In July of 1999, I started down the path of becoming a Six Sigma Black Belt for the DuPont Legal Department. My colleague Julie Mazza and I were the first two members from DuPont Legal to be exposed to this secret society of statisticians.

The first two weeks of training were spent de-mystifying this program and trying to see how it applied to a legal function. In the final two weeks of the training I became reacquainted with the mantra “the power of data.” In its simplest form, a successful Six Sigma project proves that improvement has been made to a process. The data are the evidence used by the Black Belt to obtain validation from a financial analyst proving that the performance change has occurred and will be sustained.

This wickedly wonderful methodology sounded like it had potential and I was eager to test the limits. Was it possible that Six Sigma offered a magical data potion that could validate the DuPont Legal Model and give definition to what is successful litigation management?

First Data Point: The Law Firm Bill

Any discussion about law firm performance will ultimately include questions about cost management. For over six years DuPont was one of the companies that believed that electronic billing in task-based format would hold some of the keys to better cost management. Nearly all of our Primary Law Firms (PLFs) submitted bills in this format and in return they received favorable payment turnaround time.

There were two immediate “defects” that were uncovered when the Six Sigma wand was waved over this billing process: each electronic invoice was accompanied by a paper copy and the task based data were not used in any measurable way.

One of the powerful aspects of Six Sigma, which can be unsettling sometimes to some of the recipients, is the challenging of tradition. I found that the culture of the legal profession sought comfort in the physical touch of paper. Although DuPont seemed to be doing e-billing, we still clung to that comfort of paper and had created two paths to process one law firm invoice. This led to an inordinate number of “paper touches” and duplication of effort.

The first objective of my Six Sigma journey was to eliminate these paper touches and move to a true e-billing process where there would be only one stream of data. The system implemented to achieve this was TyMetrix. The hard costs savings that resulted from this improvement have been validated at over $200 thousand.

Should I Pay For This?

One of the additional defects in the paper invoice route was how it hampered our ability to validate if an invoice passed the outside counsel guidelines and firm-specific billing arrangements. The TyMetrix system allowed us to improve the quality of the process by automating this guidelines check. Many of the more routine checks made by the in-house legal professional, such as timekeeper billing rates and fixed pricing for disbursements, now became part of an automatic rules check that was performed by the TyMetrix system prior to the invoice going to the in-house reviewers Web-based in-box.

The law firms benefit from this process change as well because of the immediate notification with explanation that they receive about an invoice passing or not passing the rules check. Prior to this implementation a frequent defect in the pre-existing, paper-based system was that payment was delayed to the law firm because of invoice format or addition errors without a clear remedy on how to fix the problem.

Two improvements had now been achieved involving cost data: the process for collecting it and the quality of the data itself.

More Than Just An Invoice

One of the great findings in mapping out the billing process was that the invoice data themselves have dynamic qualities. Tradition shows that the invoice is a bill for services rendered for a specific time period. The in-house professional makes some determination if the invoice is too high and has red pen in hand.

But upon further investigation it was found that the in-house counsel was trying to utilize the invoice as a communication by the law firm on strategy and management of resources. The disconnect was because the view was only of a month at a time (the typical billing period for DuPont invoices).

TyMetrix offers some analytical tools that provide the in-house counsel with the ability to look at invoice data by case, by firm and by duration of the case. Specific and simple analytical tools were created that showed the staffing levels provided by the law firm, a timeline with tasks performed and costs incurred by task. All of this was achievable utilizing the task-based data that resided in the law firm invoice. This was the same form of data that we had collected historically but now we had a tool that allowed us to use it.

It should be noted that although the emphasis so far has been in providing the in-house counsel with the means and ability to review and analyze the law firm invoice data, the system offers benefits to the law firm as well as the client. If the case strategy was truly developed collaboratively by in-house and outside counsel, then both sides of the partnering relationship should share access to the data. It is a validation of that agreed-upon strategy. The TyMetrix system is Web-based and supports this centralized, shared-access approach. Certain security restrictions are put in place that allow access to only that firm for that case.

A History Of Performance Metrics

Since its inception ten years ago, the DuPont Legal Model (the Model) has always included a focus on metrics. Tom Sager, Vice President and Assistant General Counsel at DuPont, has always insisted that the on-going sustainability of the Model can only be achieved by proving that it is improving the way that law is practiced.

This opened the door for a metrics program to prove that the Model was a successful business model that could pass the scrutiny of internal and external examinations. In retrospect, credit needs to be given to Tom and the founders of the Model for practicing Six Sigma methodology without any formal training. My only caveat is that I have yet to find the term “metrics” in any Six Sigma manual.

The first form of metrics adopted in the Model reflected case costs and cycle time. These measurements were broken down by practice area, law firm and in-house professional. “You are here” charts were created to show where a firm or in-house counsel was relative to the average for case costs or cycle time. There was often resistance to the acceptance of these metrics but DuPont Legal quickly set the tone that it found these areas critical in proving that the Model had a positive effect. A study in 1995 proved that the Model was successful in reducing litigation management costs by $13.2 million and case cycle time from 39 to 22 months.

The Benchmark Survey

Since 1996, DuPont Legal has conducted a Benchmark Survey (Survey) that asks each PLF and each Primary Service Provider (PSP) to perform a self-assessment on how it is achieving the goals of the Legal Model. The Survey poses a series of questions that the respondent must answer about their contribution in the following categories:

1. Further Savings to DuPont
2. “Best in Class” Working for DuPont
3. Growing DuPont’s Business
4. Virtual Law Firm Available to DuPont
5. Technology Payback
6. Women and Minorities Representing DuPont

The challenge in preparing the Survey from year-to-year is formulating questions that ask for data that can be used for metrics. The data from the Survey are analyzed and presented in a report that I prepare for the annual meeting attended by all PLFs and PSPs. The report shows metrics on how we are doing collectively as a Program. This form of metrics goes beyond just the work done on a case-by case basis. In a sense, it is a “portfolio” view of our litigation function. Some of the specific findings from the 2001 Survey include:

• $17.9 million in hard cost savings
• $5.6 million invested by the firms in DuPont and the Model at no charge
• $2.3 million invested by firms in the purchase of DuPont products
• $9.1 million in business generated by the firms through referrals

The Scorecard

In addition to assessing the performance of the PLFs and PSPs as a group, I offered the PLF attendees at this year’s annual meeting an individual scorecard template showing how they performed relative to the Legal Model.

Example of Law Firm Scorecard
Litigation Management		Program Management
Liability Handled	$40000M	Minority Atty at Firm:	16%
Early Case Assessment Score	2 (0-3 scale)	Women Atty at Firm:	41%
Fees Billed to DuPont	$  2000 M	Legal Asst at Firm	35%
Discounts	$  - 200 M
Cost Sharing Savings	$  - 200 M	Non-billable to DuPont	$ 60M
Budget Management	$  - 100 M	Referral Income	$250M
Results:
Reduction in Liability	$25000M	DuPont Products Bought	$100M
		Business Ideas	3

While this scorecard is a work in progress, it represents a snapshot of performance. It also lays the foundation for creating a “Return on Investment” methodology (ROI). In this case, the investment can be looked at from both the client and firm perspectives. A simple client ROI could include the investment of fees less discounts with return being reduction of liability and purchase of DuPont products. The law firm could do an ROI with investment being non-billed work and return being fees, including those gained through referrals. One PLF in 2001 posted the following:

Fees from DuPont:	$ 30 M
Non-billable invested:	$ 87 M
Referrals from Legal Model:	$362 M

Marketing And Differentiation

At first glance, the move to e-billing, a metrics program and the Survey may seem like devices used by DuPont to scrutinize and audit the law firms’ performance. Six Sigma does not focus, however, on an individual’s performance but rather on the performance of a process. The individual process owners can benefit, though, from the measurable improvement made in the overall process. I believe that the Model represents a change to the processes used to practice law and manage litigation. Each individual PLF that participates in this improvement project will have performance data that it can use to market and differentiate itself from those that can only state “we have good lawyers.”