Law Department Management - Technology Using Six Sigma To Reduce Law Department Costs

Tuesday, March 1, 2005 - 01:00

The Editor interviewsJim Michalowicz,Litigation Program Manager, Tyco International (US) Inc., andWoods Abbott,Senior Manager of Legal Operations, Raytheon Company. Jim also serves as a Six Sigma Black Belt for the Tyco Law Department, andWoods serves as the Six Sigma Champion and Expert for Raytheon's Office of the General Counsel. Questions about this article can be addressed to them at jmichalowicz@tyco.com and woods_k_abbott@ raytheon.com respectively.

Editor: What challenges is Six Sigma helping your law department address?

Abbott: Raytheon Company has subscribed to a unique approach to the Six Sigma methodology for five years. Seeing the potential benefits, our Office of the General Counsel (OGC) quickly embraced Raytheon Six Sigma (R6s) as a methodology to develop, implement and improve processes throughout the organization.

One of our recent R6s projects focused on improving how we collected, analyzed, processed and disposed of supplier and vendor bankruptcy notices across the company. In the past, each was handled uniquely depending on which business unit or functional area received the notice first. This inconsistency could potentially lead to missed court deadlines and contract notice issues with our customers. An R6s team consisting of representatives of Legal, Supply Chain Management and our outside counsel used a "Six Sigma blitz" to gather and chart the various ways that these notices were being handled. This day-long exercise gave us a foundation of data for drilling down to the root cause-and-effect analysis.

Using Six Sigma tools, the group designed a new global process to be followed by all groups within Raytheon. The team also designed a system to track the work flow and final resolution of each notice, which in time will produce metrics that can be used to further improve this process.

Our current R6 initiative addresses an issue facing many large companies: how to harness the power of years of stored institutional knowledge. This project not only deals with what is put into a data repository, but also how data can be shared real time while taking into consideration such issues as document retention policies, Sarbanes-Oxley requirements and ever changing electronic discovery rules.

Michalowicz: Joining Tyco nearly three years ago as its general counsel, Bill Lytton began work to unify law department across the entire global enterprise. This initiative is part of what we call "One Tyco." Our theme in Fiscal Year 2005 is "Results." Six Sigma helps us deliver on both "One Tyco" and "Results."

A major transformation in Tyco Law is structuring our work groups by practice areas. Historically the legal work group was defined by the needs within a single business segment. Now representatives from each of the segments are beginning to work together in groups specializing in practices such as intellectual property, litigation and labor and employment.

My particular charge is to support the Litigation Practice Management Team (LPMT), which uses Six Sigma to develop litigation management tools for deployment consistently across all business segments. The LPMT also is looking for Six Sigma to help us deliver on our goals for reducing risk and the costs associated with managing litigation, some of which have already been reported. (Editor's Note: To read our report of Tyco's use of technology in managing litigation and other legal functions, visit www.metrocorpcounsel.com and type "Tyco" in the search box.)

Bill Lytton challenged the LPMT in late 2003 to reduce the number of firms we engaged. As "the voice of the customer," Bill strongly suggested going to one firm for certain areas of law. Jeff Caravella, a green belt, was assigned to a project titled "Selection and Management of Product Liability Firms on Tyco Litigated Matters." His collection of data on how Tyco attorneys selected firms and how the firms performed led to a baseline measurement. In conducting the convergence piece of the Six Sigma project, the CTQs (Critical to Quality) ascertained what Tyco valued in law firm performance. Six Sigma guided us through the selection process and, yes, we answered the "voice of the customer" and selected one law firm - Shook Hardy & Bacon L.L.P.

This example of Six Sigma deployment in Tyco Law demonstrated how the representatives from the various segments came together as "one" to make a decision that would bring greater efficiency and deliver savings. This project will be financially validated with over $5 million in savings. We continue to use Six Sigma to develop on-going performance metrics enabling us to report accurately on the benefits of this project.

Editor: How does technology help you to address these challenges?

Michalowicz: A Six Sigma project typically has five steps: Define, Measure, Analyze, Improve and Control. Rather than looking to technology as the improvement or solution, I like to view technology as supporting the Measure phase where data needs to be collected and the Control phase where metrics help track results.

In one Six Sigma project, we focused on how legal research was conducted. We wondered if the assignment of legal research projects often went to inexperienced associates billing at sometimes hefty prices. The e-billing data from TyMetrix quickly provided us with a baseline of data for dollars spent on such research. Using the task based data, we performed an analysis that ultimately led us to an improvement where legal research was "unbundled" from the firms and sourced to LRN. This data collection process would have taken months if the invoices were in paper form. With the e-billing format, this process took only one hour.

In another Six Sigma project, we are looking to improve alternative fee arrangements (AFAs) using our Mitratech matter management system to identify opportunities where AFAs should be deployed, measure the effectiveness and enforce our guidelines for AFA management.

Other examples include the MDY records management system to control our improved process for legal records management and our corporate secretary database for entity dormancy to dissolution.

Abbott : We are presently using a combination of systems ranging from desktop applications such as Lotus Notes and MS Access to large server databases like CaseTrack and Aurigin. To manage the flow of electronic files in our Litigation Document Management Center, we use Concordance and iCONET. This system allows us to web host all of our imaged documents and securely share these documents along with the associated metadata with both in-house and outside counsel.

Editor: How does Six Sigma help you to show the benefits of your technology solutions?

Abbott: Six Sigma helps me gather and analyze various data points which I can then apply towards evaluating the system under review. These metrics allow for an unbiased review of the performance of the system and expose any gaps in its performance. This ability to gather and analyze data in a meaningful way is what makes Six Sigma such a useful tool.

Michalowicz: Six Sigma's quality improvement program reduces defects and variations by having processes work right each time. Motorola first implemented Six Sigma in the 1980s in the manufacturing area where statisticians identified areas of waste that could be eliminated to increase revenue or reduce costs. As use expanded to General Electric and other companies, the methodology extended to such transactional areas as legal, finance and human resources. What sets Six Sigma apart from other quality improvement programs is that the statistical tools "prove that you have improved" and includes a financial validation that assures sustainability of the improvement.

Editor: What contributes to successful deployment of Six Sigma?

Michalowicz: Six Sigma will fail if the employees asked to participate merely see the program as an add-on to everything else they are doing. Six Sigma should be seen as a program to enhance performance and used as a consideration for job promotions. The Six Sigma task force for Tyco Law has recommended that Law employees commit to having at least one Six Sigma touch in a year. A "touch" is defined as leading a project, being a team member or offering an idea that becomes a project. This Six Sigma "touch" contribution would be included in the development and performance assessment for the employee.

Abbott: Foremost you must have the full support and commitment by upper management. We in the OGC have been fortunate in that our CEO, Bill Swanson, and General Counsel, Jay Stephens, have a wealth of knowledge and experience in Six Sigma culture. Taking this a step further, they embrace a corporate culture that combines diversity of thought, while leveraging the Six Sigma principles. This combination enables co-workers to embrace different points of view while using a proven problem solving strategy.

One of the criteria we use in annually evaluating our employees is related to how much they improved their work processes using Six Sigma. This actively engages all employees.

Editor: How are team members assigned green or black belts?

Michalwicz: Six Sigma defines several different roles. A champion serves as the driver and leader within a department or business. Committing anywhere from 50 to 100 percent of their time to Six Sigma, black belts typically lead projects with at least $250,000 in projected savings. They also serve as mentors to the green belts. With a time commitment closer to 25 percent, the green belts lead projects with savings at a lower value than what a black belt is projected to realize.

A master black belt is skilled in the statistical side of Six Sigma. They can aid the black belts or the green belts with the use of technology tools and can validate that process steps have been completed.

Six Sigma also includes team members, who perform such functions as collecting and validating data. At various times the team members are operators in some process. Six Sigma can be "therapeutic" because the operator is glad that someone is coming to ask why something is being done a particular way and how could the process be improved.

Abbott: Raytheon uses the same role structure as companies like Tyco, DuPont and GE, with the one exception that we refer to our black belts as "experts" and our green belts as "specialists." Raytheon's goal is for every employee to become a specialist. A specialist can either work on an individual project or with a group of specialists under the supervision of an expert.

Experts work on Six Sigma activities full time, receive extensive training and coach specialists on their projects. Experts are envisioned to gain exposure to various parts of the Company placing them in situations outside their normal comfort zone. Once they have completed their two-year tour, they will continue on with their leadership development.

Editor: What software tools help you track your progress in improving processes and reducing costs in managing legal functions?

Michalowicz: We are using a tool called Power Steering, which is a centralized project tracking software. It is particularly helpful in tying together the 18 green belts working in the law department in various locations around the globe.

Abbott: We also use Power Steering for projecting tracks in addition to other knowledge management tools and applications.