How to Launch and Sustain a Value Initiative on Multiple Fronts
By Jennifer J. Salopek
When Joe Milcoff became vice president for litigation and risk at Pittsburgh-based FedEx Ground in 2012, his team was given a long-term goal: to handle as much litigation and claims adjustment in-house as possible.
Using Quality Driven Management (QDM) processes to facilitate that self-examination, the Litigation and Risk team arrived at resource optimization tactics and value-based relationships with outside firms that have generated impressive results.
Beginning in 2013, members of the department assessed internal processes, seeking opportunities to increase efficiency and reduce costs. Quality Action Teams (QATs) were created to work on the opportunities identified, led by litigation attorneys and managers. Paralegals served as project managers and really led improvement efforts, Milcoff says: “They are an extremely strong group, and showed us how to bring the processes they had developed individually into the wider department.”
Quality Action Teams were created around five areas:
Metrics. This team identified key performance indicators to measure internal performance and that of law firms; the most critical are those that measure spend on a per-matter or per-claim basis, as well as matter duration and claim closings. It was important to have these metrics to communicate L&R performance to the business, says Milcoff.
“Our measurements previously had been very legal-focused, and weren’t necessarily something that the business could assess. We had tried to quantify savings with equivalency to the external billable hour, but they were unable to draw any real meaning from that,” he says.
Internal processes. This team assessed the litigation process from start to finish and created a process flow map that reflects its stages as well as responsibilities, links to template documents, and standard procedural steps. The team also refined L&R’s early case assessment process.
Discovery. This team catalogued all responses to written discovery into two searchable databases, established protocols for written discovery responses, and launched an enhanced process in which paralegals now draft initial discovery responses for attorney review, thus reducing legal fees.
This effort has generated additional benefit for the members of the department. “Everyone is able to use all of their talents as legal professionals,” Milcoff says. “There is no need to farm out this work to a firm billing us for a junior attorney’s time. We’ve seen increased quality, increased consistency, and increased job satisfaction.”
Outside counsel engagement. This team assessed and revised outside counsel guidelines to enhance the use of value-based fees, streamline financial reporting obligations, and ensure uniform use of preferred litigation services vendors. It then conducted a request for proposal process to select preferred law firms for West Coast litigation. This reduced duplication of effort, saved on travel expenses, and helped to foster a trusted vendor relationship. The RFP resulted in cutting the number of outside law firms by half; VBFs were negotiated with the rest.
“We had suggested AFAs before but not very successfully. We had to drive them; we couldn’t wait for them to come to us. It has helped us to build stronger relationships: Firms see the opportunity to do good work on a continuing basis.”
Milcoff reports that about 10 to 20 percent of litigation work is now performed on a value-based fee basis, as well as all general litigation. “This is still in its infancy,” he says.
Alternative dispute resolution (ADR). This team researched the basis on which ADR provisions are likely to be enforced in courts across the United States, and worked to enact measures that would increase the likely enforcement of arbitration clauses in vendor agreements.
In the first year, these enhanced processes reduced average monthly legal spend by 32 percent in general litigation, average cost per liability claim by 15 percent, discovery costs by 62 percent, and average docket duration from 33 to 52 percent, depending on the type of matter. The Litigation & Risk team achieved these results despite a 16 percent increase in general litigation matters and 40 percent increase in claims volume, with minimal staffing increases. Over this period, they added only two claims professionals for liability claims and one paralegal for general litigation.
Like other in-house departments, the FedEx Ground Litigation & Risk team faces resource constraints that will challenge their ability to continue driving cost reduction. "Nevertheless, any time I think we've reached the limit, this team finds a way to deliver even better results," Milcoff says.