Legal Leaders Exchange - Podcast episode 14

Worst practices and challenges of change management in legal ops

This episode is hosted by Nathan Cemenska, Director of Legal Operations and Industry Insights at Wolters Kluwer ELM Solutions, and features Cheryl Cowley, Vice President & Director of Legal Administration at Santander. In it, Nate and Cheryl discuss change management in the corporate legal setting. They talk about why it is difficult to do well and why it is so important to execute properly.

• The factors that make change management challenging in legal department settings
• Why it is sometimes good to say “no” to law firms – and how to make data-driven decisions about it
• The importance of truly reviewing all invoices and how to provide attorneys with the tools to support that effort
• How to have the right conversations about your law firm panels and continuously ensure that your company’s panel of firms is well-considered
• Overcoming both the internal and external hurdles to get budgets entered against matters and then leverage them in negotiations

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Transcript

Greg Corombos:
Hi, I'm Greg Corombos. Welcome to legal leaders exchange. This podcast series was created to deliver insights on optimizing legal operations for corporate legal and insurance claims professionals. On this episode, Nathan Cemenska, Director of Legal operations and Industry Insights at Wolters Kluwer ELM Solutions discusses the nuts and bolts of change management and corporate legal departments with Cheryl Cowley, Vice President and Director of Legal administration at Santander. Learn why change management is so hard and why it's so important to do it properly.

Nathan Cemenska:
Hello, everyone. My name is Nathan Cemennska. Thank you for coming to our legal leaders exchange Podcast. I'm a thought leader, which means that my job is to educate myself, clients potential clients in the industry at large about legal operations, trends and best practices. And today I am here with Cheryl Cowley from Santander, a legal ops person there. And we're going to be talking about change management, why it's so hard how to do it in a corporate law department. And some of the what we call worst practices that change management and planning are trying to improve including bogeymen such as death rate increases, enablers and what I would call panel bloat. But before we get into some of those issues, I would like Cheryl to introduce herself. Would you please do that Cheryl?

Cheryl Cowley:
Sure can, Nate. My name is Cheryl Cowley. As you said, I'm from Santander, I take care of the legal administration for all of Santander US, that's all of our entities in the US. And I am happy to be here.

Nathan Cemenska:
Thank you so much, Cheryl. And just so the audience knows, Cheryl is a former Clevelander, which is where I live currently. So that was a point of bonding for us. She spoke for us at our user group conference in October, and it went really well. And we're going to get into some of the issues that we discussed back then. But before we get into the nuts and bolts issues, can we just zoom out to the ultimate level a little bit and talk, Cheryl, about why is change management important in a corporate law department? And why is it so darn hard?

Cheryl Cowley:
Well, it's very important, because you have to keep up with things and make changes as you go. If you don't make change, then you stay in static form. And it's not going to help you get to where you need to be and where you want to be and achieve those goals you have. So change management is very important, I think, not only to any legal department, but any company in general, just to keep up with the Joneses and make sure you have all of your expenses under control and all of your processes, and you're doing everything up to speed and greatest technology you can. Efficiency is a huge thing. Why it's so, so hard is because you have a lot of people that you have to get on board and allow them to see that the change is good, and have them make that change with you. So the more people you have, obviously, the more difficult it is to get everybody to make that change.

Nathan Cemenska:
And another thing that I wanted to ask you about briefly is, if I recall, your previous roles were in finance, and this is your first role in legal ops, per se, although I think you had worked with legal in the past. Could you talk a little bit about maybe being a little bit of an anthropologist and coming into legal from other environments and getting the lay of the land and trying to understand the environment before trying to make any big changes?

Cheryl Cowley:
Yeah, absolutely. Working in finance, I took care of managing the expenses, overseeing the expenses for all of the bank and coming to legal it's just one portion of it, but it's a whole different animal from the finance background. I thought, you know, this is the way it is, you know, this is your bill this is what you pay, you know, these are the rates that you negotiated, this is the rate that you'll have. But coming into legal I found that it's not quite that black and white and there's a lot of gray. So I had to really learn the lay of the land and what actually is okay and what is not necessarily so, you know, understanding that people reduce the legal bills was was completely mind boggling to me because, I came from in finance. You got the bill and okay, that's what it was for the contract. And that's what you paid. So, that was very new to me, understanding how to work with the law firms and the different rates and how that all works. That was all new to me too, and the dynamic of how the attorneys got involved versus when I needed to be involved in that relationship with the law firms. You know, that was all a learning experience and seeing where I sit in in that And I'm sure it's different for every legal department. And of course, as we talked about it before, you know, that role can often change within that legal department. But finding where I fit was quite an interesting journey.

Nathan Cemenska:
Yeah, I mean, I used to be, I still am, I guess, an attorney, and switched over to legal ops from that. And around that time I read a book called "The First 90 Days" and it basically said that when you go into a new environment, assume that you know, nothing. And just don't promise anything, necessarily, just watch and learn before you start making any big proposals. And I agree with that. So thank you. Let's talk a little bit about what we focused on back in October. So we talked about a number of what we somewhat jokingly referred to as worst practices going on in corporate law departments or going on in law firms. Now, we all know what best practices are. But kind of the theory was that there's also these things called worst practices. And if you could just cease doing those or at least curtail what's going on, that would put you ahead of a lot of other people. And so I've got a list of them here in front of me - we actually created a list of what we thought were the top 10 sort of worst practices, and the solutions to some of those. But let's go over some of these. So one of the most interesting ones, and I think it was one that you brought to my attention, was what I call enablers. And you called them something like friendly negotiators or something like that. But in a relationship with law firms, this is a person who feels like they're not a nice person, or they're not a good person, unless they help the law firm, for instance, get a rate increase granted, even though it might be a somewhat greedy request. Could you talk a little bit about that phenomenon?

Cheryl Cowley:
Yeah. So you know, just because you're doing work with that firm and you want a good relationship? Doesn't mean you have to say yes to everything that they propose. So you know, not all firms that request something need to get it. And if you're a firm or in your normal life, if you want something, wouldn't you just ask? Worst case scenario, they say no. So I think that that's where that mentality comes from, from a law firm perspective, where every year we're going to increase rates and any company that lets them do it, that's exactly what they're going to do. Because why wouldn't they? Why wouldn't they want to get an increased rate. So as a company and an attorney and somebody working in the legal department, I think it's our job to make sure that the rate we are paying for that service we're receiving is a good rate or rate that we feel comfortable with, and a rate that reflects the service that we are getting from that law firm. So I find it very difficult sometimes for people to see that because they just want - and when I say they, you know, the attorneys - wants to just get their job done a lots of times, they don't want to necessarily be bothered with the whole rate type thing. But they're the ones that are working with that law firm. They're the ones that understand the service that's been provided. So in a way I see it, that they would be the ones to approve that rate and understand whether or not it makes sense for that increase to happen. And if it doesn't, then no, and tell them why. Because if you don't tell them why you can't let them better their services for you,

Nathan Cemenska:
Cheryl, from a change management perspective, what can legal ops to do to help educate the people that you just described? Or perhaps supplement their efforts with analysis from legal ops? Or in some cases, maybe have rates being negotiated by other folks? What can legal ops do to mitigate the effects of these friendly rate negotiators?

Cheryl Cowley:
I think that information is empowering. And lots of times the attorneys don't have the time or the know-to our understanding of using the system to get to that information. So I think it's very important to understand, you know, the right information that's coming in. And then also giving the attorneys information back about rates that are comparable for other firms and current rates that that firm is already getting. And based on their current rates, it's this percentage of an increase. And so that's enlightening that for them to see and a tool to help them negotiate with. I also like to pose a couple of different questions when I'm in that situation as well. And I like to ask, you know, deep down, have you been satisfied with those services? Do you feel when you're approving invoices that what they have on there is appropriate? So it's all a matter of putting everything together and allowing them to have a full picture with all the information to make an informed decision in regards to the rights that they agree to?

Nathan Cemenska:
Thank you. And you talked a little bit about attorneys looking at invoices, or you mentioned it, could we talk a little bit about the phenomena, which I call 'just hit approve', we did a study in conjunction with one of our clients probably about five years ago, where they actually used our technology and mined data out of it, that allowed them to report on how many seconds in-house attorneys and other approvers were reviewing an invoice before they hit the Approve button, how long the it was actually on their screen before they hit the Approve button. And I can't remember if it was the mean, or the median. But the the average was something like half of a second. Could you talk a little bit about the just hit approve phenomenon, what causes it, and what legal ops might be able to do to curb that a little bit.

Cheryl Cowley:
So I think what causes it is, I guess there's a mentality that they don't want to be bothered with it, it's an extra thing to do. And then they want to just get it off their plate. So it's just easier just to hit Approve than to actually look what's in front of them. But when it comes down to it, you have a system, which makes things easy to look at and easy to adjust. And once you get past that, and you have a training, and they see how easy it is to look at the invoice and not just hit Approve, I think that they see the benefit of understanding what's in their invoices, you can give them the tools that they need. But until you have the back-end understanding and the information out of the system, like you had mentioned, the idea that somebody's only looking at an invoice for two seconds before it gets approved, or the attorneys that never change anything on the invoices or never have any questions for you. I think that those are red flags. And once you see them, I think it's important to have that conversation with those attorneys to make sure that they understand that there is a need to it, and that it serves more purposes just than paying.

Nathan Cemenska:
I am going to make a shameless plug at this point because my company does sell invoice review services, particularly artificial intelligence-assisted human invoice review teams and technology. And so there are cases where we have encountered clients who can't get their in-house people to review invoices thoroughly or don't want to do the calorie burn, they don't think it's worth it for them to do internally. So they have us do it. So that is an option. I just want people to know about that. Now, could we move on to panel management? So I think most people who are listening this podcast probably know what law firm panels are, and know why you don't want them to have an infinite number of firms on them. But in case they don't, Cheryl, would you please explain what a panel is, and why you want to prevent panel proliferation?

Cheryl Cowley:
A panel, I see as basically our approved counsel list and the panel of firms that you would use at any given time. It's like a pool. So you have a pool of firms that you have, you know, you can go to for whatever services you need. That panel can be small, can be big, it can be huge, and I think that there's no right or wrong to any given panel. However, I do think that if somebody were to find that perfect scenario where they could have that perfect size panel and manage it appropriately, I'd be the first to say sign me up. I want to understand that because I think that that's the most difficult thing to manage within a legal department because somebody always wins wants to use one attorney or this law firm, or they need a specialty, or somebody's new coming in. And they have a friend at this firm. And so it's very difficult to find that perfect panel for any given time. And it's ever changing, which makes it so much more difficult to manage.

Nathan Cemenska:
When somebody wants to add yet another firm on to the panel, what are you supposed to do about that? What can you do?

Cheryl Cowley:
Well, it's about having a conversation, a bigger conversation with the group, with maybe just a smaller subset of the legal department, to make sure that number one, it makes sense to onboard that firm - the reasoning behind it, do we really need them? And then also, is there other firms then that they can take the place of that we may not need? That way, you're asking all these questions to make sure that the list and panel that you have is appropriate at that given time. So it's about asking the right questions, and, and making sure that people have an open mind that are at the table and understand exactly what the need is to make sure that they really do need that particular firm, in order to be on the panel and get their job done.

Nathan Cemenska:
I have another quick question about this. So one thing I have heard is that a lot of clients don't actually understand the full spectrum of services offered by their panel firms. And because of that, they might be using more firms than they need to. They might have, you know, 20 firms. And if they understood the full variety of offerings from those firms, they could get all their needs met from those 20. But they don't understand all of those capabilities, and therefore they end up adding yet more firms and it can become unmanageable, do you think it's a good idea for a corporate law departments to make a bigger effort at trying to understand the full range of offerings that their providers have?

Cheryl Cowley:
Oh, absolutely, I think it's very important that they understand the full range. And I also feel it's important for an attorney if they want to onboard a firm, that they'd be responsible for that relationship. And they're the ones that need to make sure that other people in the legal department understand what that firm can do, and basically sell them to the rest of the legal department. So that they can make sure that their firm is being used and stays on the panel. That's why they have a vested interest in making sure that their firm is there when they need it. We have a database that we built to allow people to understand the not only the practice areas, the different services that they provide, but also the different geographical locations, because that's another thing that plays into it as well, is when you need local counsel, having that geographical location covered on your panel. And you know, in different businesses it's not always a feasible thing. So it's important information to have. In addition, you want to make sure that your panel is willing to do things they need to do at different rates, negotiating things like bigger matters at a different rate, rather than your regular standard rate. And you need to make sure that you're not paying more for service than you really should. Sometimes those smaller firms, those niche firms that only do one thing can do it at that lower cost. So it makes sense for you to have that on your panel to make sure you can reduce your expenses in that one service area. So just because you have a law firm that only does one service on your panel doesn't mean that it's not a good panel, or is not a good firm to have on your panel.

Nathan Cemenska:
Right, no. You've got to go to those boutiques, you can save a lot of money that way. Another quick question about panels. I think it's really cool that you have the database of your different firms and their geographic and practice group coverage. I've not heard a whole ton of clients who can say that, but one thing I have heard is that a lot of times in law firms, you would think if you hadn't had a chance to ponder it, that law firms would have a lot of interest in working together with the different partners at the law firm to cross sell various types of services. But I've actually heard that that's not always the case. Because they are partnerships and because their partner draws are often tied to the amount of revenue and the client relationships that they can control. There are times when a partner A does not really want the client to know about the services from Partner B because they are worried that that will eventually erode Partner A's relationship and control and origination credit and matter credit and compensation. However, that's not really your problem as a buyer, right? What the incentives are at the firm? Do you think that buyers could do more to go to firms and say, hey, look, we want to expand the scope of our business with you. We want to know all your different capabilities we want you to cross sell with us. Will you please come and sit down with us at the table and explain how we can work together in a more expanded way?

Cheryl Cowley:
Yeah, absolutely. I think it's, it's certainly the responsibility of the company to do that. I mean, that's why you can gain efficiencies and synergies by using the same firm for multiple practice areas. And so it's very important that you as a company have an understanding of your firm's and what they do and what they can do for you. And making sure that from a legal administration perspective, I can say, Hey, do you know that this firm offers that? Have you tried that, and challenging them when they want to on board, another firm that has that functionality? So I think it's very important that a company understands all the different services that the law firm can provide for them, and make sure that they have synergies and great efficiencies through using that one firm whenever possible,

Nathan Cemenska:
By the way, doesn't this put you as a buyer in a better negotiating position, if you know all the capabilities of all your different firms? And maybe you've experimented a little bit with the different types of work, and so you feel like you have options? If somebody's being unreasonable on price?

Cheryl Cowley:
Oh, definitely, it opens the door for negotiation opportunity by saying, hey, you know, we have this firm, and we could do it at this rate, if you're willing to match that rate, we consider you.

Nathan Cemenska:
Okay, let's talk a little bit about matter budgets. I had a personal experience with this, when I was baby legal ops, where I was able to get our corporate law department to go from having about 50 matter budgets out of 1200 active matters, to about 1200 matter budgets in a pretty short time. But it took publication of what I called a public shaming dashboard at the time. Could you talk a little bit about the frustration, and the difficulty of getting budgets on these matters? And then maybe having to update them later?

Cheryl Cowley:
Yeah. So I think that sometimes when you tell an attorney that they have to have a matter on their budget, they feel it's extra work, in order to be able to have that conversation and say to the firm "hey, what do you think the budget is going to be?" And then once they see it, like in black and white in the system, they feel like, oh my gosh, I have to abide by this. Whereas, you know, budgets are not something that don't change, they can change, just like a different - if you have a piece of litigation, that litigation can change multiple times throughout the life of it before, you know, the matter is closed. But those are just the ability for us to gauge at any specific point in time. And I think by helping the attorneys understand that, that I think that they become less, for lack of a better word, afraid of putting an actual budget on a matter and possibly being held to it. And I think that once they start to use them, they become reliant on them and utilizing them as a leverage point for various things, whether it be understanding that, hey, this firm always goes over their budget. That's a little bit of a red flag for me. And if it is, you know, making sure you have that additional conversation, "okay, well, of the last five matters you've done for me for her going over budget, you know, are you sure that this is the budget?" We're going to lock this down and utilize it as a negotiation and say, then let's lock this in as a fixed rate, rather than an hourly with a budget.

Nathan Cemenska:
Like you said, there's always going to be some matters that go over budget or that change in scope. What can you do at an organizational level to help attorneys be more aware when the budget is being approached or when it's been exceeded and there's time for revision?

Cheryl Cowley:
I think sometimes the attorneys might ignore that there's different functionality within systems that you can do to make them more aware of it. Different notifications or not even allowing invoices to be paid to the law firm if they go over budget. So I think it opens that conversation for when that happens. Instead of just ignoring it, which I think is an important thing to do, especially if you're going to make sure that you're efficient with your law firms and you're keeping that line of communication open. If that budget is going to be exceeded, that law firm should be coming to you and telling you and having a conversation with you before they submit that invoice that puts it over the budget.

Nathan Cemenska:
I agree. It's all about communication. So it's a cliché, but it's a cliché because it's true. Okay, thank you so much, Cheryl. We really appreciate you taking the time to come on our podcast and talk about what you're doing over there at Santander. We really appreciate your help.

Cheryl Cowley:
No worries. Thanks for having me.

Greg Corombos:
That was Nathan Cemenska Director of Legal Operations and Industry Insights at Wolters Kluwer ELM Solutions, and Cheryl Cowley, Vice President and Director of Legal Administration at Santander. This podcast is hosted by Wolters Kluwer ELM solutions, the market leading provider of enterprise legal spend and matter management, contract lifecycle management, and legal analytics solutions. For more information and additional guidance, please visit wolterskluwer.com or call 713-572-3282. Please join us for future podcasts on optimizing legal operations and achieving your legal and business goals.