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This Webcast Will Begin Shortly If you have any technical problems with the
Webcast or the streaming audio, please contact us via email at:
Thank You!
Cost Control in the Current Economic Environment
April 29, 2009
Association of Corporate Counselwww.acc.com
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Introductions Speakers QualcommOverview
CostControlintheCurrentEconomicEnvironment CreatingSustainableCostSavings FoundationalQuestions 3FoundationalCost-SavingProjects 10(+1)ProvenCost-SavingIdeas
Agenda
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Nancy Jessen Managing Director
Legal Business Consulting
Bill Sailer Senior VP, Legal Counsel Qualcomm, Incorporated
Introductions
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Industry:Telecommunications 2008Revenue:$11.1B BusinessSegments:
QualcommCDMATechnologies(QCT) QualcommTechnologyLicensing(QTL) QualcommWireless&Internet(QWI) QualcommStrategicInitiatives(QSI)
Qualcomm
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Polling Question Have you been asked to cut costs in 2009?
Yes No
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Polling Question What is your target cost savings for 2009?
0-5% 5-10% 10-15% 15-20% Over 20%
Is the target higher than your target for 2008? Yes No
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Process and Technology Utilization
Technology Process
Collaboration
Knowledge Sharing
Skills & Capacity
Management
Performance Management
Matter Management
Resource Management
Financial Management
Portal
Corporate Secretary
Patent Management
Discovery Management
Contract Management
Document Management
Matter Management
Expenses Hours Rates + X Cost =
Transformation
Generates tangible savings
Sustains savings generated
Hard Payback
Soft Payback
Short-term Payback
Long-term Payback
Outside Counsel & Vendor
Management
Internal Resource Optimization
Process and Technology Utilization
Law Dept Strategy and Plan
Operational Performance Management
Align client service delivery with business needs through the right mix of tools and resources at the
appropriate cost
Law departments are focused on reducing costs and creating sustainable long-term cost savings with a high return on investment. They are implementing legal cost management programs that balance strategy, people, processes and tools.
Creating Sustainable Cost Savings
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Question Analysis Needed Internal Focus
External Focus
1. What services are we delivering to the business?
Quantified baseline of the number of Full Time Equivalents (FTEs) and dollars spent
Type of work and staffing
Type of work, leverage and cost
2. How do we prioritize the value the services currently being delivered?
Qualitative value assessment to determine priorities
Value the work based on risk and contribution to achieving the company’s strategy.
3. Who should be delivering the services?
Criteria for sourcing the work Align internal resources to most highly valued work
Align work to appropriate price point
4. What can be done to drive costs down while improving the quality of services delivered?
Cost savings initiatives for the short and long term
Internal Resource Optimization Outside Counsel & Vendor Management Process and Technology Utilization Operational Performance Management
We ask the following questions to help provide a framework for understanding how to manage legal costs and resource allocation
Foundational Questions
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Resources Spend
External Resources $20,000,000
Internal Resources $8,000,000
Total $28,000,000
Sample Data
Foundational Questions 1. What services are we delivering to the business?
Resources Avg. Cost per
Resource
External Resources $593,472
Internal Resources $266,667
Regulatory Litigation Commercial Employment Non-Client
Service Unknown Total FTEs
7.90
20.35
7.70
10.75
9.80
2.05 2.20 2.40
0.25 0.30
30.00
33.70
FTE
Matter Type
$12.08M
$2.11M
$2.05M
$6.38M
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To define the Right Work Law Departments must prioritize the entire portfolio of legal work required by the business based upon Impact on Competitive Advantage and Risk Potential. This process enables the Department to make more proactive decisions about the legal services delivered.
VALUE is combination of:
Risk Potential The extent to which specific types of
legal work have the potential to negatively impact the Company, e.g. financial, regulatory, reputation
Impact on Competitive Advantage The degree to which the type of legal work drives competitive advantage and supports the Corporate strategy
Foundational Questions 2. How do we prioritize the value?
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External Resources Internal Resources
Strategically aligned with Company Predictable cost with defined skills
Strategically aligned with Company Predictable cost with defined skills
Doing the Work Right requires a deliberate approach to aligning the resources with the value and volume of the legal work.
Foundational Questions 3. Who should be delivering the services?
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Foundational Questions 4. What can be done to drive costs down? Sustainable cost reduction programs address all areas of legal spend, focusing on both the internal and external costs.
As much as 80% of internal costs are attributable to compensation and benefits
Although external spend consists primarily of outside counsel, non-law firm spend continues to grow with additional opportunity for scrutiny
Savings on internal costs can be achieved by: • Appropriately allocating internal work to minimize
fragmentation, duplication and process inefficiencies • Leveraging lower risk work to lower cost resources
either inside or outside
Savings on external spend can be achieved by: • Consolidating work with fewer number of firms • Aggressive negotiations and using alternative fee
arrangements • Only outsourcing specific and discrete areas of legal
matters by unbundling tasks. Examples include document review and other discovery related tasks.
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Question
1. What services are we delivering to the business?
2. How do we prioritize the value the services currently being delivered?
3. Who should be delivering the services?
4. What can be done to drive costs down while improving the quality of services delivered?
“Doing the Right Work” Identifying the work most highly valued by the business
“Doing the Work Right” Identifying the service delivery model with the appropriate mix of internal/external resources and required skills
Doing the Right Work – Doing the Work Right
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Polling Question In what areas are you seeking to reduce costs?
(may select more than one) Internal headcount Outside counsel Other vendors Contracts Corporate Human Resources IP Litigation E-Discovery
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E-Billing Lineitemreview Guidelineenforcement
Nonlawfirmvendornegotiations Specializedservices Lowerpricepoints Consolidation Discounts
Valuechallengediscussionswithlawfirms Consolidation Discounts Alternativefeearrangements Othervalue-addservices
3 Foundational Cost-Saving Projects
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1. Assignlowvalue/lowriskcontractstonon-attorneysresources2. CreatecriteriaforlegalinvolvementinHRissues(e.g.terminations,immigration)3. OutsourceImmigrationworktonon-lawfirmvendor4. Simplifycontractlanguagetoreducelawdepartmentreview5. Createtrademarkstandardstodefinenecessityforpreliminarysearches6. Unbundledocumentreviewfromlawfirmservices7. Consolidateemploymentlitigationtoasingleoutsidecounselfirmatafixedannualfee/percasefee
8. Applycost-benefitconceptstolitigationtodeterminefightorsettlestrategy(leverageanalysisofhistoricalportfolio)
9. Negotiateflatfeesforpredictableannualcorporatework10. Update(andenforce)outsidecounselguidelinesforcopy/faxandtravelcharges11. LimitIPassertionsandoffensivelitigationtocriticalmisuse
10 (+1) Proven Cost-Saving Ideas
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Question and Answer Session
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