Law Department Management - Technology Using Billing Technologies To Achieve Tighter, More Consistent Partnerships Between In-House Counsel And Their Law Firms

Tuesday, March 1, 2005 - 01:00

The Editor interviewsMichael T.Haysley, Director, Legal Projects, Waste Management, Inc. Questions can be addressed to him at MHaysley @wm.com.

Editor: Please tell our readers about the nature of Waste Management's business and the types of legal issues that typically arise in your industry.

Haysley : A Fortune 200 company, Waste Management is the largest provider of comprehensive waste and environmental services in North America. Headquartered in Houston, our operations are broadly dispersed across North America, including hundreds of collection operations, transfer stations, active landfill disposal sites, waste-to-energy plants, recycling plants and beneficial-use landfill gas projects. We serve nearly 21 million residential, industrial, municipal and commercial customers.

Generally speaking, we face the same corporate law issues as any large company. In addition to that, we deal with legal issues surrounding a very large number of service contracts, municipal and government agreements, employees, and, of course, trucks on the road. Our land interests also result in real estate and environmental matters.

Editor: How is your legal department organized to address these issues?

Haysley : Our legal department consists of 70 people - 33 attorneys and 37 other professionals. About 20 percent of the staff is located in our corporate headquarters, while the rest are located in offices in the field.

Given the breadth of our legal activities and the broad geographic dispersion of our operations, it would be extremely difficult to handle all of our legal work in-house. We require both subject matter and geographic expertise that extends beyond our in-house staff. That being said, our in-house attorneys stay extremely close to the matters that they are managing - more so than I've seen in other legal departments where I've worked.

The work that we give to outside counsel tends to lie at the extremes of the complexity curve. For extremely complex or commodity-type work, we hire outside counsel. For work falling between these categories, we perform it in-house if we have the resources available. For each decision of whether to perform the work in-house or to retain outside counsel, we consider the need for specific expertise, cost effectiveness and resource availability.

Editor: What are your responsibilities at Waste Management?

Haysley : The best description would be business manager for the legal department. This involves managing activities surrounding technology, administration, finance and accounting. Beyond helping to manage day-to-day business activities in the legal department, I have several major initiatives underway to improve several currently hot issues, including financial management, discovery management and outside counsel management processes.

This seems to be an increasingly popular role in large companies. Corporate legal departments have recognized that they can run themselves more like business entities rather than risk management functions that are completely reactive. Look at any legal department over the past five years, and you will see an increase in technologies implemented, improvements in business processes and a more intense focus on financial controls including budgeting and reporting. With the size of the financial spend, volume of services legal departments provide and opportunities for improvement, it's smart business to have a dedicated manager for all of the business activities.

Editor: Please tell our readers about Waste Management's e-billing initiatives.

Haysley : We were an early adopter with regard to e-billing. In late 2000, we implemented DataCert and our matter management system, Bridgeway's eCounsel product. Invoices are submitted through DataCert and fed to eCounsel where they can be reviewed and approved on-line. For the most part, however, paper is currently still a major part of our processes.

In the past year, we decided that it was time to expand the initiative both in terms of number of firms participating, as well the functionality itself. We are rolling out DataCert's AIMS product to serve as our primary financial management tool. eCounsel will continue to act as our matter management system and will be integrated with AIMS.

We have doubled the number of firms to be implemented, will do all of our invoice approvals on-line and will remove paper from the accounts payable process.

Editor: How did Waste Management select the DataCert e-billing solution?

Haysley : Waste Management initially found DataCert after then-General Counsel, now COO and President, Larry O'Donnell decided to include e-billing as part of the legal department's matter management implementation. DataCert's focus on integration with other systems, implementation of our firms and simplicity were the major selling points.

Editor: Please describe how the DataCert e-billing solution is being used by Waste Management.

Haysley: Our current process involves the firm's submission of invoices on DataCert's website, validation of the information during transmission and a feed directly to our matter management system. We still review our invoices via paper and send a voucher sheet to accounts payable when all approvals are obtained and the invoice can be paid. We recognize that this is not the most efficient process.

Our new solution will take advantage of DataCert's AIMS application and a completely paperless process. Invoices will be submitted and validated in the same manner as currently done. Instead of approving a paper version of the invoice, however, AIMS will automatically route the invoices to the appropriate user based on our fairly complex approval workflow. The invoice will be reviewed, adjusted and approved or rejected on-line. Once the final approval is obtained, AIMS will automatically feed our accounts payable system. Following payment, a feedback file will pass payment information to AIMS.

We have some fairly big expectations for our new system with regard to efficiencies in processing invoices and in catching improperly billed items. Beyond that, we also expect to be able to mine the data to identify strategic opportunities that we hope will provide the greatest return on our investment. With the level of detail and the improved integrity of the data, we will, in the short run, be able to more effectively report on and manage rates, case staffing and alternative billing opportunities. We have done this to a modest extent in the past, but plan to expand it in 2005.

Editor: Please give an example or two of your legal department's guidelines for law firm invoices .

Haysley : We are looking more closely at case staffing not because we sense any problems, but because it is simply something that we feel we can more closely monitor and create meaningful cost savings. To that end, we will be validating that all professionals billing on an invoice are in our system. If an unknown professional is included on an invoice, the firm will receive notification that they must ask Waste Management to add the professional to our system. It is unlikely that we would refuse to accept a professional - we are proponents of right-sourcing work - but it again highlights one of the things that we will be measuring in 2005 and our interest in communicating this to the firms and asking for their help in managing.

To that same end, we will be tracking billing rates in our system and validating this for most of our firms. We have the flexibility to identify which firms to check. This helps with administration from our end.

Editor: How do you hope to reduce the time it takes for bill review?

Haysley : Under the new process, we expect to see a significant improvement. The reduction in routing and data entry effort should provide an immediate improvement, but we also hope to provide incentives for our internal professionals to quickly approve invoices by introducing quick-pay discounts, regularly reporting on cycle time and developing reports tied to accounts payable. With these incentives in place, we can also expedite remittance on the accounts payable side as well.

Editor: How has the DataCert solution helped to improve case management?

Haysley : In the past we have seen improvements in adherence to our matter management policies and more detailed tracking of matters on our matter management system. Better data results in better decision making and planning. In the future, we hope to expand our reporting capabilities to provide enhanced tactical reporting, such as budget to actuals and staffing practices for case management and decision making, and trend reports to help develop new processes for handling similar cases.

Editor: How do e-billing initiatives improve in-house relationships with outside counsel?

Haysley: A natural side effect of implementing e-billing is closer scrutiny of the number of firms used. As we have culled down our firm list over the past four years, we have focused more work with a smaller number of firms. This is sometimes difficult given the broad range of work we do and how dispersed our operations are. By using a smaller number of firms on more cases, they become more informed about our business, understand our strategies and goals, and are able to more easily recognize and align their work withour needs.

I am not certain that having better financial data and processes alone improves the quality of work or the working relationship, but it is clear that a tighter, more consistent partnership with our firms has a demonstrable benefit.