My last column described how Silicon Valley’s NetApp Inc. has stepped on the accelerator in its drive to create a world-class legal department – one powered by smart technology decisions, first-rate metrics and a deep commitment to satisfying its clients inside and outside the company.
This month, I’ll delve even deeper into NetApp’s groundbreaking approach and attempt to explain the concrete steps the company has taken to move its plans from a great strategy on paper to one that actually succeeds in real life.
As I wrote last month, the Fortune 500 data management company has dubbed its strategy “the autobahn,” and like the European highway system for which it’s named, the effort emphasizes speed, efficiency and engineering, and evokes a sense of international scope and destination. Matthew Fawcett, NetApp’s general counsel, says the strategy is designed to “help us confidently say we can be the best legal department in the world.”
In practical terms, Fawcett’s goal has meant a complete overhaul of the legal department’s technology, workflow and metrics. The chief engineer behind those efforts has been Connie Brenton, NetApp’s director of legal operations and chief of staff and Fawcett’s first hire when he joined the company in 2010.
For Brenton, the first stop in creating a more modern and efficient department was NetApp’s IT department. Together, she and the company’s tech team plotted out department processes, the legal technologies they would need, and how those technologies would integrate with the broader company. “The original exercises were with the enterprise architecture team,” Brenton says. “We divided our technology into the must-have categories you would need, and we looked at purchasing technology in each of those categories.”
The categories included business processes, compliance, contract management, litigation, intellectual property, and corporate and securities matters. “Those are the must-have categories for a mature legal department,” Brenton says. The team also has developed a highly detailed schematic of technology processes that maps how and where legal data flows throughout the company.
If anything, the schematic demonstrates the scope of change at NetApp: When Brenton joined the company in 2010, she says it was using just three pieces of technology to handle legal workflow. Now it uses 21. The proliferation of software and systems has as much to do with the state of the legal technology market as it does with the company’s desire to track processes and gather data, she says. “There really is no one perfect solution for everything,” Brenton says. “And you have to stay on top of it, because the technology is always changing.”
Brenton says e-billing and matter management were the first items NetApp implemented. The reason was simple: Those two pieces provided data on legal department spending. “And when people talk about metrics, a lot of the time, that’s all they’re talking about,” Brenton says.
Financial metrics from the legal team allow NetApp to benchmark itself against other top technology companies and measure performance year over year. Where possible, legal spending is compared to the technology industry median. Among the key figures it collects are:
• Legal spend. The team measures legal spending as a percentage of revenue and inside legal spend as the number of lawyers per billion dollars of revenue.
• Percentage of legal spend in-house. Brenton says the company, like many others, is shifting more work to inside counsel. The bigger the percentage of in-house spend, the better.
• The percentage of legal spending on alternative fee arrangements. This metric helps the company measure how much of legal spending is hourly and how much is in fixed fees.
• The number of active law firms. The more firms used by the company, the higher the administrative costs.
• The percentage of legal spend with smaller law firms. This is a metric less common than the others, Brenton says, and it is designed to help measure the move of some legal work to smaller and potentially lower-cost or more diverse providers.
Financial metrics are critical, of course, but the NetApp team has set performance goals that go well beyond managing spending. The company’s internal business units have said they want the legal team to deliver work quickly, accurately and with the appropriate metrics. “So we have a speed goal,” Brenton says. The legal team measures the number of automated workflows it has implemented over the course of the year through ThinkSmart LLC’s Transaction Automation Platform. It also measures the business units affected, the turnaround time saved during the fiscal year, and the cost savings achieved by increasing speed.
Going deeper, however, requires far more discipline and time. “When you are developing a strategy, you determine what the strategy is and then you tie metrics to that,” Brenton says. “The metrics are the most difficult part of the discussion. How do you capture metrics? Do you even have the technology to capture the data you want?” Brenton says the process requires patience and must be designed for trial and error. “It’s not a static thing,” she says. “Each one of the metrics takes a long time to capture … and you have to clean up the data and look at it over time to make sure that what you’re getting is correct.”
One example: The company implemented technology to track the turnaround time for sales contracts. When they saw the numbers, sales employees said that they couldn’t possibly be correct. After investigating, the legal department found that contracts weren’t being entered into the system at the appropriate times, thus skewing results. “We had to change the behavior of employees and go back in and do some retraining,” Brenton says. “We didn’t have enough discipline yet in the system to ensure the integrity of the metrics. So we had to dump those metrics.”
When the metrics are strong, however, they can be game changers. Brenton says they can help identify process problems that can bog down talented employees. For instance, lawyers were spending unnecessary time reviewing nondisclosure agreements that, in the end, were never signed. “That was an interesting piece of data,” Brenton says. “It helped push us to a more automated approach. Something like 50 percent of the NDAs weren’t getting signed. We sent those offshore. If they aren’t getting signed, we shouldn’t be spending resources on that activity.”
Clearly, people management is an essential component of creating best-in-class metrics. For the NetApp team, that means gathering feedback before the metrics – or the strategies and goals that drive them – are in place. The department has created 12 “learning circles,” each made up a diverse cross-section of the legal team, to provide input on the department’s strategic initiatives. That process helps demystify the goals and the metrics for employees.
“Lawyers shouldn’t be afraid of this. We are not looking at an individual. We are looking for process gaps and for deviations that will help us become more efficient. We’ve found that there’s very little variance among our lawyers in terms of performance metrics,” Brenton says. “We have made the assumption that our talent is exceptional and that the metrics will show it.”
NetApp’s strategy relies on having the right technology and the right metrics in place. But there’s another key piece of the strategy: Brenton herself – and more specifically, the way Brenton and Fawcett are able to work closely together to create goals and implement them. In my next column, I’ll examine the factors general counsel should consider when hiring for the critically important legal department operations role. Stay tuned.
Published October 4, 2016.