Q&A with ACC Value Champions 2013: Axiom Law and Mondelēz International
Axiom and Mondelēz International have been named one of this year’s Association of Corporate Counsel (ACC) Value Champions as part of the annual ACC Value Challenge. This distinction is awarded to in-house legal departments and law firms recognized for implementing client service models that deliver results while keeping efficiency high and legal costs low.
Mondelēz International and Axiom are recognized for designing and executing a sophisticated process to collect and assess nearly 40,000 contract documents and negotiate with thousands of counterparties prior to Mondelēz International’s spin-off of its North American grocery business. The entire spin-off was a significant undertaking, and together, Mondelēz International and Axiom found an efficient way to solve the contract challenge that also ensured a diligent and comprehensive solution.
This innovation came about largely through the efforts of Tom Finke, General Manager of the Chicago office of Axiom, and Gerhard (Gerd) Pleuhs, Executive Vice President & General Counsel of Mondelēz International. Tom and Gerd describe here how this winning process innovation came to be, and the benefits and challenges for both parties.
Q.Gerd, why did you decide to retain Axiom Law to assist with the spin-off of Mondelēz’s North American grocery business?
A.Axiom offered us the scale and expertise to tackle this project. The volume of the work, the tight deadline of our upcoming spin-off and cost were all significant challenges to more traditional prospective law firm partners, so these challenges led us to look beyond the more traditional set of firms.
Q.How long have you worked with Axiom, and from your perspective, why has this relationship worked?
Although Mondelēz had worked with Axiom on several smaller matters, this was Mondelēz International’s first experience with Axiom on a project of this magnitude, and we were impressed how Axiom’s management made a great effort to make the relationship work seamlessly. We saw Axiom was proactive in learning all about our company upfront, such as our business model and our culture, and they used these insights to train everyone at Axiom involved in the project. Axiom’s up-front work made it much easier for everyone to work even better together.
Mondelēz International’s legal department, its employees in charge of contracts and Axiom’s team completed the collection and assessment in less than 35 days, and then negotiated all affected contracts while keeping the project on budget and on schedule with daily progress reports. The relationship between the two companies was highly collaborative, which is a large reason for the success of the project. Mondelēz International and Axiom pulled together a joint team that delivered flawless execution for the identified contracts in 10 months, on time and with a substantial cost savings relative to a traditional law firm. It’s a good example that you do not have to necessarily go abroad to get alternative legal services—in fact, the proximity was an advantage, giving both teams better access to one another on a daily basis, greater efficiency and ability to course-correct more quickly than an offshore partner. Neither of us could have done this alone—rather than outsourcing, this was continuous cooperation and teamwork.
Q.Tom, what were the greatest challenges in implementing this innovation?
A.The greatest implementation challenge was, by far, the sheer scale and complexity of the undertaking: the need to design and flawlessly execute a sophisticated process to collect and assess nearly 40,000 contract documents and obtain consents from or negotiate new agreements with thousands of counterparties in less than 12 months.
Our advice to other firms and law departments undertaking a similar initiative would be to recognize when the enormity of a project demands a non-traditional approach. In other words, for large scale projects, GCs and their departments should seek out a solution that utilizes project and process management and leverages technology in addition to legal expertise.
Although the success of the project did not fundamentally change how we serve clients, we did improve our processes and use of technology throughout the course of the project, and we’ve applied those learnings to subsequent projects. More importantly, the success of the project enabled other clients to be comfortable with non-traditional approaches to large-scale commercial projects.
Q.How are you measuring success?
A.We’ve measured success beyond simply completing the needed work on time and on budget. An important measure of success is how we have better ways of working and better systems in place today than before the spin-off. Beyond completing the project, together with Axiom, we created a cost-effective system to separate, organize and perform due diligence on our contracts on an ongoing basis. We also learned how important is to focus on doing what matters. By focusing our efforts on what we had to do, Mondelēz International was able to concentrate our contribution, work hours and thinking on the overall process and how to get it done, while Axiom was able to execute at a lower cost than we could have done in-house. Today, doing what matters has become a core principle for all our legal our work.
Q.Gerd, has this experience changed your relationships with other law firms or legal service providers as well?
A.Yes, based on our collaboration with Axiom, our law department is better able to hold outside counsel accountable to help control costs and be more open to alternative ways of billing for services. Outside counsel are increasingly aware there are more options available to us. We saw how being disciplined with regular budget and progress meetings throughout the process helped both Axiom and Mondelēz International. More broadly, doing what matters has become a core principle for our legal department, meaning alternative service providers and outside counsel aren’t just for specialty or overflow work. We’re much more strategic in what we do, who does it and what qualifications are needed to get the job done.
Q.Any other comments about changes to legal services models?
A.For Mondelēz International, “doing what matters” is a principle that law firms need to further recognize—they should join in-house departments to share the burden, work more as a team where each provides what it can do best to come to the best result. Doing so will help reduce costs and improve efficiencies. It’s client friendly, practical and meets the client’s needs.
For Axiom, while we have numerous thoughts about the broader legal ecosystem, we will limit our comments here to commercial contracts, given that it is the crux of our work on this project. The ramifications of commercial contracts extend well beyond the legal department. In fact, contracts are the most important point of intersection between legal and business interests relating to the relationship between a company and its customers and suppliers. Despite this level of import and the resources devoted to this category, contract lifecycle management has been fragmented across numerous corporate disciplines, often without a single “owner.” The consequences of this fragmented approach include missed opportunities to optimize the economics of relationships with customers and suppliers.
Our strategy in this field, we believe, breaks new ground not only treating contracts as a single/unified discipline cutting across multiple corporate functions but also addressing all aspects of the end-to-end lifecycle—beyond the traditional legal role of contract creation to include contract data-mining and contract rights/obligation management. We believe that we, along with our innovative GC partners (Gerd Pleuhs chief among them) are leading the way in reassessing the industry’s approach to optimizing this important corporate asset.
Tom Finke started the Chicago office of Axiom in 2008, growing the office to over 50 attorneys. Since 2010 he has also served as an adjunct professor at Northwestern University School of Law, where he teaches a class on the role of in-house counsel. Prior to Axiom, Tom was at Tribune Company, where he served as CEO of ForSaleByOwner.com and as Senior Vice President of Tribune Interactive. In that role, he managed Tribune’s ownership stake in CareerBuilder.com and cars.com. Tom started his career at Sidley & Austin where he served as the general counsel for a $450 million division of a client. Tom is a graduate of Northwestern’s JD/MBA program and holds a BA from Claremont McKenna College.
Gerd Pleuhs oversees Mondelēz International’s legal, corporate secretarial, compliance, and security functions. For more than a decade, Gerd has been involved in and dealt with a wide variety of legal issues and matters. His work has involved many jurisdictions and areas of law and compliance, including much of Kraft’s international M&A activity. Gerd negotiated Kraft’s acquisition of businesses in Morocco, Bulgaria, Romania, Russia, Poland, Turkey, and Egypt. He was the lead negotiator in Kraft’s 2007 $7.6Bn acquisition of Danone’s LU biscuit business. He was also a member of the core team responsible for Kraft’s $19Bn Cadbury acquisition in 2010. With the announcement of the separation of Kraft Foods Inc. into two separate publicly-traded companies, Mondelēz international, Inc. and Kraft Foods Group, Inc., Gerd led the many legal work streams that enabled the spin-off of Kraft Foods Group, Inc.
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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