Articles
A TCL Interview: Douglas Bates
Senior Vice President, General Counsel, and Secretary of Source Interlink Companies, Inc.
“The Client,” is a new feature of The Complete Lawyer. We bring you candid, thought-provoking interviews with the world’s leading corporate counsel conducted by long-time TCL contributor, Marcie Shunk of BTI Consulting. BTI’s senior researchers conduct thousands of interviews each year with corporate counsel, delving into the nuances of client satisfaction, probing for new, undefined issues and delineating drivers behind key market trends.
This month, we are delighted to feature Douglas Bates, Senior Vice President, General Counsel, and Secretary of Source Interlink Companies, Inc.
MS: Thank you very much for joining us today. Our topic is one that many corporate counsel have expressed extraordinary interest in—alternate billing and ways to reduce legal costs. I’ll begin with some background. Could you please describe your role and your key responsibilities at Source Interlink?
DB: I am the Senior Vice President, General Counsel and Secretary of Source Interlink Companies. I handle and supervise all of the legal affairs of the company. I’m also responsible for the Real Estate portfolio management—strategic decisions regarding some 130-odd facilities that comprise our Real Estate portfolio. I also spend a lot of time advising and consulting with senior executives on a variety of strategic tactical and operational matters.
MS: What are your top goals and your priorities for your legal department for 2008?
DB: We’re focused primarily on improving and streamlining processes. One of our key performance indicators for this year is what we call cycle time—the time between first learning of a contract and signing it.
MS: What are some of the steps you are taking to achieve this goal?
DB: Well, there are a variety of things. Like many legal departments, we need to improve our objective measurement of what really is happening. For example, we’ve found that the biggest impediment to improving cycle time has nothing to do with the law department—although every business person will tell you that it’s those lawyers who always delay the project. It’s the documents sitting on the salesman’s desk. Generally, we’ve been improving processes throughout our department to be able to track information, develop performance indicators, and then monitor and measure these to look for ways to improve.
MS: And then make it known throughout the company.
DB: That’s right.
MS: One of the key areas we have heard you, your peers and other corporate counsel discuss in recent months is how better to manage outside counsel and the rising cost of legal services. Could you discuss what strategies Source Interlink is currently employing to help reduce legal costs?
DB: Our first step, when we looked back at costs for outside legal services, was to try to gather as much information as we could. We wanted to simply understand what we were doing and how we were doing it. Then, we tried to identify opportunities to streamline that process and reduce costs. Having information is the most important factor in making sound business judgments. Most legal departments are small—we have five attorneys here—and they don’t think about gathering information. So, the first step was to gather that.
Second, we’ve undertaken a wholesale revision of our outside counsel billing guidelines. After meeting and talking with each of our principal contacts at all our outside firms we developed, in partnership with them, guidelines that worked for them and for us. We must have spent five months doing this and it’s fairly tight. That is a huge help for us. Sometimes it seemed as if we were negotiating over seemingly silly things, but the amount we spend for copy charges and those sorts of things makes a big difference.
MS: What has been the actual impact on your legal costs after you finished this process?
DB: We’re still measuring the return; however, our preliminary results indicate that the cost of outside legal services is down about 13 to 14% this year over what it would have been had we not put in place these guidelines. So that’s an actual decrease.
MS: Do these guidelines include alternative billing with your firms?
DB: We do use alternative billing arrangements. They are not in our guidelines other than a general statement that we want to talk about them. Alternative billing arrangements have been hotly discussed and of great interest to inside counsel for years. The problem for alternative billing arrangements is they’re promising but difficult to implement. In theory, everything works, but there are so many variables, not all of which can you control. That is, whether you’re working on a transaction or working in litigation, you have to be responsive to your opposition, and they may do things that increase your costs significantly.
