The Home Depot
Lucchini S.p.A.
Improving Decision Making through Better Legal Support
tax refunds and customs duties, with
recoveries obtained in cash and via
business concessions.
Across the department, Home Depot
has reduced annual legal fees by 45
to 55 percent since the start of the
program in 2008. Additionally, the
legal budget is more predictable. “We
are now able to predict with near certainty approximately 70 to 75 percent
of our annual legal fees, and our total
fee spend is more consistent month to
month,” Hunter says.
“We’ve found that creating
true partnerships with outside
counsel consistently drives the
best results for the company,
minimizes businessdisruption,
and fosters the sharing of
knowledge and resources
among participating firms.”
Most promising, the company has
reaped improved legal outcomes by
better aligning the goals and interests
of outside counsel with those of inside
counsel, and thus those of the company.
“We’ve found that creating true
partnerships with outside counsel
consistently drives the best results for the
company, minimizes business disruption
and fosters the sharing of knowledge and
resources among participating firms,”
says Roseborough.
“You can’t argue with the strong
results of this program,” says Hunter.
“Some firms were initially reluctant,
citing all the reasons the program could
fail. Happily, the programs have been
enormously successful for Home Depot
and in providing certainty for the firms,
and we believe similar initiatives could
be successful at other companies.” vc
Lucchini S.p. A. is the
second largest steel
producer in Italy,
with annual revenues
of 2 billion euros.
The small in-house
legal department out-sourced its 400-plus
legal matters to more
than 30 law firms.
This model was unsustainable, however, as
the company could not afford uncontrolled
expenses over the long term. Upon becoming
general counsel in 2010, Ernest Sultanov was
charged with overhauling business as usual to
reduce expenses, increase efficiency and bring
greater budget predictability.
“The company had been facing a
difficult market situation since 2008,” Sultanov says. “We were wasting money when
we should have been focusing on debt
restructuring and M&A. My mission as
general counsel was to reduce dramatically the expense of outside law firms
without doing harm to the company.”
Sultanov launched Project Dobra (an Italianized Russian word that means “good”) in
January of 2011, with the following goals:
■ ■ Reduction of day-to-day spending
■ ■ Reliable, transparent and timely budgets
■ ■ Zero tolerance of inefficiency
■ ■ More control on each and every
legal matter.
Ernest Sultanov
The project’s initial phases included research
and the creation of new policies and pro-
cedures. “We contacted leading legal firms
to learn their best practices, and tried to
understand the practices of other companies
in Italy and throughout Europe,” he says. A
significant first step was the creation of
terms and conditions for legal services
provision. “Lucchini was probably the first
Italian company to implement terms and
conditions for all legal outsourcing,” Sultanov
says. “We wanted the firms to use our systems
and requirements to increase control, while
decreasing the number of matters and firms.”
The terms include a ban on lump expenses,
hidden charges (faxes, phone calls, copy-
ing and so forth), and billing for idle time.
Sultanov requires law firms to submit quotes
before matters are undertaken and detailed,
uniform invoices and timesheets. The application of the terms and conditions alone
saved Lucchini 12. 5 percent in its first year.
“It really changed our relationships
with the law firms. We’re no longer
working to their rules; it’s now more of
a joint venture, a partnership. And the
more they are compliant, the more we
come to rely on them,” he says.
Sultanov also tackled IT issues. “It was
not something that we could avoid; we had
to make it more efficient,” he says. “We
needed a robust data reporting system
that would enable improved decision
making by management and supervisors.”
Surprisingly, no suitable European system
for legal needs was available on the market.
Lucchini selected a U.S. platform that still
required “huge customization” by the project
team, including the creation of customized
templates for each matter of substantive law
(civil, administrative, criminal). Data is automatically converted from the IT platform
to SAP. Automating processes, coupled with
improved planning, resulted in a decrease in
legal expenses of 35 percent compared to the
previous year. Reports that used to take two
weeks can now be generated in five minutes,
and the legal team has real-time access to
every matter.
