WMACCA Signature Luncheon December 18, 2014 IN-HOUSE INNOVATION Learning From One Another Presented by Doris Gilliam and Larry Cohen, AARP Scott Chaplin,

WMACCA Signature LuncheonDecember 18, 2014

IN-HOUSE INNOVATIONLearning From One Another

Presented byDoris Gilliam and Larry Cohen, AARP

Scott Chaplin, Alliant Techsystems Inc. (ATK)Jonathan Coleman, CoStar Group Inc.

Mark Nackman, General Dynamics Advanced Information Systems

AARP Office of General Counsel:Business Optimization Tactic -

The Self-Service Model

Doris Gilliam, Esq.Senior Attorney AARP Office of General Counsel [email protected]

Larry Cohen, MBAClient Services ManagerAARP Office of General Counsel [email protected]

AARP Office of General CounselAARP Office of General CounselThe mission of the Office of General Counsel (OGC) is to maximize the ability of AARP to carry out its tax-exempt mission while remaining in legal and ethical compliance and maintaining AARP’s reputation for trustworthiness and integrity.

The legal department in the AARP Office of General Counsel consists of 11 lawyers, two non-legal staff who handle a variety of client assistance, training, reporting and budgeting functions, and two legal secretaries, for a total of 15. The lawyers are all generalists but each attorney has at least one area of focus such as intellectual property, nonprofit tax, charitable fundraising, privacy, or employment law.

Who We AreWho We AreAARP is a nonprofit, nonpartisan organization, with a membership of more than 37 million, that helps people turn their goals and dreams into real possibilities, strengthens communities and fights for the issues that matter most to families such as healthcare, employment security and retirement planning.

AARP® BackgroundAARP® Background

Real Possibilities is a trademark of AARP.

Context: MOU review approval requests are initiated by staff at any number of our 53 state offices representing about 250 clients. Those requests comprise nearly 60% of state office-based requests to OGC. Within a year’s time, tracking metrics showed an overwhelming 494% workload increase in total requests up to a high of 1,711 by 2013 year end (currently 2,101). Both number of total service engagements and executed documents had increased exponentially compared to that of the original baseline.

Issue: Faced with an ever-increasing number of service requests that compounded and lengthened both production of services and completion times, AARP’s Office Of General Counsel had to act. It did not want to compromise providing world-class service to its clients with producing high-quality legal documentation simply to “get people out the door.” The huge number of service requests strained both technical quality and customer SLAs (Service Level Agreements), and degraded the necessary customer rapport for the client-focused, OGC operations team. With client service requests accelerating and no additional staff available a viable solution had to be found.

Problem StatementProblem Statement

Use Use DMAIC DMAIC Approach To Solve Problem Approach To Solve Problem

• Identify and implement improvements

• Can improvements be controlled, are they sustainable, repeatable?

• Define the problem and the objectives

• Can we measure what we need to improve and then translate the data into insights?

• Analyze the process and influence factors

Business Process Capabilities AddressedBusiness Process Capabilities Addressed

The Importance of RelationshipsThe Importance of Relationships

6

Explicit Knowledge

ClientEngagement

DataMetrics

BusinessIntelligence

Tacit Knowledge

Learnin

g

Client/Service EcosystemOptimizedOptimized

Data

ExplicitTacit

The Solution: The 5K MOU ProcessThe Solution: The 5K MOU Process

Implement a Self-Service Model whereby clients can “pre-approve” their MOUs by using an email-based contract template. After clients complete training, and then as long as the proposed relationship meets policy criteria, the agreements are executed by using the email-based template. The MOUs are audited by OGC for compliance.

This initiative was an evolution in process, risk assessment, and client service. We completely changed an existing way of conducting business. This paradigm shift has also improved the internal client's control, speed and consequently self-confidence - it has made us a more agile organization.

• Who was involved• Other approaches• How did we implement• Staff concerns• Other Phases

Program Goals and ResultsProgram Goals and Results

Program Goals Program ResultsProduce a 25% work-load reduction for legal review of state office MOUs

46% work-load reduction for “formal” legal review of state office MOUs

Reduce by 50% the time needed to complete MOU agreements

400% reduction in time required to complete agreements

Improve client satisfaction indicators Positive client email testimonials, praise email by senior leadership, mention to the Board of Directors, phone calls and anecdotal stories

Redirect reclaimed capacity New project completed to expand client facing website OGC Online, 4 new client process desk-tools created, 2 trainings conducted on policy issues, over 750 document audits performed, 2 new organizational projects

Since implementation of the Program from July 2013 to today, the process has successfully managed organizational risk, significantly reduced time to execute agreements, exceeded program goal metrics, and increased OGC client satisfaction indicators.

Alliant Techsystems (ATK):Client Development Initiative

Scott Chaplin, Esq.Senior Vice President, General Counsel & SecretaryAlliant Techsystems Inc. (ATK) [email protected]

ATK – Client Development Initiative

• The Issue: – One reason that lawyers often depart private practice for a career in-house is

to avoid the responsibility of building a client-base and developing and maintaining a book of business. This includes the continual pressure to network and meet law firm client origination requirements.

– Yes, there is less pressure to conduct client development when you are in-house and you sit with your client everyday. We do not, for example, have the pressure of getting an engagement letter executed by a new client. The work is there for us already.

– But, is this really a good thing? Is the lack of client development helping or hurting the reputation of in-house lawyers? Could well-defined and properly executed client development initiatives be a good thing for the in-house legal community (and the client!)? Dare I ask - is it possible that we could actually learn something from law firms?

ATK – Client Development Initiative• The Problem:

– When I came on board, the Office of General Counsel had an image problem.– It was clear that all lawyers were talented, dedicated, hardworking, and

experts in their field. These are the best lawyers I have ever worked with.– Yet, when I spoke with the client community I would hear phrases like “the

Department of NO” and “the office sales prevention.”– The team believed the reputation was undeserving, yet recognized that

sometimes perception can become reality. They were passionate about fixing the image problem, resulting in many changes within the department.

– We rolled out an organizational restructuring, re-defined roles, expanded some practice areas and reduced others to ensure our organization mirrored the mission and strategy of the client.

– We implemented and issued our own Vision and Mission Statement.– It became apparent that if we were going to truly re-define ourselves and

improve our image, we need to also enhance the manor in which we engage with the client. We needed a client development initiative.

ATK – Client Development Initiative

• The Solution: Client Development Initiative– Every lawyer (at all levels) was given the assignment to develop a client

development plan for the year.– As a leadership team, we discussed the overarching goals and objectives of

the plans, but purposefully left open the structure and the individual plan development; nothing standardized, no template, etc.

– Lawyers were encouraged to tailor their individualized plan to their practice, their strengths and their personality.

– There was admittedly some confusion on the assignment due to the lack of structure, but we purposefully limited the dialogue, did not provide a lot of examples, and left a fair amount to be interpreted by each individual.

– We urged the team to think back to the client development tools from private practice and challenged them to take variations on those themes in determining what type of in-house client engagement would improve the relationship between lawyer and client.

ATK – Client Development Initiative• The Plans

– The individual client development plans exceeded expectations. The team came up with meaningful and creative ways to develop existing clients and/or find new clients within the organization.

– Some Examples• An Ops lawyer went on a “Service Offering” campaign within his business Group. He put together a

presentation that outlines all the various tasks his legal group performs, as well as some capabilities that they are not currently performing, but could perform if there was a need. It was essentially a re-introduction to the legal team - very simple, but very productive. The client loved it. The key -- free lunch. You know you’ll get good turnout for anything with pizza and chips. Attendance was great and so was the feedback, including – “we had no idea you guys did all that”, “I didn’t know we had people who could help us with ___.” The Group legal team saw in increase in business and an overall improvement in client satisfaction and engagement.

• The head of the IP group selected key business leaders, flew to their location, and took them to dinner in a traditional client development approach. The purpose was to target those business leaders that did NOT utilize the IP legal group with frequency, explain the strategy and capabilities of the IP legal team to demonstrate that it was more than just trademark and patent prosecution, but that the IP Group has a real strategic value proposition on how to exploit IP to further business goals. The question of the dinner was simply “if you think we could ever be of any service to your business, give us a call.” They did! We had to hire more IP lawyers.

• Another lawyer simply went in search of new work – cold calls, introductions, short explanation of what he does, and an offer to help out with anything. He was surprised at the response – requests for training, inquiries about issues that we (legal) were unaware of, requests for in-person visits, and invitations to standing operational meetings that previously legal representatives did not attend.

ATK – Client Development Initiative• The Results

– We strongly believe that the client development plans achieved two goals:• It forced all lawyers to think about their relationship with clients in a different way, including

the simple idea of seeking work as opposed to waiting for it.• It absolutely changed the way the client thinks about us. We were not just saying “proactive

versus reactive”, we were living it. We became more of a partner to business and less of a “requirement.” Our reputation improved dramatically.

• The Lessons Learned– I believe an important component of the project was accountability. Lawyers

were judged on their plan performance. They were not judged on the plan itself, but they were accountable to demonstrate results. If there were no results from the plan, the plan needed to be adjusted.

• The Message– At the end of the day, I think we proved our point – lawyers should not and

can not escape client development just because they are in-house. If anything, effective client development should be as much of a requirement for in-house lawyers as for those in private practice.

CoStar Group Inc.:Anti-Piracy Program

Jonathan Coleman, Esq.General Counsel CoStar Group, Inc. [email protected]

Who is CoStar?• CoStar is the #1 Commercial Real Estate data provider in

the U.S. and U.K., with over 1,000 professional researchers• Over 25+ years we have compiled:

– Info on over 1.5 million sale and lease listings, covering 8.6 billion sq ft – Info on an inventory of over 4 million properties in total– Over 15 million digital images (e.g., building photos)

• CoStar Products– CoStar SuiteTM products provide CRE information (including images)

that is verified and accessed by subscribers via login credentials– LoopNet.com provides an online CRE listing marketplace (some

portions are password protected)– Apartments.com provides an online apartments marketplace (entirely

open to public)

The Problem?• Data Theft! Data is our most important asset and the life-

blood of the Company. Job #1 for Legal is to protect CoStar’s IP.

• CoStar’s many products present different theft issues.• Began 25+ years ago with data theft from password–

protected areas of CoStar’s Products:– User Theft: Password sharing by those who don’t think of it as theft;

Reselling Access– Competitor Theft: Individuals and companies seeking to launch

competitive products w/o putting in the hard work of collecting data

• Evolved to now include scraping of our public sites, hotlinking/framing our proprietary content.

The Innovation• Anti-piracy program that detects and deters theft … and

brings revenue$ into the Company!• Comprehensive, multi-pronged, proactive approach of

Education, Technology and Enforcement.• Not just a Legal issue: Need buy-in from CEO and resources

from Systems, Sales and Marketing • Education -- Theft of CoStar’s IP is no different than theft of

physical merchandise– Audience: employees, customers, non-customers, and competitors– Antipiracy page on website: Includes FAQ’s about authorized use vs.

piracy; and Tip Line/Rewards Program– Sales training, client communications, press releases

Technology & Enforcement• Technological Tools: Detection & Prevention

– Watermarking photos– Seeding data– Customized automated alerts for suspicious log-ins (e.g., bump-outs)– Analyses of usage patterns and IP addresses– Prevention examples: anti-scraping monitoring, blacklisting

• Enforcement/Deterrence– Copyright registration program (gives rise to statutory damages) – Internal referrals, tip line/tip rewards, auditing of competitor products– Antipiracy team investigates/confronts those we catch and attempts

to resolve via payment of back-fees and go-forward license

– Litigate and publicize most egregious cases … deterrent effect

Innovative BenefitsIn addition to successfully identifying, prosecuting, and deterring theft of our IP, the Antipiracy Program:

– More than pays for itself, averaging $1M/yr revenue, past 5 yrs.

– Elevates the profile of the legal department within the organization and in the industry

– Motivates team members with incentive-based compensation determined by # of deals closed and amounts recovered

– Challenges us to stay nimble with product changes, technological advancements, and evolving theft tactics

General Dynamics AIS:Balanced Scorecard

Mark Nackman, Esq.Vice President & General Counsel General Dynamics Advanced Information [email protected]

GD-AIS Law Department Balanced Scorecard

• Goal was to create a document to track the important/strategic goals and metrics by which the ultimate success of the law department would be judged for the year.

• Then wanted to do so in a way that was consistent with other parts of the business that are tracked with scorecards to establish credibility and make it easier for our business unit president to evaluate.

• Needed to determine what to measure, then how• Utilized a combination of historical data.• Industry benchmark surveys, &• A customized survey (along with beginning of the year survey results to measure

improvement against).

• By setting goals and high performance/stretch goals, our leadership agreed at the beginning of the year, what success would look like, including how to define high performance (which ties directly into our year end bonus system).

GD-AIS Law Dept. Internal Customer Satisfaction Survey

• Asked to rate the Law Department from 1 (Unacceptable) to 5 (Excellent) in 5 categories:

• Availability• Timeliness• Utility of Assistance• Proactiveness• Professionalism

• Then asked to rate how important each category was from 1 (Unimportant) to 5 (Extremely).

• This allows us to determine where we are not putting enough focus, as well as where we might be putting too much.

• Also allowed space after each question for comments (and we received many).

• Sent at end of last year and end of this year to the top ~160 leaders in the company via survey monkey.

• Allows us to track improvement year-over-year

PERFORMANCE WEIGHT 120%

TARGET / MEASURE (%) TARGET Results Total

FINANCIAL GOALS

Reduce Non-Litigation/M&A Outside Counsel Spend 10% below FY13 15% 12% below FY13 29% Less 18

Operational Improvements $600K 15% $700K $1.3M 18

30%

OTHER / PROGRAMMATIC GOALS

Operating Efficiency:> Demonstrate Market Leading Legal Performance Top 50% vis-à-vis Key Benchmark Metrics: 10% Top 25% Top 25% 12

> Total Legal Spend as % of Rev

> In-House Hourly Rate

> Improved Metrics vs. Contracts Quality Plan Varies (Improve Color by Category) 10% All Green at Year End All Green 12

Internal Management Controls:

> Audits & Compliance Pass all Law Dept. Gov't Audits & No Fines 25%

Green/Pass all Law Dept. Audits & No Significant/High Risk Findings

All Green/Pass, one High Risk

27.5

Customer Connection: > Internal Customer Satisfaction Survey Score Score of 4 (out of 5) 5% 4.8 or Higher 4.5 5.5

> External Customer Contact Plans Establish & Implement 10%Documented Positive Impact on Award/Program

Exceeded visits & multiple impacts

12

> Quarterly Law Dept. visits with Top 5 Customers

Employer of Choice > Retention of FY14 EX & ET rated Law Dept employees Voluntary Attrition Rate below 5.2% (3/58) 10% 0% 0% 12

70% 117

100%

2014 Operating GoalsGD-AIS Law Department