Note: This transcript has been adjusted to improve readability. Transcripts are generated using speech recognition software and human transcribers. The context and more than 95% of the actual transcript have been preserved. We strongly encourage our listeners to listen to the audio.
Nicole Giantonio: Hello, this is Nicole Giantonio, the head of global Marketing at Elevate. The podcast episode you’re about to hear is part of our Impact Series featuring Elevate customers implementing transformative change. In this episode, Elevate’s Stephen Allen talks with Dion Harrington of Rio Tinto about outside counsel management programs and AFAs, programs that have resulted in real savings for Rio Tinto, including $2M in savings on a single matter – and $10M in savings, program-wide in 2020.
Stephen Allen: Hi, this is Stephen Allen, Vice President of Get Shit Done at Elevate, and today I’m talking via the ether with Dion Harrington from Rio Tinto. Hi Dion.
Dion Harrington: Hi Stephen.
SA: Could you give people an idea of who you are and your role at Rio Tinto?
DH: Sure. My current role is Chief Legal Operations at Rio Tinto. During the last year, we restructured part of the function around creating the Group General Counsel Office, and it was something that Barbara Levi [Rio Tinto’s Group General Counsel] was keen to do. I was formerly a managing attorney, and we re-badged that role because not many people knew what that role meant. A lot of the things the managing attorney was doing were in the legal operation space. So we re-badged it, Chief of Legal Ops. We’re sitting within the Group General Counsel’s office and handle a lot of the things that apply function-wide, around external spend management, document management, and knowledge management.
SA: Yeah. You keep the machine running?
DH: Yes. [laughter]
SA: We talked a while back, a general catch-up, and I remember you talked about being a convert to the power of data. Could you share your story with our listeners and your route to that? I think it was particularly interesting.
DH: Sure, my interest in capturing and using data goes back a decade when I was leading the Legal team supporting our global Procurement function. Procurement being very transaction-driven, has a highly vested interest in certain data and metrics, source to contract, a cycle of time. For example, customer satisfaction, and there were metrics on many different things. However, the intersection of Procurement and our Legal function wasn’t characterized by using data for monitoring demand, management, and performance. There was quite a deal of misinformation around Legal being a blocker, being slow; those were the things that I would hear. One particular pain point was around the end of the financial periods, accompanied by very urgent requests for contracts and legal support. Getting contracts and negotiations done in days, if not a week, or two, was one of those things that have always been the case; there was immense pressure on my team. It wasn’t good for team morale because they were under a lot of pressure, and there were also defensive comments on the client side.
Contracts would get thrown over the fence, so to speak, and then when they [Procurement] got asked where things were, they’d say, “Oh, it’s sitting with Legal.” The fact that the contract was thrown over the fence the day before wasn’t relevant, and that it had been sitting on their desk for six weeks. I was quite curious about what was going on with this; it was quite early when I led that team. I asked my team worldwide to start tracking urgent request data, who made it, when, and why it was urgent. We collated the data and put it into a table representing the urgent requests of the Legal function across the whole of Procurement. It showed that it was variable across Procurement, and I presented this at the leadership team meeting. I sat on the leadership team meeting with Procurement GMs; this was data analysis that hadn’t been seen before. It was quite amazing that rather than me having to defend my team’s performance, it turned the discussion around in that meeting.
The head of Procurement, looking at the data, was able to question those particular GMs whose teams were the ones that had the high volume of urgent requests, “What’s going on? Why is your team having all these urgent requests?” A very interesting discussion ensued and a lot of questions. Ultimately, it was the beginning of lifting the lid on a whole range of processes around the use of Legal, and we’ve talked about those examples of contracts sitting on desks for a long time and then throwing it over over the fence. I guess it gave insight into what was happening. It enabled us to focus on the bottlenecks, drove transparency and accountability, and stopped the buck-shifting.
Another great thing is it improved work morale and people enjoying their work. It was a very simple but very powerful learning experience. It demonstrated to me the benefits of capturing data and using it to drive meaningful insights. Data that you can use in decision-making, tracking performance, and promoting change.
SA: The great thing about that story Dion, is sometimes you read about the tyranny of metrics and how we’re all slaves to metrics, but actually, there the metrics freed people. It shined a light on what was happening. Great story. In your current role, there’s a number of initiatives you’re working on. But there’s one I wanted to ask you in particular about; it follows on nicely from data and how data can drive outcomes, drive better performance, all of those things. It’s the Spend Excellence Program I know you’re leading. There are some confidential things, [chuckle] I’m not asking for that, but do you want to give people a flavor of the Spend Excellence program?
DH: Sure, it was early 2019. Our Legal team had implemented several initiatives, such as introducing e-billing, refreshing our guidelines. Still, we didn’t realize the full anticipated value and benefits of the costs of all of these things. They have quite a long runway. We were also required to accelerate cost savings in 2020. This applied across all functions and Legal; we didn’t get an exemption from that. Just as every other function in the group had to deliver some hard savings, we had to do the same; we had to work out how to accelerate that.
SA: I think that’s interesting for a couple of reasons, and hopefully, we can talk about that. Number one is too often in Legal, and you’ll be aware of this because you’ve been around it as [chuckle] long as I have Dion, that people think that technology is the solution. It’s an enabler, and I think there’s realization or acknowledgment here that you have the technology, even in some of the processes, in terms of the guidelines. However, it still needed that extra piece of thought leadership or direction or intelligence to drive it, so hopefully, we can talk a bit about that. And the second thing is, I’ll come on and ask you in a bit about some of the tangible benefits. But how did you get the thing up and running? What was its initiation? How did you get started?
DH: What we did, we ended up kicking off a project where we did a deep dive, historic spend assessment. This was early 2019. We wrote to our top 30 law firms asking for our spending in 2017, 2018 to provide it in LEDES format [Legal Electronic Data Exchange Standard], and that allowed us to put it into a platform where we could then do a deep analysis of that spend. We identified a whole raft of different opportunities for improvement as part of the project. We analyzed those in terms of; ease of implementing against the quantity of value, or benefit to be obtained, because you can’t do everything in one hit. That allowed us to prioritize the low-hanging fruit that we’re going to go after, given that we had that mandate of delivering some meaningful savings in 2020.
SA: I think that’s always interesting, right? Because change is difficult. Trying to find less difficult change; easier is always key. What did you look at first?
DH: We had an e-billing platform in place, but we needed support in the back-end running it, getting the resourcing right with the technology. Also, there are a lot of processes you need. We are a global team spread around the world, there are 100 odd of us, and there is some variability in processes and how you do things in different regions. When you have a single technology platform in place, you come across friction points, and we needed some help. We embedded an e-billing platform that was sort of an easy one, and it helped with timekeeping management. That was one.
The next one was, we had quite robust and detailed billing guidelines, but we needed to do a bit more on them to make them implementable in terms of enforcing the guidelines, the consequences of non-compliance. We also implemented a legal bill review team at Elevate Services to assist us with this. Who would leverage the technology and human review of every single line item? This freed our lawyers from the pain of trawling through pages and pages of invoices for approval on top of their day jobs.
Now that we’re getting invoices through a legal bill review process, there were recommendations about what was non-compliant, but they [the lawyers] made the final decision on where to override that. That was dealing with the spend.
One of the other areas where opportunity was identified was at the front end when you’re engaging the firms running RFPs. Our lawyers were doing a lot of this themselves and doing it manually through email without having a lot of support; the more you invest in writing a good scope of work for an RFP, the better the quality of bids you’re going to get. Another thing was, we were wholly unsuccessful in applying AFAs on our matters. Part of that was, if you’re not investing the time upfront and writing the scope of work, doing an RFP, it gets hard for firms to bid with the certainty necessary if you’re going into AFA territory. We implemented an outside counsel concierge, where we had three desks around the region. They would support each regional Legal team using technology for running the RFPs. That has been a great success, a bit of a slow start, because it’s quite a bit of a change for our lawyers. We ended the year with a real bang-up, we still had multiple RFPs on the go at the end of the year, and we’ve gone into this year with a lot going on. We’ve delivered some quite fantastic results around that; it’s been a real success.
SA: There’s so much great stuff in there. There’s fixing this thing upfront, fixing the pipe upfront, so that everything is properly scoped and deliverable going into the process. I think your success in being able to drive a move towards AFAs is fantastic. We hear a lot of talk about this, to see that happening is fantastic. The other thing I want to draw out from what you said was the realization of the practical world. In two respects, I think this shows great insight, Dion. Number one is giving the lawyers the materials and the data but leaving the decisions with them because that would drive adoption. It takes the work off them that they don’t want to do and leaves the authority they want to retain. I think that shows huge behavioral economic insight. I think that’s fantastic. The other thing I like from what you said, and I think you should take a huge kudos from, is that you wanted to make it easier to comply with outside counsel guidelines. I think that really is meritorious. That is fixing the upfront understanding of the behavioral drivers internally and the behavioral drivers externally show how the industry can take something they’re trying to do today and make it work.
DH: It’s quite a holistic thing because, to start with, it was very much about e-billing and reviewing invoices quite hard. But it was clear that the real value proposition is actually at the front end and affects the scale of opportunity for us anyway. Given where we’re at in terms of not having many resources available to our lawyers and running RFPs and engaging firms, you’re generally engaging firms. There’s an urgency to do it; there’s a lot of pressure to run a good RFP, there’s quite a bit of process, quite a bit of time. It was beneficial having an outside counsel desk manned by qualified lawyers, actually working with our team, doing all the work, and scoping out the RFPs. When all the bids come in, the desk is doing the work and analysis, producing a report for our in-house lawyer to review and get into the real detail. This was another eye-opener, as many of our lawyers didn’t realize when bids come in there’s still a lot of room for negotiation. I think it has been quite a learning for many lawyers; you can go back and have a negotiation.
SA: I think the really interesting point is understanding the insight that you’ve displayed, Dion. Trying to make it workable for everybody and fit within their behaviors to make adoption easier. You’ve been running it a little while now. What results are you starting to see, Dion?
DH: For 2020, we’ve looked at results, and in terms of the RFPs that we ran over the year, 94% of them resulted in some form of fees under AFA, and 88% of those resulted in all fees under AFAs. That’s quite remarkable. We didn’t have any AFAs. They weren’t part of our landscape; it was all the traditional hourly model. So that was the first one. In terms of savings on the RFPs, these ranged from 4%-94%, and we had a median of 28%, and our largest savings on a matter was $2 Million, quite a tangible amount.
SA: I presume that’s just a wholesale return on investment.
DH: That one on its own pretty much, [laughter] exactly.
SA: Yeah.
DH: The other thing is that by leveraging the data we’d unlocked from the two-year spend review and from our program, we were able to re-negotiate engagement terms on some of our larger matters. We took a far more active role in matter management with the outside counsel desk, not only helping us with running our RFPs on the front end, they are working with our lawyers, certainly on the big matters, bringing in the legal project management discipline, applying project management trackers. That puts a bit of work on the law firm; they get it; it’s all in the interest of us having certainty on where it’s going; no one wants surprises. Across the whole program, we delivered savings above 10 million in the year. Quite successful.
The other benefits we got were consistency in reporting and management of all our law firm spend with our E-Billing platform; we also put the data through an analytics platform. We’ve got consistency on our reporting, getting deeper insights into the work performed and the value delivered by the firms. Reducing the administrative burden on our lawyers is going down well. Increasing confidence within our team in exploring alternatives to the traditional hourly rate model. That’s been an eye-opener for folks and a marked refinement in the expense and time entries that get billed. Now we’re more focused on those activities that deliver clear value.
SA: That’s exceptional. There’s so much to unpack there. Going from a zero standstill to deliver 10 million savings is absolutely exceptional. The stats that stood out to me most are 94% fees on the part AFAs and 88% of fees all AFA, which is a truly remarkable outcome. Congratulations, that’s a really impressive result. You’ve talked about a couple of things that you learned through the process, and I know, Dion, you’re very cognizant of continued learning. Was there a particular thing that surprised you most out of all of this?
DH: There’s the negative and the positive. On the negative side is just how challenging it is and that you need to stick at it. It is tough, and especially when you’ve got multiple technology platforms involved and decentralized teams, and different processes and practices around your function. Not everyone finds technology easy; some of the things you assume are a given, you’ll find they’re actually wrong. I had one of those last weeks, and it’s just astounding. The positive has a negative element to it. With all the data that we gathered, we started looking at the data through the gender diversity prism. We were quite shocked and disappointed. We found across all external fees that we paid in 2020 across all timekeepers, 30% are attributable to female lawyers. When you look at it just on the partner level, and this is what I really like about E-Billing and the data, you can focus on all different timekeeper levels. We could laser in on the partner level, and we found that the level of female partner participation on matters for Rio Tinto is even lower at 24%. When we looked at it even further, we found that five of our larger firms had no female partners working on our matters, and where they are, it’s less than 5% of all fees charged. Those were very disappointing results. Now we’re working on an inclusion and diversity initiative; it’s very important to us as a function. We embrace it, and we’re working internally as an organization. We think the Legal industry has got a long way to go, and we’re really looking forward to defining our initiative, launching it, and working with our service providers.
SA: It’s disappointing, but I suppose the silver lining is now you’ve set this up, and you can watch what’s going on; you’re able to have informed data-led conversations with your Legal service providers.
DH: Exactly, it takes me back to that example I shared with you about using data to debunk myths; the data doesn’t lie. Exciting stuff to have to inform the decisions we make going forward. We now have in our RFPs for new matters; a requirement for the firms to set out the diversity [of their team for the matter]; we are starting with gender, and we’ve got an eye to going beyond that in due course.
SA: Dion, absolutely fascinating. I commend you on an exceptional program, and I commend you on your faultless ability to round the conversation out back to the starting point. Thank you very much for your time.
DH: Thank you, Stephen.
