legal Value Index is also used to calculate what headroom we have to invest in specific areas such as data protection and compliance and the extent to which we have headroom to engage external counsel for unforseen requirements.
Q. Are there measurements other than cost savings?
A. We monitor the quality of work undertaken by the internal team and the level of direct interaction with our customers. The data shows that since the introduction of the front door, our internal team are spending less time on routine low value transactions and more time on complex matters with more time spent inteacting face to face with BT’s customers and their representatives.
We survey our employees on a quartely basis and it is apparent that the quality of work and employee satisfaction have improved. The LPO is used like a virtual assistant by our internal staff. Time zones mean that work can be ready for review by internal staff at the start of the following working day, thereby freeing our internal staff from time-consuming basic drafting / document review activities. We use the feedback from our employee engagment surveys and build it into our plans so that our staff see our external suppliers as tools similar to knowledge management and document management systems.
The focus on matching skills to task has allowed us to offer broader development opportunities in places where our business is expanding such as Asia and the US.
Additionally our senior level business clients appreciate that skilled resources are finite and this program has forced business decisions around priorities and cost. Our senior level clients also appreciate the greater focus on more face time with BT’s customers.
Q. How might you continue to refine the innovation in the future?
A. Ultimately contracts / transactions are data points which vary within parameters. We would like to be able to track all variances from a baseline and use this potentially to asses our performance against the baseline and to inform whether the baseline has been set correctly. Collecting this data could be really valuable for asssing future transactions and compliance obligations. We believe there is a real opportunity for providers to use this to develop outcome based solutions and we are presently giving thought as to how this can be best achieved.
Q. Has this innovation changed your expectations of law firms, choice of firms, conversations, etc.?
A. This innovation has changed our relationships with our external suppliers. We have moved from having a “tight” panel of law firms to a network of suppliers, each of which provides support at a different level, from our LPO (lower-value repeatable work) through to panel firms (higher value specialist legal work) to our Alternative Legal Supplier network (which provides a range of services at different levels).
Q. Other comments about client service; thoughts about future challenges and recommended changes, etc.
A. We have recently been looking at other providers, for example a number of alternative legal service providers (ALSPs) and we have recently signed agreements with two of these in the UK. As described above we believe anyone who can move into output-based solutions will be well placed to expoit future opportunities.
Chris Fowler is currently the General Counsel for UK Commercial Legal Services at British Telecommunications plc in London, England. Chris is responsible for 81 legal and contract professionals supporting the buying, selling and designing of telecommunications and information technology services across all of BT’s Lines of Business in the UK and for delivering a consistent shared service to a business with FY 12/ 13 revenues in excess of £14 billion. Previously, Chris was VP and Chief Counsel for BT’s Global Services division in the UK as well as responsible for its group wide major transactions team that was responsible for leading BT’s largest commercial and corporate transactions across the group globally.
David Eveleigh is General Counsel of BT Global Services, the major business and international division of BT plc. He leads a team of over 160 people based in the UK, mainland Europe, Latin America, USA and Asia and is responsible for legal, regulatory and compliance activities. He has lived and worked in the US and is currently based in the UK. David started his career as an associate at Ashurst and is a graduate of Southampton University. His team has won In House team of the year and he has been In House lawyer of the year. He is also a director and company secretary of ECTA.
The Association of Corporate Counsel is a global bar association promoting the common professional and business interests of in-house counsel who work for corporations, associations and other private-sector organizations through information, education, networking opportunities and advocacy initiatives. ACC has more than 30,000 members in more than 75 countries, employed by over 10,000 organizations. The Value Champions initiative is part of the ACC Value Challenge, launched in 2008 to provide resources and training for in-house counsel and law firm lawyers to help affect change within the legal industry. By re-aligning relationships and promoting value-based fee arrangements and other management tactics, the market for the delivery of legal services benefits from the same insights upon which every other service industry relies to provide world-class value to their clients. Nominations for next year’s Value Champions will be accepted starting in December 2013 through February 7, 2014.
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