going big: integrating value strategies into a repeatable framework
Data management and storage company NetApp garnered a Value Champion award in 2013 for its data-driven, technology roadmap project. Not satisfied to rest on their laurels, General Counsel Matt Fawcett, Senior Director of Legal Operations Connie Brenton, VP of the Innovation Services Group (IP Group) Beth O'Callahan, recognized that innovation in silos wasn't enough. "We had to find a way to integrate individual innovations into a cohesive program that would create greater spend and value alignment," says Brenton. The team sought to move from "small arrow" (innovation in unstructured silos) to "big arrow" impact—a structured combination of innovation tactics towards a focused, larger and more impactful result.
Continuing to work with co-Champ Elevate Services, which acts as an extension of its legal department, NetApp embarked on a project to pilot this strategy of cohesive steps within the most impactful area, the Innovation Services Group, which has the highest outside legal spend. The Innovation Services Group manages about 3,000 patents, as well as trademarks and copyright.
The integrated team started with analyzing spending patterns, rates, staffing, substantive work product, and billing compliance. This yielded a significant realization: "We discovered that we had pricing, staffing and scope variation and thus had an opportunity to simplify and increase efficiencies and value by collaborating on a unified direction, process and technology solution," says Brenton.
"What's unique about this engagement was the opportunity to apply integrated models for end-to-end innovation at NetApp," says Pratik Patel, VP of Legal Business Solutions at Elevate."NetApp observed the results of smaller pilots and were smart to apply them in a structured, integrated fashion, creating efficiency and value for the benefit of NetApp and their outside counsel."
The program had four key parts:
Enhanced legal bill review. Greater rigor in ensuring that firms were abiding by billing guidelines, as well as refreshed, tighter guidelines, led to more than $200,000 in savings. The team leveraged technology by writing new rules into NetApp's e-billing system so that invoices are automatically identified and approved, denied, or auto-corrected without human involvement.
Sharper lens on work. Focusing law firm services on value-added tasks, as well as raising the strategic bar for patent applications and patent renewals, contributed to a 58 percent reduction in spend in this category.
A move to fixed fees, for each major task in patent prosecution. "This captures savings up front and cuts invoice review", Brenton explains, "allowing the team to focus on higher-value portfolio management and managing firms based on outcomes rather than spend."
Competitive bidding. NetApp invited select incumbent and new firms to get creative with pricing and support models, including a fix-price menu approach and yearly "all-in" fees approach."The menu approach makes it easier for law firms to respond, and for us to identify the items above the negotiated price. It forces firms to rethink their own processes and utilize the docketing system," says George Simion, Director of IP at NetApp. The team then decided on a price for each activity. "We wanted that single price so that we could write a rule into our e-billing system and eliminate bill review," Brenton says. "It also leveled the playing field."
Legal partnered with NetApp's procurement team on the RFP submission to ensure greater rigor and deeper analysis, including participation from technology resources to consolidate the massive amounts of information generated. The process yielded six selected firms globally ("the beginnings of a convergence program," according to Brenton) and a reduction in outside counsel spend of 19.5 percent.
Not only did this "big-arrow" initiative result in lower legal costs, but the resulting efficiency gains—an estimated time savings of 5,200 hours—freed up NetApp IP attorneys to handle complex deals and litigation, strategize with the business, and continue to evolve the patent program to align with the Company's broader transformation.
"Information drives value," says Patel. "Tracking data through these initiatives builds data sets (small arrows) that help law departments better understand the fair market value and pricing for matter-related work. That intelligence can be used to scope future work and help outside counsel become more accurate, cost effective and efficient (big arrow). This drives tremendous value, saving all involved parties precious time and money."