Do You Measure Up? Proving That Legal Departments Are More Than a Cost Center

General Counsel (GC) across most industries remain under pressure to operate efficiently, cut costs and maximize existing resources. In order to properly measure just how successful a Lawyer is operating today under these mandates, it is vital that in-house legal teams have a system of metrics and measurements in place. By measuring efficiencies, GCs can demonstrate their value to the organization and can provide proof points that help their legal department gain the trust and respect of company executives.

Are GCs on board?

In a recent survey, GCs were asked, “Do Metrics Provide a Useful and Accurate Measure of the Legal Department’s Value to the Business?” In response, 66% of General Counsel (GC) said that metrics do not provide a good measure of the legal department’s value. Additionally, most GCs reported that they do not use metrics to assess the legal department’s performance (58%), and they do not believe that metrics assist in analyzing the legal department’s value (66%).

Measuring cost vs. value

Why? When considering Conferences metrics generally, they are most often designed to measure only the legal department’s cost to the organization, rather than the department’s value. For example, the most common metrics in legal departments are:

* Legal expenses as a percentage of corporate revenue

* The cost of outside counsel

* Internal Legal Process Outsourcing department costs

* Cost per matter

* Average billing rate

It’s easy to see that these metrics are more about cost than value. To accurately capture value, a legal department needs to tell a complete and balanced story and show not simply the dollars being spent by a Lawyer, but how much that department has saved the organization from spending or losing. There are a number of methods to measure both the tangible and intangible value of a legal department. Here are a few:

* Feedback from client surveys that focus on quality of service, efficiency, commerciality and communication

* Assessing matter success rates

* Calculating dollars saved by negotiating better rates or AFAs with outside counsel

* Documentation of the where the LPO team added commercial value in a matter

* Tracking of the actual risks that were avoided

* Tracking the cost of internal legal resource against external hourly spend

* Regular reports to the business and/or board of directors

Going back to the aforementioned survey, most GCs believed their in-house legal teams were viewed as both legal counsel and strategic business partner. In fact only 19% reported that their in-house teams were seen purely as legal counsel. This demonstrates that GCs are being asked to play a greater strategic role in their organizations. It also reinforces the need for GCs to use metrics to prove value. As we approach mid-year, GCs will likely continue to search for new ways to heighten the efficiency of their departments, while working steadily to provide more value to their organizations as strategic partners.

Check more info about: Legal Conferences in USA and Legal Event UK 2014

Rising Legal Costs – A Solution

1.0 Background

Globalization has brought tremendous changes in the global business arena and the BPOs and later LPOs are the direct offshoot of it. LPOs have come into being in India and elsewhere in the world primarily to cater to the clients of US and other developed nations as far as the legal processes are concerned to not only provide quality service but also to reduce the legal costs. In the past decade or so, a good number of LPOs have opened their businesses in India and in the light of rising legal costs and in order to find a workable solution to it we need to examine the issue in detail.

1.1 A Few Illustrations

Cisco’s Systems Inc., is a company that sells networking products, routing and switching systems. The company has a total legal spending that amounts to a little over one-third of 1% of company revenue, with non-litigation expenses running at about 0.16%. Measured in terms of dollars, Cisco’s 170-member lawyer department spends $38 million internally and $80 million a year on outside counsel. The $32.8 billion company has 51,000 employees spanning across 80 countries. (Leslie A. Gordon in GC California Magazine Published in their website http://www.law.com.) Microsoft managed to reduce its legal costs for the last fiscal year but still the company is involved in lot more litigation matters in Europe (Todd Bishop in P-I reporter). It would be an interesting scenario to collect the info pertaining to each US Company’s annual spending on the legal costs. It will certainly not please those who manage the companies, not in the least the shareholders.

2.0 Existing Arrangements

There are certain existing arrangements in place to deal with the issue of legal costs. The arrangements include in-house counsel department for every company. The in-house counsel takes care of all the legal matters pertaining to the company he works for and he also depends on outside counsels for the same. It would be appropriate if we understand the roles played by the in-house counsels and outside counsels vis-à-vis the legal costs.

2.1 In-house Counsels

The American Bar Association developed a model rule on foreign legal consultants (FLCs) in 1993. FLCs offer legal advice on international law and the law of the countries in which they are qualified to practice if they meet certain requirements. American Bar Association recently endorsed recommendations of its Commission based on Multijurisdictional Practice (“MJP Commission”) including revisions to the ABA Model Rules of Professional Conduct (“Model Rules”) regarding unauthorized practice, jurisdiction to discipline out-of-state lawyers, and choice of law rules governing multistate representation. These revisions are currently being examined and awaiting for the implementation. U.S.lawyers, seeking to increase their opportunities to offer their services overseas for liberalization of admission requirements under the General Agreement on Trade in Services (GATS) including both inbound and outbound of trade of U.S In August 2006, the Committee on Professional and Judicial Ethics of the Association of the Bar of the City of New York (“the Committee”) which published a Formal Opinion stating attorneys could ethically contract out legal support services abroad.

American Conference Institute (ACI) announced to hold an LPO Summit at the Grand Hyatt Hotel in New York on January 16 and17, 2008 to develop global legal support strategies, identify negotiating outsourcing contracts, and to optimize ongoing relationship

2.2 Problems and Challenges

Both the risks and exposures an in-house counsel faces are pronouncedly greater in comparison with the other lawyers as the in-house counsels are concurrently encumbered with the task of providing valuable legal advice while ensuring compliance to the law. In-house counsels face this daunting task in a scenario where the activities of the company are inherently interconnected with the legal tasks at hand. To top it all, in-house attorneys were confronted with a myriad of potential exposures. These legal tangles include $307 of SOX; backdating stock options; new Rules of Federal Civil Procedures regarding electronically stored information; the McNulty Memorandum; Federal Rules of Evidence 502; liability to outside third parties; investigating boardroom leaks; and multi-jurisdictional practice and licensing.

2.3 Outside Counsels

Similarly, in-house lawyers are increasingly asking the law firms on hire to submit estimated budgets so they can trim down the costs of legal work especially when defending themselves against lawsuits. Companies have long asked for budgets from their lawyers for business transactions and for more conventional types of legal work. But with pressure mounting on them to report higher earnings, the in-house lawyers must now monitor their legal expenditures and they want their outside counsel to follow the suit as well.

The “2007 ACC/Serengeti managing outside counsel survey report” (www.serengetilaw.com) shows an average increase of 5.3% in the billing rates by outside counsel during the period from 2002 to 2007.

Billing issues have always been a war zone between the in-house and outside counsels. The popular “hourly billing” method comes with its own disadvantages. It often impacts legal costs negatively as it lays more emphasis on the delivery of the work rather than on the qualitative aspect which can eventually have an adverse effect on client relationship.

2.4 Some Key Challenges

The Legal Service Act 2007 of UK, permits legal out sourcing, is a boon t. Indian law graduates who can easily cope with England Legal work. The WTO in July 1998 noted a combined net trade balance for the U.S. and the U.K., the two largest exporters of legal services.

With associate lawyers in the US carrying a price tag of $225 per hour in their first year and $450 an hour in their eighth year. It was only a matter of time before law firms sought to outsource some of their countries like India, where the lawyers need to pay a price of 10 to 15% of that of US lawyers and a turnaround time of 24 hours for outsourced work. Legal Services Off shoring (LSO) which is an in-house legal departments or organizations offshore legal work from areas where it is costly to perform in United States or Europe is decreasing rapidly and on the other end in Indian services on high demand.

Criminal defense specialist and former Assistant United States Attorney Jay Ethington assure that “There is no difference between Indian and American advocates. The quality of work is the same”.

Outsourcing legal work to India is beneficial to western countries due to

3.0 What ails legal costs?

Despite taking all kinds of measures the ailment of over-expenditure continues in a company. Corporate entities, in-house counsels
and outside counsels, all seem to be caught in an escalating web of legal budget.

Budgets are the chief pointers to know whether in-house and outside counsels are thrashing out strategic issues and activity levels in a fruitful manner before litigation starts. They also act as parameters against which progress of the team and the expenses while handling complex legal questions and issues faced by it can be gauzed.

In a study conducted by Inside Counsel in its 17th Annual Survey of General Counsel (Published in the July 2006 issue of InsideCounsel), some 407 in-house counsels and 131 law firms felt that most of the friction between law firms and their in-house counsels can be attributed to the costs. Undeniably, when it comes to fiscal matters, the perceptions of the two groups could hardly be more divergent. 52% of in-house counsels identified ‘reduction of costs’ as the most significant thing law firms could do to develop their rapport with in-house counsel.

3.1 An interesting study

A study carried out by ACCA (now renamed ACC) has shown that despite taking measures, cost controls are failing to cut overall legal spending. The ACC survey shows that in-house counsel relies heavily on outside counsel in key areas such as litigation (69%), intellectual property (45%) and employment (45%). And as salaries for junior law firm associates continue to spiral upward, along with hourly billing rates for associates and partners alike, general counsel must manage with increasing legal fees.

The Way Out!

The only viable and durable solution on the horizon appears to be legal outsourcing which is more beneficial to the US and other western companies not only in the short run but also over a period of time.

4.0 A Few Issues!

Certain issues came up after the legal process outsourcing has begun in India and elsewhere in the world. Certain myths are also doing the rounds and it would be a mistake to attribute them to unbiased minds alone. In the light of newer issues let’s examine them as objectively as we can.

4.1 Outsourcing to India affects US employment

here is no valid data to prove that legal outsourcing to India will affect the employment in the US. According to a study by Forrester Research, the current annual value of legal outsourcing to India is at about US$80 million, but this can rise to US$4 billion, and would provide 79,000 jobs by 2015. This makes the present job absorption in this sphere-which is a mere 12,000-appear minuscule (http://www.blogsource.org/2005/11/india_could_abs.html). A study conducted earlier this year by Robert Half Legal (www.roberthalflegal.com) points that more stress is put on legal expertise in areas of compliance, regulatory issues, litigation, intellectual property and real estate. This increased demand will considerably outpace the rate of the entire legal outsourcing market.

These are mere forecasts. Even if such forecasts are completely believed, the amount of legal work that is off-shored will still remain 2% of that projected total and that too a major chunk of that constitute low-end work. Moreover it is widely reported that the population of the US is aging. At current productivity levels, it will need 5 percent or to put it simply, 15.6 million more workers by 2015 to maintain both its current ratio of workers to the total population and to sustain its present living standards. By 2015, despite current fears about job losses as a result of off-shoring, the US economy will certainly need more workers. Off-shoring is surely one way to meet that need. So all those doubting Johns who hold a pessimistic view on outsourcing legal services will be better off remembering that even after a substantial amount of work is outsourced from the US there is no threat to its economy.

4.2 Competence of Indian lawyers

The competence of the Indian lawyers can be judged not from the fact that quite a number of advocates are being produced annually but from the fact that they are the pillars, strong pillars at that, for the gigantic judicial system prevailing in India matched only by the US in its magnitude and dimensions. There is not a single legislation in the US that is not made in India barring a few that is not subject to intricate and in-depth interpretations by the lawyers and the judges. Many landmark judgments in India were and are possible due to the presence of the highly agile and competent lawyer force. The ease with which they can tackle any legal issue pertaining to any country where common law is prevailing is predictable and natural. The fact that the BPOs in India which are a runaway success are gradually paving way for the LPOs or at least LPOs are increasingly occupying the centre-stage in the outsourcing business in India with growing number of clients from the US and other countries speaks volumes about the ability and competence of the Indian lawyers.

4.3 Quality output

Apart from economical costs another important factor for the US or other western country to outsource their legal work is the quality output they are assured of in India. It is an admitted fact that in most cases quality takes precedence over many other factors like cost-effective services, abundant workforce etc.

4.4 Safety and Confidentiality

Nowhere else does the issue of safety and confidentiality come up so constantly as in the field of law. And, when it comes to the LPOs the task of providing quality services to their global clientele should be matched by stringent safety and confidentially measures in order to earn their confidence and goodwill. There are of course competent and professionally run LPOs in India that adhere to the safety and confidentiality norms.

5.0 Separating the wheat from the chaff!

There are a good number of LPOs in India now and a report says 1800 lawyers are presently engaged in various LPOs catering to the global clientele providing quality services. It becomes quite a task to choose the best from among them. However, with stringent objective criteria the task becomes easier and then it will not be a Herculean task to select the best LPO to whom any legal service can be entrusted in confidence. The parameters can be-

Quality output
Security and confidentiality
Cost-effectiveness
Easy accessibility
Hassle-free and client-friendly billing

Its website (www.acumenlpo.com) can be scanned for further details.

Child Soldiers – A Brief Legal Survey

The concept of a ‘child soldier’ – the involvement of children (through recruitment or otherwise) in the violence and brutality of armed conflict – is abhorrent to most adults who consider the matter. This is borne out by the fact that there are a number of international conventions and other mechanisms which condemn the practice and which create an international framework to combat it.

Who are child soldiers? The United Nations Convention on the Rights of the Child (see below) defines a child as a person below the age of eighteen years. However, for the purpose of restricting recruitment into the armed forces of a State Party to the Convention, and for the requirement that States Parties “take all feasible measures to ensure” that children “do not take a direct part in hostilities”, the Convention uses the lower age of fifteen years (Article 38).

The Optional Protocol to the Convention on the Rights of the Child on the involvement of children in armed conflict (see below) uses the age of eighteen years to condemn the recruitment of children, or their use in hostilities, by armed groups that are distinct from the armed forces of a State (Article 4).

The Rome Statute of the International Criminal Court (see below) includes, within the definition of “war crimes”, the crime of conscripting or enlisting children, or using them to participate actively in hostilities, by either national armed forces or any armed group (Articles 8(2)(b)(xxvi) and 8(2)(e)(vii)). For these purposes, a child is a person below the age of fifteen years.

Where are child soldiers used? Child soldiers may be found both in government armed forces and in armed groups which oppose the central governments of their countries. The Coalition to Stop the use of Child Soldiers, which was launched in 1998 by several groups including Amnesty International and Human Rights Watch, reports that the majority of children under the age of 18 years, who are involved in conflict, are associated with armed groups.

The Coalition reports that Africa has the largest number of child soldiers. Children are being used in armed conflict in countries such as Burundi, Central African Republic, Chad, Democratic Republic of Congo, Somalia and Sudan. It also reports child soldiers in various Asian countries, such as Myanmar and Indonesia, in the Middle East and in Latin America.

Because the Coalition campaigns for a complete prohibition of all recruitment and use for military purposes of persons under the higher age of 18 years, its web site notes that the United States, and such other western countries as Austria, Australia, France, Germany, the United kingdom and Canada, are countries which recruit children (that is, persons under the age of 18) into their armies.

How are child soldiers used? Most publicity surrounding child soldiers has focused on their use in non-western countries by both armed groups and government armed forces. Such publicity makes it clear that child soldiers are used in these countries to fight and kill, participating directly in combat. They may also be used to loot and destroy property; to lay mines and explosives; to scout, spy and act as decoys. Girls are widely reported to be used for sexual purposes and for domestic tasks, as well as for these other purposes.

Important International Conventions: The United Nations Convention on the Rights of the Child entered into force in September 1990. As noted above, Article 38 of that Convention deals with the issue of children in the context of a country’s armed forces and of hostilities generally. In paragraph 4, the Article states that, “States Parties shall take all feasible measures to ensure protection and care of children who are affected by armed conflict”.

The Optional Protocol to the Convention on the involvement of children in armed conflict entered into force in 2002. It requires that States Parties “take all feasible measures” to ensure that members of their armed forces who are under the age of 18 “do not take a direct part in hostilities” (Article 1) and requires that children under that age not be compulsorily recruited (Article 2). (Voluntary recruitment of children between the ages of 15 and 18 into a State’s armed forces is not banned by the Convention or the Protocol.)

Article 3 of the Optional Protocol requires that States Parties that permit under-18 voluntary recruitment must maintain certain safeguards (including ensuring the informed consent of the child’s parents or legal guardians). States Parties are also required to take “all feasible measures” to prevent recruitment and use by armed groups of children under the age of 18, including the adoption of legal measures necessary “to prohibit and criminalize such practices”.

The International Labour Organization Convention No. 182 concerning the Prohibition and Immediate Action for the Elimination of the Worst Forms of Child Labour came into force in November 2000. The Convention defines a child as a person under the age of 18 years. Ratifying States are required to take urgent measures to secure the prohibition and elimination of the worst forms of child labour, among which are included “forced or compulsory recruitment of children for use in armed forces”.

Enforcement: A body of independent experts, the Committee on the Rights of the Child, was established further to Article 43 of the Convention on the Rights of the Child. The Committee monitors the implementation of the Convention and the Optional Protocol on the involvement of children in armed conflict. States Parties must submit regular reports to the Committee.

The Special Court for Sierra Leone (which was established by the United Nations and the Sierra Leone government in 2002) handed down the first convictions by an international tribunal for the crime of recruitment and use of child soldiers.

The Rome Statute of the International Criminal Court (ICC) entered into force on July 1, 2002. The first trial before the ICC, which started, after long delays, on January 26, 2009, deals with the war crimes of conscripting and enlisting child soldiers under the age of 15 years and of using them to participate actively in armed conflict. This trial, described as a landmark event in the development of international law, should bring increased public attention to the issue of child soldiers.