How in-house legal departments can become truly innovative

From implementing agile and lean methods to physically changing their work environments, in-house departments can become increasingly efficient and even generate revenue

Post-it notes? Who would think such simple 1977 technology – which sprang from an attempt to deliver a super glue and instead yielded a weak though reusable one – could be a key tool for improving the efficiency of in-house legal departments?

Combine sticky notes outlining tasks with a whiteboard, one sorted into “Do,” “Doing” and “Done” columns, and you have kanban, a Japanese word meaning “billboard.” Kanban, a system used to visualize work and control chains of production, has helped the manufacturing and tech world improve efficiency for decades. But law firms? Well, that’s a sticky point.

Paul Saunders, a lawyer with an IT background, is the Practice Innovation Partner at Stewart McKelvey in Halifax. When he started extolling the critical role kanban could play at his firm and for in-house clients they work with, they “think you are a little nuts. But when you explain the underlying reasoning, it really starts to resonate with people.”

The underlying reasoning can be traced back to Henry Ford, with his Model T assembly line, but was really cemented in post-war Japan, where Toyota developed the Toyota Production System often referred to, since the 1990s, as “lean manufacturing.” It’s a management philosophy designed to add value in manufacturing by continually eliminating processes that produce waste.

In the 1990s, taking lean principles from the auto factory floor, the tech world started adapting them to knowledge work. In 2001, a group of software development “anarchists” – as they called themselves – published the Manifesto for Agile Software Development. It was prompted by their desire for a new organizational model promoting a more efficient, less document-heavy IT product development process.

The management philosophies of the manufacturing and IT worlds are now heavily salted with process and workflow improvement concepts like Lean Startup, Agile, Kaizen, Scrum, Sprint and kanban. But is the legal community catching on to these innovations?

Barely, say Karen Dunn Skinner and her husband David Skinner. Four years ago the two lawyers started up Gimbal Canada Inc., a consulting firm based in Montréal that uses Lean Six Sigma tools and concepts to help in-house and external counsel improve their practices.

When it comes to workflow innovation – making changes that can make a legal department or firm more efficient, and, heck, possibly a happier place to work – the corporate law world is as progressive as the Flintstones. “We used to have a debate as to whether the doctors or the lawyers would get there last,” says David Skinner. “We [lawyers] won yet again.”


Legal lethargy

John Grant, a Portland, Oregon lawyer, bills himself as the “Agile Attorney.” For 10 years, before attending law school, he worked for Getty Images in Seattle in operations. After graduating from law school in 2007 he went back to Getty, this time as in-house counsel. While studying law, something changed at Getty. It heaved aside its traditional, rigid, waterfall style of management in which project tasks cascade downward and changes afterward are difficult and expensive to make. Getty had gone Agile.

“Their world really had changed,” recalls Grant. Work progressed faster, more smoothly. People seemed to get along better in the workplace. “I remember thinking at the time, gee, I wonder if there’s something here for lawyers?”

A few years ago, Grant started The Agile Attorney, his consulting and coaching firm that uses business optimization processes such as Agile, Lean Startup and Design Thinking to help lawyers improve the “points of impact” that impede their business and make their clients peeved. So far Grant has had only external firms as clients. “But I think Agile has huge potential for in-house teams.”

 

Lonely Planet

Agile starts with kanban, which Grant says makes the work “that lawyers carry around between their ears,” visible in the form of a sticky note.

Lonely Planet – the publishing house producing international travel guides that backpackers live by – went Agile in 2008. The Australian company’s legal affairs team was an unhappy planet. They often worked past midnight, were burnt out and behind on projects. Work was often done wrong and had to be restarted. The opaque nature of the legal team’s work had colleagues in other departments thinking legal’s role was to block them, not be a valued partner.

Realizing their traditional work methods were unsustainable, legal affairs used Agile concepts to become Lonely Planet’s leanest operational group, reducing waste and delivering the highest-priority values.

Grant teaches similar tools to lawyers. One is scrums weekly, quick meetings where teams stand in front of a kanban board and in a few minutes each relate what they did since the last meeting, and will do before the next.

Another is sprints, a “concentrated effort to produce something that can be put into practice right away,” explains Grant. Lasting one to four weeks, sprints are used to develop a minimal viable product that actually works and is useful for clients.

In the software world, according to a VersionOne survey, 94 per cent of respondents have adopted Agile methodologies. In the legal world – it’s just a guess – uptake is probably less than 1 per cent.

Lawyers, says Grant, “are conservative by nature. It’s part of the profession … That translates into being skeptical of new things. And that is, for the most part, a feature, not a bug.”

 

Re-treaded

There’s no such skepticism at Canadian Tire, where Doug Nathanson is General Counsel. Nathanson, with a team of 16 lawyers, provides a wide swath of legal advice to the Canadian Tire brood, including FGL Sports, Mark’s Work Wearhouse and Canadian Tire Bank.

Last November Nathanson’s team gathered for a two-day offsite to discuss Agile and workflow improvement themes with, among others, their external legal supplier, Norton Rose Fulbright Canada LLP. “The genesis,” says Nathanson, “begins here: Our new corporate mission is to be the most innovative retailer leader in the world.” For him and his crew, that means “we have to be the most innovative legal team in the world to support that vision.” At Canadian Tire, legal wouldn’t just begrudgingly follow the IT and other departments in shaking things up. It would lead them.

Digital commerce and the Internet have fostered massive and evolving changes in retail. For instance, it used to be that when Canadian Tire’s marketing department sent legal a copy of its latest sales flyers before they went to print, it would take them several days to vet. That worked fine then.

But then the flyers went digital as well. “If it rains in Vancouver and our guys want to switch the flyer online to put raincoats on sale, they don’t have the time to go to the legal team and ask them to review it,” says Nathanson. The in-house department had to innovate. Dumping the old system, legal took over governance of the flyer from the start, but designed a faster, more dynamic process and framework marketing could use so that if changes were suddenly needed, it had a comfortable legal zone it now knew how to work in. There’s Agile in that.

 

Leaning In

If you think of workflow as a river, is yours wide and smooth-flowing like the Amazon? Or, like the Fraser, does it narrow with its own Hell’s Gate a bottleneck choking off the flow of files, spewing mistakes and making people grab for life jackets?

That could be where lean thinking comes in for in-house. Lean Six Sigma (LSS) concepts combine tools of both lean manufacturing and Six Sigma, the latter a process improvement methodology first introduced at Motorola in 1986 to improve quality by finding and removing causes of defects and variability in manufacturing.

David Skinner spent 10 years with Stikeman Elliott LLP in Canada and later with major firms in Europe. This past decade he was in-house, including a position as vice-president and general counsel with a publicly traded biopharmaceutical company.

While working in-house, recounts David, “I bought a lot of legal services around the world.” Though often well served by external advisors, as his legal budget shrank yearly and pressure increased to do more with less, he wondered sometimes: “Did I get the service that I thought I wanted to get from my lawyers?”

 

Eliminating waste

Waste – and its elimination – is central to LSS doctrine, which identifies eight kinds of waste (or muda to use one of the Japanese terms used in lean-speak). Those wastes are time, inventory, motion, waiting, over production, over processing, defects and skills.

Working with legal groups, the Skinners start with a four-hour “Lean Legal Boot Camp,” outlining lean concepts and methodologies. Then they develop a list of potential improvement opportunities in that organization. Next they conduct small projects – similar to sprints – with a strong likelihood of success aimed at fixing a particular problem. Small, early successes are important, says Karen; they help get buy-in from a team.

Gimbal challenges clients to look at their everyday tasks and ask: does it deliver value to the client?

The Skinners’ LSS approach to innovation in corporate law workflow uses a core LSS tool called DMAIC (for Define, Measure, Analyze, Improve and Control).

“With in-house counsel,” says Karen, there’s “huge benefit … in terms of becoming more efficient, finding ways to reduce overhead, finding areas where they can actually become revenue generating as opposed to being a black hole where the company pours money into legal.”

 

Black hole sums

Back in 2013, RBC began using Lean Six Sigma to shrink its black holes. Over the course of a year, according to RBC, which discussed Lean Six Sigma with Canadian Lawyer InHouse after it won the magazine’s 2014 Innovation of the Year Award, the bank tackled 18 different projects within its legal group.

Using LSS’s process-mapping techniques, they exposed a multitude of Hell’s Gates. For example, the lean team turned to using automated documentation technology on a low-value-adding activity to generate structured notes to business partners. They also streamlined a process, in conjunction with finance, to report funds provisioned for settlements.

Overall, LSS helped the Royal Bank save $5 million and about 2,700 hours in time annually. And, astoundingly, the in-house legal team, never before a profit source, now generates more than $1 million in revenue annually.

 

A change of space

Agile and lean aren’t the only ways to innovate in business and legal work. You can also get physical. Just radically change your work environment. At its offices around the world, including in Canada, Deloitte is moving employees into dramatically different new office spaces. It has dubbed the “people-first” changes its “Workplace of the Future.”

At heart, the long list of changes – open spaces, treadmill walk-and-work stations, laptop communications technology, going paper-light and hot desking, where employees don’t have assigned desks and book desk private office space as needed – are designed as much to change how people work as where they do.

Already, Deloitte has done such make-overs on its Montréal and Ottawa offices. When Nikki Latta, Associate General Counsel at Deloitte, moves into the firm’s new 19-storey Toronto headquarters along with 3,500 other employees, she and her in-house colleagues won’t get personal offices or their own desks. No one will, from top to bottom, regardless of rank or seniority.

They can book them as needed, storing personal items in lockers. It’s what Deloitte calls “agile seating,” which shouldn’t be confused with Agile project management concepts. There will be four kinds of areas: social areas, tech-enabled team areas, acoustically tailored privacy areas for discreet conversations and quiet areas using pod-like seats that will be spread around the perimeters next to windows.

The in-house team, though yet to move into the new Toronto digs when this was written, is already “living the change.” The notion behind it, explains Latta, “is certain days you may need quiet work space. Others you may want space to collaborate with a team or working on an engagement with a specific group of people. So you may want to sit close to them.”

There’s more flexibility, more face to face. There’s a “right to light” premise that means everyone can get access to window space when they want it. Deloitte says the new work spaces “encourage both planned and spontaneous connections between our people, breaking down barriers across all levels, services, roles and functions.”

Technology is helping as well. Deloitte got rid of desk phones. Latta, like other employees, makes her calls, using her old Deloitte desk phone number, through her laptop using a small wireless headset and portable speakers.

 

Removing physical barriers

Luxury fashion chain Holt Renfrew is trying similar things at its Toronto headquarters, though perhaps with a touch more couture. In-house legal departments, writes Catherine Forbes, Holt’s Director, Senior Legal Counsel, in an email to Lexpert, are often isolated from other lines of a business. That traditional arrangement, with in-house focused on work behind closed doors, she continues, is a result of legal’s “obligation to maintain confidentiality when dealing with privileged or sensitive legal matters.

“That can leave employees outside of the legal department with the impression that the legal team is unavailable or unapproachable.” On the flip side, in-house lawyers may experience a lack of exposure to the day-to-day reality of the businesses they work for and the resulting benefits relationship-building can bring.

Holt Renfrew’s Toronto headquarters are being redesigned with collaboration, cross-functionality – and of course, style – in mind. (The work is expected to be complete in February.) Physical barriers are being removed so people can interact more easily. Leadership, says the firm, will be more easily accessible, to “enable the natural learning that occurs through proximity by physically integrating executives into the teams.”

Legal had to keep in mind the Law Society of Upper Canada’s guidance regarding open-concept offices. It requires lawyers working in such environments to ensure they meet professional obligations, including client confidentiality. For Forbes and her team, who handle a high volume of issues, including e-commerce arrangements, marketing strategies, finance and employment, it was also important not to sacrifice productivity for the sake of collaboration and community life.

The legal team’s work spaces, Forbes notes, are configured with their backs to windows so other employees can’t see their computer screens. Lawyers observe a “clean desk” policy, so sensitive material isn’t accessible to others.

For Forbes, one of the most vital tools to use is the ClickShare wireless presentation system for meeting rooms. A small device resembling a mouse, it plugs into a laptop USB port and allows multiple users to stream or mirror content on a meeting room display, toggle between different laptops, or display split-screen views. “It is easy to use, and eliminates messy cables and potential for technical difficulties,” Forbes points out.

 

Office benefits

Back at Canadian Tire, Doug Nathanson is stoked about another facet of innovation with how his in-house team works. It’s how they interact with their external advisor, Norton Rose Fulbright. Since its global merger in 2013, the law firm, with its huge size and international reach, has focused significantly on innovation initiatives improving the capabilities of its own lawyers and the service the firm offers clients.

Walied Soliman, a Toronto Partner and Co-chair of Norton Rose Fulbright’s Special Situations Team, says corporate clients are hungry for their external lawyers to provide the kind of technologically advanced, efficient services they’ve been getting for years from other kinds of service providers. The firm’s associates are all sent to the firm’s International Academy in London, England, where they’re schooled in, among other things, project management concepts such as Agile. For Nathanson, the law firm’s technical innovations are “a cut ahead.”

A variety of Norton Rose Fulbright apps help Nathanson’s team quickly access their open matters, documents, current billings, trade-mark info, contract templates, video learning and more. Especially useful is a custom-designed quiz the firm made that Canadian Tire lawyers can securely populate online with a half dozen or so legal questions to get answers to those black-and-white, standard and repetitive questions that previously sucked up inordinate amounts of time.

Since Nathanson’s in-house team put the rubber to Canadian Tire’s innovations in 2015, Nathanson has seen benefits. Initiatives are getting finished in record time, he says. “What we really pride ourselves on now is we are not slowing things down. We are helping things speed up and moving at a higher velocity.”

In November, John Grant, who has been preaching Agile around North America over the past few years, spent time coaching Stewart McKelvey’s lawyers. Things have moved fast since. The firm has begun internal Agile pilot programs at its offices throughout the Maritimes. It’s also been asked by a provincial government in-house team dealing with a slew of incoming major new projects to help them use Agile to deal with anticipated workflow increases.

People were skeptical when Grant came to coach his firm, says Saunders at Stewart McKelvey. Grant began with his pet tool, kanban. “After about 15 or 20 minutes, you could see their eyes just open as they seemed to get it,” says Saunders. A week after meetings with Grant, Saunders was fielding requests from his colleagues for at least five new whiteboards. “My facilities guy,” laughs Saunders, “says to me, ‘Geez, where are all these requests for whiteboards coming from? What the hell are you doing, Paul?”’ He was merely innovating.

 


So You Want To Be Agile

Here are some tips – and translations – for some of the key terms and ideas behind the idea of agile innovation:

Visualize your workflow, says lawyer John Grant, known as the Agile Attorney. Kanban (Japanese for billboard or sign) is a great way to do that. Using sticky notes and a white board, team members put up their task, with brief decryptions of purpose, into “Do,” “Doing” and “Done” columns. “You will see a bottleneck naturally form at one of the phases – you will wind up with more sticky notes in one column – which is a pretty strong indicator that is where your problem is. That gives you the impetus to drill down and make more targeted investigations as to what might be causing the bottleneck within that particular piece.”
 

Take a Gemba walk. Gemba, explains Grant, is a notion from lean manufacturing concepts that means getting off your butt and taking a walk around to see how the business you represent actually works. More than external lawyers, in-house counsel have better opportunity to do this. “Lawyers are undereducated in even basic project management principles,” says Grant. “Lawyers are good at firefighting. But it’s easy to lose sight of what your business is.”
 

Be a good leader. If you are general counsel where your company and your in-house team’s practice methods are being transformed, buy-in is critical, says Doug Nathanson, GC at Canadian Tire. “You really have to show everyone involved a curiosity and a level of interest and commitment to work with it.” And to bridge the isolation that legal departments seem to breed, be a cheerleader and show other departments, like IT and marketing, you’re interested in their work. “And you are there to help, not just advise.”
 

Change management is key, says Nikki Latta, Associate General Counsel at Deloitte. “People are uncomfortable with change, generally,” says Latta. “You have to make sure there is clear communication, clear support. Listen to the concerns raised.” If you avail your teams to the latest technology advancements, make sure they have appropriate training and support.
 

Think like a start-up company as you begin to innovate in your legal department, says Paul Saunders, Practice Innovation Partner at Stewart McKelvey. “Start-ups have an idea and a vision they want to get to. But they have to be very mindful of costs.” Using the start-up framework, it’s better to focus on a minimum viable product (or change in process) that can be quickly done, test and measure how it works.“ Evolve iteratively. Don’t go bold and crazy.”

Take an honest look at your practice.
“Lawyers,” says Karen Dunn Skinner of consulting firm Gimbal Canada, “tend to hesitate when you tell them you are going to talk about process improvement. They typically say, ‘We don’t have any processes. Everything we do is bespoke and creative and we start from scratch every time.” But look around and there are transactions – title verification, incorporating a “newco” acquisition vehicle – that are routine and repetitive. That’s where waste and error can be reduced through process optimization.