Built for Value: A Legal Department Start-up
By Jennifer J. Salopek
Hyundai Motor Manufacturing Alabama, LLC ("HMMA") is Hyundai Motor Company's first manufacturing plant in the United States. HMMA started its production operations less than 10 years ago, in 2005. "When you're building a new legal department, it's like a startup," says Chris Smith, general counsel at HMMA. "There are a lot of opportunities, without past practice or precedent to restrict them." However, as he notes, it's not easy: "We had the tremendous challenge of quickly establishing legal systems and controls from scratch with limited resources." There were no established systems for providing legal assistance to internal clients, contract management, litigation management, outside counsel management or employee training.
There were other challenges as well. "Law is very word-based, but language was a significant barrier between ourselves and Hyundai executives," Smith explains. "We had to break down complex legal concepts into simpler terms for translation purposes.
"To understand the legal department's solution to these challenges and its ability to define a value-added role for itself, it's important to understand the corporate culture in which the legal department was working.
"Manufacturing concepts are essential to understanding our internal customers, who look for results in numbers rather than words. Efficiency is also key, and speed is seen as a competitive advantage at HMMA, so it's important to adapt to change quickly," Smith says.
The formation and evolution of the department moved through three phases as its members ramped up to full speed and efficiency. The first, or startup phase, dated from the plant's opening in 2005 to 2008. "Things were unstable as we were installing systems," Smith says.
The second, or stabilization, phase occurred across the years 2009 to 2012. This phase was crucial as the legal department devised what would be both its centralized operating system and its interface with internal clients: ELM, or Electronic Legal Management, an online computer program developed in collaboration with HMMA's internal IT department and vendor company Hyundai AutoEver-Korea.
The "build versus buy" decision also reflects the corporate culture. "For example, the plant is a greenfield site. Hyundai prefers to build from scratch and to be very self-reliant," Smith says.
The legal department uses ELM to process all requests for legal assistance from other departments electronically. Users submit requests for legal assistance, which are automatically routed to the legal department for assignment to the appropriate attorney. The attorney then enters a response directly into the system, which is forwarded to the requester. ELM allows the legal department to easily record and store assistance requested and provided, and to track the workload of the five attorneys and three support staff. It increases cooperation within the department and has allowed the department to perform more work in-house—an increase of 44 percent since 2010—and to reduce outside counsel expenses by 48 percent.
These efficiencies have helped to raise the stature of the legal department within the company. "The legal department has always performed well, but we lacked a way to convey the value we were bringing to the company and to support that value with numbers," says Smith. And the benefits are not calculated only in dollars and cents: "These higher-value assignments allow internal lawyers to develop and specialize."
ELM also provides a contract management system that allows the legal department to review, store and search for contracts electronically. Its contract expiration tracking feature automatically notifies departments via email when contracts will expire. Since the implementation of ELM in 2010, the legal department has increased the number of contracts collected and stored by 61 percent.
In another response to their environment, the legal department uses ELM for litigation management. There was startup litigation, as HMMA built a new plant and hired 3,000 new employees. ELM consolidates all litigation electronically for easy retrieval and review, and employment litigation was reduced 20 percent in its first three years.
"Although there is no concrete evidence that ELM is directly responsible for that reduction, our department's enhanced efficiency frees our staff up for training, counseling, audits and investigations that can help prevent employment litigation and therefore reduce the number of actions," Smith says.
Training delivery is another key accomplishment facilitated by ELM. The legal department now identifies key areas for employee training, such as sexual harassment, contracts, intellectual property or immigration matters, in its annual plan. Attorneys work with the public relations department to record training videos on each topic, which are deployed via ELM once per quarter. Employees can watch the videos on their computers at their convenience; ELM allows the legal department to track completions, which have increased 123 percent since the implementation of ELM.
The legal department stores key information on outside counsel in ELM as well. The legal department staff completes report cards on all outside counsel via a quarterly review meeting; this feedback is shared with outside counsel.
The legal department wanted to make decisions based on objective criteria. "The report cards allow us to select the best attorney for a project and to help outside counsel help us. It also allows for better budget predictability," says Smith. HMMA has reduced its outside legal spend by 48 percent over the past three years.
"We are now a data-driven legal department, and very results-driven," Smith concludes. "Our department's motto is 'never confuse activity with accomplishment.'"
Hyundai Motor Manufacturing Alabama, LLC Legal & IT Team