ACC names Telstra, Woolworths as value champions

In-house legal departments at Telstra and Woolworths have been honoured for sustained reductions in legal costs.

Carmel Mulhern, head of Telstra’s legal team. Picture: David Geraghty.

In-house legal departments at two of the nation’s biggest companies — Telstra and Woolworths — have been honoured by the Association of Corporate Counsel for achieving sustained reductions in legal costs.

These companies have introduced changes that have shaved millions of dollars from their legal bills and freed in-house lawyers from low-skilled tasks.

Telstra, with the collaboration of Herbert Smith Freehills, has put in place reforms that have eliminated 40,000 hours of low-value in-house legal work every year, freeing the company’s 200 lawyers to spend more time on high-value work.

By improving its procedures and developing automated systems, the legal department at Woolworths has slashed its overall legal costs — internal and external — by $29 million over two years.

Both companies have been included on the ACC’s international list of “value champions” which lists 12 in-house legal departments that have achieved sustainable ­reductions in legal costs, increased client satisfaction, reduced turnaround times and improved results.

Also on the list is the legal department at Royal Dutch Shell, which cut its panel of law firms from 400 to six and linked their fees to the price of a barrel of oil. This means Shell’s legal spending automatically declines during periods of budget constraints.

Archer Daniels Midland reduced its legal spend by $US20m ($27m) and cut its panel of 700 law firms by more than 75 per cent.

At Telstra, the savings are the result of a legal innovation forum established two years ago to make better use of the in-house team’s skills.

General counsel Carmel Mulhern said the project had changed the legal department’s culture.

“We can now talk to the CEO about the metrics — the 40,000 hours — and the value we are bringing to the organisation,” Ms Mulhern said.

“We were trying to find the pain points for our lawyers — what was the stuff that was getting in the way of what we really wanted them to be doing — which is the strategic work, the interesting work that they went to law school to do and which is where we add value.”

At Woolworths, total legal costs fell by 21 per cent in the first years of the reform program, and by 25 per cent in the second year.

Chief legal officer Richard Dammery said this had been achieved through a range of initiatives including “analysis of cost drivers, tight management of all legal matters, and increased work undertaken in-house”.

“Reviewing fee arrangements in partnership with external firms has also been a key part of this process,” said Mr Dammery, who is also company secretary.

Mick Sheehy, who is Telstra’s general counsel for finance, technology, innovation and strategy, said the changes at his company were the result of a series of ­forums and pilot projects involving in-house lawyers.

Those forums, which were ­facilitated by Herbert Smith Freehills, had applied an uncon­ventional problem-solving tech­nique known as “design thinking” that Mr Sheehy had become ­familiar with at Harvard Uni­versity.

When the project started in 2015, HSF partner James Crowe and client relationship manager Marlo Osborne-Smith brought in innovation specialists Tristan Forrester and Lisa Leong, who ran a series of workshops for Telstra’s lawyers.

Mr Sheehy said the project identified a “laundry list” of “boring topics” that needed reform such as the legal approval process, drafting nondisclosure agreements and internal meetings.

“We measured how much time we were spending on these activities and worked out that we were spending a considerable amount of time of these low-level activities,” he said.

A series of eight-week trials, or “sprints”, was put in place and if they were unsuccessful other options were tried.

Creating nondisclosure agreements has now been automated and the number of internal meetings has been cut by 52 per cent — along with a big reduction in the number of lawyers who are required to attend the remaining meetings.

The Association of Corporate Counsel, which selected the 12 “value champions”, is part of a global network of 40,000 in-house counsel employed by 10,000 ­organisations in more than 85 countries.

“The companies we recognised reset the conversation about the role of the legal department, then demonstrated how they could turn it from a cost centre to a value centre,” said Tanya Khan, ACC vice-president for the Asia-Pacific.