16 ACC VALUE CHAMPIONS | A SPECIAL SUPPLEMENT TO ACC DOCKET
When Kraft Foods made the decision to spin off its $18 billion
North American grocery business into a separate company,
everyone knew the project would generate a lot of legal work.
Ultimately, the spinoff affected 20,000 patents, 40,000 contract
documents and 80,000 trademarks.
The new business was called Mondelēz, a made-up word
derived from the French for “world” (monde) and the Spanish
for “delicious” (deliz). Just as the combination is innovative, so
was the way the in-house legal department approached the work
involving commercial agreements. They partnered with Axiom,
a new-model legal services firm headquartered in New York,
with 11 offices and four delivery centers globally.
The project, which became known as Project Gemini, had
two distinct phases: the collection and assessment of the impact
of the spinoff on more than 40,000 contract documents; and
the negotiation of the duplication or consent to assignment
of more than 6,000 agreements prior to the execution of the
spinoff. It ultimately involved more than 200 professionals.
“To execute the spinoff required digging into the details of
how we did business, and determining which contracts would
belong to which of the two resulting companies. We needed
to get into the weeds,” explains Gerd Pleuhs, executive vice
president and general counsel of Mondelēz. “This is the first
time we’ve reached out to a company like Axiom, which had the
ability to scale to meet the demands of the project.”
In Phase 1, Axiom professionals collected and loaded Kraft’s
North American commercial agreements into a custom contract
management system. They configured the system to meet the
project’s unique requirements and implemented a process for
collecting related information not contained in the agreements
themselves. A second step was to assess the impact of the spinoff
on the agreements.
Axiom conducted a time and motion study on a sample of
the agreements to create a resourcing plan and a budget, which
enabled it to do the work on a fixed-fee-per-agreement basis.
“Kraft was concerned about costs, especially after several out-
side advisers insisted that it would be impossible to do [this project
in the desired timeframe] due to the immense number of agree-
ments and counterparties,” says Thomas Finke, general manager of
Axiom’s Chicago office. “The assessment step provided Kraft with
budget certainty and shifted the burden of efficiency to us.”
After training sessions conducted by Kraft and Axiom
professionals, the Axiom team of more than 60 attorneys and
five project managers completed the assessment in fewer than
35 days. Along the way, they reported progress and open issues
daily to a joint operating committee.
Phase 2 was the disposition phase, which involved drafting
and delivering thousands of notices, consents and/or duplicated
agreements to counterparties; negotiating with counterparties;
daily reporting of progress against milestones; and uploading
executed documents into the contract management system.
Kraft and Axiom jointly drafted a 90-page project playbook
that detailed the roles and responsibilities of all professionals
involved, guidelines for negotiating with counterparties, and
processes and templates for eight separate workflows.
A team of more than 50 Axiom attorneys drafted and deliv-
ered the consents and duplicate agreements to counterparties.
Axiom provided Kraft with reports on progress against mile-
stones and costs of the project relative to budget.
“Axiom’s value was across two dimensions: first, a focus on
project management and establishing efficient processes; and
second, an in-house orientation our experienced attorneys
brought to working with Kraft’s counterparties. These factors
enabled us to stay on budget and on schedule,” says Finke.
Pleuhs reports that Mondelēz has subsequently started a
global program called “Do What Matters” that emphasizes
using the right resources for the right projects. The relationship
with Axiom, he says, allowed Kraft/Mondelēz’s in-house team
to focus on adding value by delivering customized legal advice
to the businesses.
“Absent this approach, we would have had to take the risk
approach and dedicate all of our in-house staff to this project.
It’s lucky Axiom and we found one another.” vc
Mondelez International, Inc. and Axiom
Parting Gift for Kraft’s Grocery Business: A Neatly Packaged Contracts System
FROM THE JUDGES
“Illustrates effectively that using innovative
thinking at the beginning of a transaction can open
up new and improved ways of managing a situation.
In this case, the new and improved method was
substantially more time and cost-effective than
the traditional alternative would have been.”
From left to right: Jonas Bruzas, Mondelēz International, Inc.,
Victoria Bobryk, Axiom, Gerd Pleuhs, Mondelēz International, Inc.,
Tom Finke, Axiom, Joe Sullivan, Kraft Foods Group, Chris Chang
and Meg Scholand, Axiom