BD: On the Cutting Edge of Controlling the Spend
Lawyers at Becton, Dickinson and Company are making the most of that newfangled technology corporate counsel have been learning to use in this century.
Still, says general counsel Jeffrey Sherman, "We've just begun to fight."
If BD's Law Group's success is exemplary, it's an indication that lawyers have not been in the forefront of the computer revolution, he says modestly. He and his staff lawyers have simply applied themselves to the task at hand, applying the maxim that anything worth doing is worth doing well.
What BD lawyers do well is to harness data to management, putting the information they gather electronically to use in running a busy law department for a fast-growing global medical-technology business. (Revenues were $4.9 billion in 2004, $7.7 in 2012.)
BD is headquartered in Franklin Lakes, N.J., where it has 20 lawyers. It has offices in more than 50 countries, with attorneys in France, Belgium, Germany, Mexico, Brazil, Singapore, China, India, Australia and Japan.
When Sherman arrived at BD in 2004, the majority of sales were in this country. Now 60 percent of sales and almost all of the company's growth are outside the U.S.
"We monitor risk on a global basis," Sherman says. "We use data to look at patterns, to learn, for example, whether a particular factory in a particular country is performing up to standard."
David Highet, BD's chief intellectual property counsel, uses Thompson Reuters's Serengeti Tracker software to detect broad trends by tracking IP, patent applications and transactional work worldwide.
Serengeti, which helps manage budgets, and BD's proprietary START software, which creates contracts for vendors and suppliers, give Sherman the leverage he says is key to working well with his in-house clients.
Few legal expenses have "positive leverage," he says, because there's not much lawyers do that can be quantified. In the eyes of the clients, "We're just an expense." The ability to provide hard data on legal spending and to streamline work flow "better aligns us with business." It shows "we're pulling in the same direction," he says.
The company is under relentless pressure to manage costs, while Sherman believes general counsel should be able to say, "Spend every penny you need to spend and if you don't have to spend it, don't." Serengeti helps determine which of those pennies must be spent and which can go directly to shareholders. It also makes it easier to explain where the pennies went, and why.
In 2012, Sherman's team won the Serengeti Golden Cheetah Award for its creative use of the program.
Before adopting Serengeti, BD lawyers invoiced on paper. Less than a year after switching to the program in April of 2010, they had saved more than $1 million by enforcing strict billing guidelines and monitoring expenditures.
"We had no idea we were doing some of this better than anyone else," Sherman says. "We knew anyone could do it."
Assistant general counsel Rebecca Bedno says Serengeti provides "critical" information for managing outside counsel. The program allows her to see what other firms are doing, "so we can benchmark. … It allows you to say, 'We've spent a lot on this and I don't think we've gotten the value.'" On the other hand, it gives firms "an opportunity to show that they like working with us."
Of course, if negotiations are particularly complex, Bedno will try to reach an accommodation. And billing guidelines are just that guidelines. "We are always open to discussion," says litigation manager Robert Manspeizer.
Sherman says he is "astonished" at how cooperative his outside firms have been about tighter monitoring. "To be effective, you want everyone in on it," he says.
Serengeti allows the law group to "drill down by looking at peer group, industry and [industry-] size spend," says Paralegal and Legal Operations Specialist Amy Guzman. When hiring a new firm, BD lawyers ask, "Are its rates consistent with the industry? What are our peers paying?"
"Law firms that are really good should actually be starting to look at these data before we do," says Highet. "Law firms have a treasure trove of data they can analyze." He says he believes firms will begin to make the most of this information in the not-so-distant future.
"When I engage a law firm, it's a much easier conversation" than pre-Serengeti, says Marie Fattell, senior counsel. "It's not 'I'm tracking you. I'm going to be cracking the whip.' It's just 'put your budget in Serengeti.'"
At the beginning of the fiscal year, the law group develops budgets for its internal units. If, for example it designates $100,000 for capitalized patents for a specific business and at midyear has spent more than $50,000, Serengeti will send an alert. Or Serengeti might be set up to trigger an audit every three months; an invoice cannot be approved until the audit is cleared.
Serengeti also makes it "easier to adjust budgets to meet changing needs, because every quarter you're asked to input a reforecast," she says. "This means you're constantly up-to-date with what you're reporting to business."
The law group works hand-in-hand with BD's Procurement Group to manage outside-counsel expenses, describing this type of in-house collaboration as a developing trend.
BD's legal team also use START (Standard Automated Request Tool), which cuts the time spent creating contracts.
"The more we can automate the workflow, the better," says Bedno, because dealing with documents can be "overwhelming."
"I used to spend a lot of time trying to create the perfect template, with the best of terms and conditions," she says. "Being able to focus on what we know is important for the business is satisfying."
Fattell also finds the automated programs lessens the focus on boilerplate. "When I joined BD five years ago, each attorney would [create] an agreement from the start. [Now] we're all in agreement on [terms], so we know that they'll be used." In addition, with START, paralegals can handle routine transactions, thereby freeing up additional attorney time.
When it comes to e-discovery, Sherman says, "We're not innovative" but "we're in [the game]."
Last year the law group, working closely with IT, began developing an in-house e-discovery program based on Symantec's Clearwell eDiscovery Platform. Expected to go live this month, it will allow BD to manage electronically stored information in house, eliminating the use of multiple vendors; the company anticipates "significant" savings as a result.
"It's something ... that we've wanted to do for a while," says Manspeizer. "Everyone's happy. The IT people are very excited."
Fattell says the use of computer data to streamline management has become a "game changer" for BD's legal team, allowing it to save money on personnel as well as on operations. "As BD is growing … we haven't grown at the same rate," she says of the law group. "An initial question is now, 'Is this something where we need to add a person, or is it something we can address with technology?'"
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