ACC Europe Panel 114
Legal Services in the 21st Century
Introduction
Bertrand Alexis
Senior Director
Qtel International
Managing Outside Counsel Spend
Leanne Geale
Legal Services Coordinator
Royal Dutch Shell
Shell
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We are active in more than 90 countries
Worldwide, we have 93,000 full-time employees
We produce 3.3 million barrels of oil equivalent per day
Our fuel retail network has around 43,000 Shell service stations
We annually sell 145 billion litres of fuel to customers
In 2010…
• We generated an income of $20.5 billion;
• Invested $30.6 billion in capital; and
• Spent over $1.0 billion on R&D
Royal Dutch Shell plc is listed on the stock exchanges of Amsterdam, London and New York
Source: 2010 Annual Report and Form 20-F
Shell Legal
• Over 600 lawyers
• Approx. 65 intellectual property professionals
• Approx. 30 compliance officers and lawyers
• Over 250 paralegals and support staff
• In over 50 countries
Managing outside counsel spend
• Competitive law firm billing for projects
• Project budgeting
• Assessing performance
• Key tips for reviewing outside counsel bills
Questions to consider
• When should one use competitive bids for project?
• Should one engage the company’s contracting and procurement
department in the bidding process?
• How can one really estimate the cost of all of the twists and
turns of a matter, especially in litigation matters?
• As long as the matters come in on or under budget, why spend
any more time on assessing performance?
• How can I reduce the time I spend reviewing invoices and still
ensure they are appropriate in time and amount?
Resources
• Invoice exercise
Microsoft Office
Word 97 - 2003 Document
Microsoft Office
Word 97 - 2003 Document
• Microsoft Office Project
• Performance assessment form
Microsoft Office
Excel 97-2003 Worksheet
Alternative Legal Service Providers
Bertrand Alexis
Senior Director
Qtel International
Qtel at a glance
• Qtel is a leading fixed and mobile
telecommunications operator principally
operating in Qatar, Indonesia, Kuwait and Iraq
Qtel Summary Financial Results
3M 2010
3M 2011
Consolidated revenue
6,417
7,478
• Customer base of >75m as of March 31, 2011
Consolidated EBITDA
11,231
12,465
• Presence in 17 countries with operations in 16
countries
Consolidated EBITDA margin
47%
48%
• Focused on 3 regions:
• Middle East & North Africa
• Asian Subcontinent
• Asia Pacific
• Incorporated in 1987 and listed on the Qatar
Exchange (Doha Securities Market) in 1998:
QAR Millions
Credit ratings (Moody’s/S&P/Fitch)
A2 / A / A+ (all stable)
Qtel Revenue Breakdown Q1 2011
Business Area
Geography
• Market capitalization of QAR 23.88 bn(1)
• Strong sovereign ownership:
• 55% owned by the Qatari government
(directly and indirectly)
• 13% by other Qatari government related
entities
Notes:
(1) As of 31 March 2011
10
Alternative Legal Services Providers
• Virtual law Firms – Former in-house counsel
• Contract (Locum) placement models
• Outsourcing legal or paralegal services (to India)
• Other knowledge process outsourcers
Questions to consider
• Why change law firms?
• What types of legal work could you envisage outsourcing to a
specialised firm?
• How would you measure the savings?
• How do you manage the relationship with the outsourcing firm?
(reporting, access to internal clients, renewal of contracts and
pricing)
Alternative Billing Models offered by Law
Firms
Andrew Fleming
Partner
Norton Rose Group
Alternative Billing Methods offered by Law Firms
Good Overview: ACC Value-Based Fee Primer www.acc.com
Alternative Fee Arrangements and Value Billing series by Jerome Kowalski
http://kowalskiandassociatesblog.com
Objectives
• Manage legal spend
• Improve efficiencies/productivity
• Improve client/law firm relationship
• Align interests
Implementation
• Managing expectations
• Importance of data
Key Issues
• Candid dialogue
• Transparency
• Trust
Alternative Billing Methods offered by Law Firms
Questions
• Who goes first – law firm or client?
• How do alternative billing models affect quality of service
• Can we identify some of the challenges in alternative billing
models?
• Can we identify some of the advantages of alternative billing
methods?
One Stop Shop Model – one Company’s
Experience
Andrea Goodrich
Associate General Counsel
Tyco International Ltd
TYCO INTERNATIONAL
• Global, diversified company with businesses in
- Security products and services
- Fire protection and detection products and services
- valves and controls and other industrial products
• Industry: Conglomerate
• Revenue FY10 $17.0Bn
• Employees: 100,000 in October 2010
• Legal Team includes about 100 attorneys and about 60 legal
professionals
Tyco’s Single Regional Provider Approach:
Path to Selection of an External Partner
• Problem/Opportunity
– 250 different law firms in EMEA and $9 million annual spend
• Assessment of Key Value Drivers for Legal Services
– What is it that the client wants out of the engagement?
– How is success defined? (Goals)
– What are the measures of success? (Result, Cost, Time)
– What are the factors influencing success? (Integration)
• Approach: Solicit partnership proposals
– How does a firm compare value drivers and add value?
– Do they have “skin in the game” and share risk/reward?
– Will your partner develop and share metrics for success?
– Is the firm willing the dump the hourly fee for service model?
Tyco’s Single Regional Provider Approach:
Path to Selection of an External Partner
EMEA Regional Representation by Eversheds
Convergence of 250 firms to 1 firm
• Coverage: 27 jurisdictions
• Cost:
• Blended rate with target annual hours for basic
counseling and litigation (with Cap and collar)
• Preference on additional work at discounted hourly rates
• Budget of $3M in FY11 for in scope work
• Consistency:
• Eversheds integrated into team meetings and operations
• Management data including reporting/accruals
• First Rule- Legal pre-approval of all cost estimates
Tyco’s Single Regional Provider Approach:
Benefits & Challenges
• Key Value Drivers
– Flexibility in resourcing
– Transparency and Certainty for P&L leaders
– Demonstrated firm investment
– Consistency in provision of legal services in most matters
• Challenges
– Initial Business Buy-in
– Data management, incompatible systems, accruals
– Some Affiliates/Best Friends provide inconsistent service
• Constant open and transparent dialogue critical to maintaining
benefits for long term success
Stop Beating up on Outside Counsel
Andrew Fleming
Partner
Norton Rose Group
Stop Beating up on Outside Counsel
Establishing the relationship on a spectrum
Partner/best friend
Defined process/metric centric
Important Factors:
• Using the procurement function
• Number of legal providers
• Size of legal function
• Direct access to business units
• Type of work – commodity vs. bespoke
Stop Beating up on Outside Counsel
Questions
• Where does outside counsel provide exceptional value?
• When is it appropriate to “premium bill”?
• How can both client and law firm achieve each other’s
objectives
 Efficiencies
 Value/cost
 Certainty
 Quality
• How does risk/reward assessment play into the relationship?
Managing the In-house Legal Budget
Michael C. Wu
General Counsel and Corporate Secretary
Rosetta Stone Inc.
Company
Rosetta Stone Inc.
Founded
1992
Industry
Software
Mission
Changing the way the way the
world learns languages
Corporate
headquarters
Arlington, VA
Other offices
US - Harrisonburg, VA and Boulder, CO
Overseas – Beijing, London, Munich,
Sao Paulo, Seoul, Tokyo
Stock symbol
RST (NYSE); IPO April 2009
Number of Employees
Approximately 2000
U.S. Brand Awareness
Best known language learning brand – 75% awareness
(Berlitz second with 23% awareness)
Legal Department
7 attorney and 12 other professionals (contract admins,
legal assistants, anti-piracy enforcement) 26
Rosetta Stone - The Most Recognized Language Learning Brand
27
Managing In-house Legal Budget
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Optimal mix of outside counsel/in-house staff budget
 Benchmarking against peers (ACC , CLEX, etc.)
 Studies show that bringing in more in-house results in lower total
costs
 Retain core practice areas in-house – commercial/contracts, financial,
IP, administrative and regulatory; outsource large or complex litigation
and other matters requiring specialized skills
Key metrics for in-house department
 Legal dept. spend as a percentage of revenue
 Performance against budget
 Recoveries gained
 Liabilities averted
 Number of initiatives successfully launched/charting wins and losses
 Preventive efforts: training seminars/modules created and delivered
Managing In-house Legal Budget

Justifying the value of the in-house team
 Increased legal department spending reduced legal liability

Legal liability rising in recent years and risk of exposure growing
 Tenured lawyers’ company specific knowledge appears to reduce legal liability
(CLEX data on damages, settlements and fines)
 Higher compliance budgets correlated with reduced legal liability, business
interruption and reputational harm
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Managing outside counsel relationships and reducing outside counsel
spend
Board support – enhance board support: (i) improve board
development, (ii) assist in corporate strategy, (iii) manage companywide risk
Aligning Legal Services with Client Needs – (i) client surveys to
assess priorities and identify gaps in perception, (ii) educate clients
on appropriate work to send to Legal, (iii) Enhance client selfsufficiency
Managing In-house Legal Budget

Considering outsourcing the legal department
 Develop criteria to identify low-value work to outsource to
the appropriate alternative service provider
 Run-of-the-mill contracts, legal research, document
review, etc.
 Pushing work down to paralegals and contracts
administrators
 Build an alumni attorney network – opportunities for
moving work to contract attorneys
 Leverage value of alumni attorneys who understand
company
 Leverage value of former in-house counsel colleagues
ACC Resources
• ACC Top Ten (2011): Top Ten Considerations When Evaluating
a System for Managing Outside Counsel Work
• ACC Presentation (2010): Legal Service Management 3.0 Core
Curriculum
• ACC Leading Practices Profile (2010): Leading Practices in
Providing In-house Legal Support for Corporate Governance
Initiatives and Compliance and Ethics Programs
• ACC Value Challenge: www.acc.com/valuechallenge
Bibliography of Other Resources
• American Bar Association
http://www.americanbar.org/publications/law_practice_home/la
wpractice_archive/lpm_magazine_articles_v34_is5_pg47.ht
ml•
Legal Process Outsourcing
http://www.outsourcing.org/Directory/Legal/1
http://www.lawgazette.co.uk/in-business/a-first-hand-look-alegal-process-outsourcer-provider-india