When taught in context, one-to-many law practice is relatively simple and intuitive.
Many of my colleagues in the NewLaw elite often laugh that there’s no such thing as legal project management or data analytics for lawyers. And I get their point. The application of decades-old disciplines to the practice of law does not change or transform the underlying discipline. Thus, better to learn the fundamentals from our allied professional peers rather than engage in the pretense that what we’re doing is something new or special.
That said, we’ve got a bigger challenge on our hands, one that’s rooted in the nature of adult education. Specifically, the farther someone gets from the foundational training they received to enter the workforce, the more resistant they become to any type of training that does not have immediate application to their job. Indeed, even 2Ls whine about course work and readings that don’t cleanly and clearly map onto their future career plans.
As we gradually retool the legal industry to include the insights brought by data, process, technology, design, and business operations, we don’t help ourselves by adding “legal” to what is essentially a 300-level college course. Instead, a far more effective approach is to start with a realistic problem faced by legal professionals in their day jobs and gradually layer in knowledge and know-how from other disciplines as the class works forward toward a solution. By introducing top-of-the-T skills in this type of real-world context, we avoid confusion and satisfy the adult learner’s deep-seated need for practicality.
The IFLP Case Study Method
The above insight was learned the hard way through many iterations of the IFLP and TLA boot camps. See Posts 018, 043, 078 (discussing history). Rather than describe this methodology, which we call the IFLP Case Study Method, how about I share an example?
Below is an IFLP Case Study that is currently being taught at Southern University Law Center in a 2-credit course called “Special Problems in Commercial Law (701).” Because the IFLP program had proven to be a very effective vehicle for helping his students get jobs in very sophisticated practice settings, see, e.g., Post 186 (profile of Trezell Ragas); Post 179 (profile of Arnedia Wallace), Chancellor John Pierre asked IFLP to provide similar programming during the fall semester. Along with two IFLP boot camp leads, Bill Mooz and Monica Goyal, I am fortunate to be one of the instructors of record.
The entire semester is organized around the Case Study below, with students working in teams to build out the solution. See SULC-IFLP Special Problems in Commercial Law Syllabus.
Law Department Transformation Exercise
¶1. Big Datalytics’ revolutionary product has enabled it to rapidly develop a global business generating $3B+ annually in revenues, along with annual growth rates in excess of 30%. This uncommon combination of large revenues and rapid growth has caused the company’s stock to be a darling of Wall Street, trading at industry-leading multiples.
¶2. Big Datalytics is at a critical point in its history. It no longer is an under-the-radar company with a new and untested product. Its success has attracted the attention of all of the major software companies, including Oracle, SAP, and Microsoft, each of which has developed a competing product. While these products still can’t match the performance of what Big Datalytics offers, they are improving steadily and are starting to capture market share in the big data space. This growing competition, along with the early stages of saturation in the big data market place, represents a very real threat to Big Datalytics’ ability to continue to grow revenues and earnings.
¶3. Big Datalytics’ Board includes a number of savvy, forward-thinking, industry veterans who recognize this threat and take it very seriously. At the Board’s urging, Big Datalytics has taken a number of steps to counter this threat. First, it has brought in a new CEO and a new CFO, each of whom has significant experience in taking companies from fast-growing startups to large companies that scale. Second, the company has launched a two-pronged strategy of (i) accelerating the development of new features in its core product to extend its current position of technical leadership in its core market and (ii) developing a series of complementary software products that can provide it with additional revenue streams and growth opportunities outside of its core product market.
¶4. Executing this strategy will require every investment dollar that the company can muster. To date, Big Datalytics’ overriding focus has been on speed of innovation and growth, with things like operational excellence, scalability, and efficiency being secondary considerations at best. Management has decided that the company is at an inflection point and this needs to change.
¶5. Accordingly, the company’s new CFO has launched a company-wide effort to get every department to rethink its current approach to the way it handles its responsibilities and develop and implement new approaches that are more scalable, produce more consistent results, and deliver material cost savings.
¶6. Big Datalytics’ legal department accounts for $90 million in annual spend, including the salaries of in-house lawyers, outside counsel spend, etc. The CFO considers this to be material and has directed the GC to present a plan for modernizing the department’s approach to delivering legal services and generating significant cost reductions. The GC has conducted a preliminary analysis of where the department’s big cost areas are and has identified four areas for potential change and savings:
- Mergers and Acquisitions
- Intellectual Property Strategy and Management
- Commercial Contracting
The GC has further decided to start by focusing on Commercial Contracting.
Editor/Instructor note: Note that a different Case Study course can be built by focusing on any one of the four items above. Indeed, the substantive practice area supplies much of the context. This is immensely important to a large proportion of law students and mid-career professionals, as they want a tight fit between learning and career goals. In this version of the Case Study, we focus on Commercial Contracting, which is the fourth prong of the Law Department’s transformation. wdh.
¶7. Big Datalytics generates revenue by entering into license agreements with its customers. This commercial contracting activity requires significant support from legal. The approaches employed currently can only be described as diverse, far-flung, and disjointed.
¶8. Current Contracting Model: Big Datalytics’ primary product is software, which contains an embedded, click-accept license. Many customers simply do business with Big Datalytics by submitting orders for products that are governed by the click-accept licenses. However, a significant number of customers insist on having negotiated, signed license agreements with Big Datalytics. Big Datalytics’ regional selling units have taken a wide variety of approaches to the negotiation of agreements with a number of customers using highly localized agreement templates that are outdated or otherwise inconsistent with the company’s “standard” license agreement. A number of the selling units also stand out as having a very high percentage of negotiated agreements. Each selling unit and their assigned lawyers apply their own judgment as to what constitutes an appropriate modification to the agreement when a customer asks for changes, resulting in widely differing risk profiles. Finally, all selling units experience huge spikes in demand at quarter-end, causing the legal department to use a wide variety of different law firms to help provide coverage at these critical points in time.
¶9. Process and Tools: Each selling unit establishes its own processes for handling commercial agreements, the procurement function in each region establishes its own processes for handling purchase agreements, and each engineering group establishes its own processes for handling their acquisition of technologies. Most of these processes are largely undocumented, but some units have “approval matrixes” that specify who must sign off on any requested changes from the standard terms. Most of the detail in these matrixes tends to be around the approval of extra levels of discount. None of these processes are automated. Approvals are handled by email and it is incumbent on the people involved to manually hand the deal off to anyone else whose approval or involvement may be necessary (e.g., Finance for review of financial terms, support for review of support terms, etc.). As a result, attorneys spend significant amounts of time performing the non-legal tasks of chasing approvals, etc. In addition, the contracting process often is a black box where customers, sales reps, business units, and others have little visibility into how close to done the agreement is, let alone a good understanding of why it takes as long as it does to close deals.
¶10. Once completed, contracts get submitted into a company-wide repository, together with a cover sheet that identifies key features of the agreement such as the parties and products involved. In practice, these forms are often incomplete or inaccurate and many groups maintain duplicate repositories that often contain multiple drafts as well as the final agreement.
¶11. Resourcing: Big Datalytics currently has substantial resources dedicated to supporting its commercial contracting activities. Roughly 50% of the personnel in the legal department work on matters related to commercial contracting. The legal department also spends several million dollars a year on outside law firms to assist with the negotiation of both very complex agreements and the large volume of relatively straightforward sales agreements that hit at the end of each quarter.
¶12. Contract Volumes and Complexity: The company has a wide array of contracts that vary dramatically in terms of complexity and volume. The company’s license agreements number in the millions each year, but the vast majority get handled on a click accept basis. The company has hundreds of agreements (including negotiated licenses and channel agreements) that are relatively straight forward but get handled manually. Finally, the company has tens of agreements (including strategic alliances, joint ventures, etc.) that are very complex and require significant lawyering.
The GC believes that by revamping its approach to commercial contracting Big Datalytics can (i) reduce transaction cycle times, (ii) lower risk, and (iii) derive significant cost savings.
Editor/Instructor note: Module 1 of the course starts with a high-level overview of the business challenges affecting the legal industry. Thereafter, it is crucial to start supplying students with specific, realistic context. This is done by (i) assigning the Big Datalytics Case Study, (ii) reviewing the challenges facing the legal department, and (iii) highlighting the importance of change management and the need to effectively navigate a large number of internal and external stakeholders, often without formal authority. Below is a problem that student teams work though to complete Module 1 of the Commercial Contracting version of the Case Study. wdh.
Module 1 Problem: Stakeholders
You and your colleagues are junior members of the Big Datalytics legal department who are reputed to have “special skills” connected to the modernization of legal departments. This reputation comes from conversations you have had with peers about coursework you took during law school combined with some unusual internship experiences. For this reason, the GC has delegated the Commercial Contracting component of the legal department transformation to you, at least until you prove you are not up for the job.
Contracts are the lifeblood of all businesses, including Big Datalytics. Further, whatever has been done in the past has been good enough to get the company to the present day, which is a successful operating company ($3 billion annual revenue, 30% annual growth) in a very competitive and fast-moving space. What is the practical implication of this fact? Your Commercial Contract proposal is going to involve changing how people do their work—indeed, this includes some very successful and powerful people within the company.
To avoid stepping onto one of many political landmines, the general counsel has told you to conduct a “stakeholder analysis” of all the people connected to, or affected by, how the company does its contracting. That is all he says, expecting you to figure things out for yourself.
After reading the Wikipedia page for stakeholder analysis, an internet search turns up several relevant templates. Your impulse is to start with the simplest ones.
Editor/Instructor note: The stakeholder analysis takes approximately three one-hour sessions: (1) stakeholder identification, (2) stakeholder interviews, and (3) team presentations of the stakeholder analysis to the GC.
For session #1, painstakingly review all twelve paragraphs in the Case Study, having a rotation of students reading them out loud and then turning to the class to identify who might be affected by changes to the commercial contracting process. A typical session should yield more than a dozen: CEO, CFO, Board, Shareholders, full C-Suite, Big Datalytics engineers, existing customers, outside counsel, in-house lawyers and staff (50% of department), operational personnel outside of legal needed to stand up solution, department heads (Sales, Marketing, Finance, Procurement), regional selling units, and channel partners.
Session #1 gives students visibility into the company. In session #2, student teams conduct six to eight stakeholder interviews in a fishbowl format, with each team interviewing at least two stakeholders. The stakeholders are best played by instructors and/or guests drawn from practice, as the purpose of the interviews is to expose students to messy, real-world context, such as turf wars, fear of change, and interpersonal conflicts and agendas. Note that it is very easy to double and triple-up interviewees, with each playing multiple roles.
Below is an example of a fact pattern used to set-up session #2 interviews.
Instructions for Stakeholder Interviews (stakeholder analysis session #2).
During our next session, student teams will interview six Big Datalytics “stakeholders” in preparation for the stakeholder analysis you are working on for the GC.
- Team 1: You are interviewing Big Datalytics GC (Devon) and the Associate GC (Freda) who is in charge of licensing and sales. Devon is not too aware of change management theory. Further, Freda is definitely not an early adopter.
- Team 2: You are interviewing the Head of Regional Finance (Sam) and Head of Sales, North America (Monique). Sam is focused on revenue recognition, has a lot of sway with CFO. Monique believes that legal is a major bottleneck to making sales.
- Team 3: You are interviewing a Contract Manager (Delia) who supports all sales units and a rep from Big Datalytics’s biggest channel partner (Kevin, from Protech). Delia is overworked but very bright and capable. Kevin has strong views because the slow and opaque contracting process currently limits his team’s ability to close large engagements with the world’s biggest companies.
Regarding the stakeholder interviews, you should consider using very broad, open-ended questions that will elicit a lot of information in a conversational manner that the interviewee is likely to enjoy. Here are some examples:
- What are your major duties and responsibilities at the company?
- Can you describe the current process?
- What do you like about the current process? What works well?
- What do you think needs to be improved? Why is that important to you?
- What type of change do you want to avoid? Can you tell me more?
You will use this information to prepare a stakeholder analysis for the GC, which each team will present during the Module 1 final assignment [session #3]
## end of case study ##
I hope readers enjoyed this example of the IFLP Case Study Method. To drive home the practical value of this approach, consider the following summary of themes that one of the SULC teams prepared for their presentation to GC Devon, all of which came out in rich detail during the session #2 interviews:
- A high workload that threatens department with burnout
- A lengthy contracting process that is creating tension with both the sales department and channel partners
- Inconsistent and confusing approval matrices
- Overburdened with administrative tasks
- Unclear tracking process
- The high cost of the current process (time, money, mistakes)
- Poor communication and lack of transparency
Module 2 (Process Design and Optimization) begins on Monday, followed by Module 3 (Technology) in mid-October and Module 4 (Data Analytics, which flows from a new process that has been at least partially automated). Module 5 is a capstone that pulls together all elements of the course.
Suffice to say, there is nothing theoretical about the IFLP Case Study Method. We believe it is the most efficient and cost-effective way to rapidly build more T-shaped legal professionals.
PDF version of the above case study: IFLP 20-01, Law Department Transformation Exercise, Aug 2020 (please use only with full attribution to the Institute for the Future of Law Practice).