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CREATING A HOUSE OF BRICKS: MAKING THE CASE TO YOUR CFO

Daniel CollSenior Associate General Counsel, Legal Operations, Jabil, Inc.

Mike HavenSenior Director and Head of Legal Operations, Gap Inc. January 2019

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FINANCIAL MANAGEMENT

& CROSS-FUNCTIONAL ALIGNMENT

LEGAL DEPARTMENT OPERATIONAL MATURITY

© 2019 Corporate Legal Operations Consortium, Inc.

THE LEGAL DEPARTMENT IS A BUSINESS WITHIN A BUSINESS

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Funds Paid by Legal to its Ecosystem Funds Received by Legal from the Business

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A/P

=

What we focus on 11 months of the year

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A/R in the Corp Legal World

=

Annual Budget Approval

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Season → Budget

The most wonderful time of the year (for Legal Ops)

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--- OR THE WORST!

Season → Budget

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→ Firm

Foundation

9 *Active PO utilisation count refers to the number of invoices

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Right or wrong, the

customer is always right.

-- Marshall Field

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Enough already, we get it!!!

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Real Estate Agent

=Compelling Budgetary Argument and Style

Curb Appeal =Alignment of Legal Strategy to Corporate Strategy

Architecture =Alignment of Proposed Costs to Legal Dept. Strategy

Building Materials =Clearly Defined Future Cost Projections

Foundation =Accurate Current Year Legal Costs

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Accurate Current Year Legal Costs:

• Q1-3 Actual

• Q4 Projected

• By Practice Area

• Internal (HC, Travel, Other)

• External (Legal Fees, SW, Vendors)

• Recurring vs. Non-Recurring

• Discretionary vs. Non-Discretionary

Real Estate Agent

Curb Appeal

Architecture

Building Materials

Foundation

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Real Estate Agent

Curb Appeal

Architecture

Building Materials

Foundation

Clearly Defined Cost Projections:

• Same categories as Current Cost analysis

(Internal, External, Recurring / Non-,

Discretionary / Non-)

• Provide P.A. Leads with templates (see

template example)

• Pre-populate template with known

“Recurring”

• Coach P.A. Leads on completing the rest.

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Real Estate Agent

Curb Appeal

Architecture

Building Materials

Foundation

Alignment to Legal Dept. Strategy:

• Two parallel paths:

• GC

• P.A. Leads

• Fine tuning of first drafts to include

strategic investments to be requested

• Articulation of alignment with Department

Strategy (e.g., Code of Conduct)

• Consolidate and prepare Exec Summary

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Real Estate Agent

Curb Appeal

Architecture

Building Materials

Foundation

Alignment to Corporate Strategy:

• GC

• Business Clients

• Functional Leads

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Real Estate Agent

Curb Appeal

Architecture

Building Materials

Foundation

Compelling Argument and Style:

• Tight Exec Summary

• Easily dovetailed to supporting detail

• Supporting metrics:

• ROI / CARS / RPA, etc.

• Align with GC on fallback positions

• Try to get a seat at the table

• MAKE THE SALE!

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Real Estate Agent

Curb Appeal

Architecture

Building Materials

Foundation

= $$$

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AVOID THE WRATH OF THE BIG BAD WOLF

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KNOW YOUR CFO!

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HOG NOG

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ZOG

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BEWARE THE ZERO BASED BUDGET

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THE SECRET SAUCE: STRIVE FOR ZOG AND SHOW PRODUCTIVITY

3 Key Elements:

• Attention to KPIs and Benchmarking• Track Incremental Business Demand YOY• Demonstrate Absorption

Magic Equation:

Rollup = ZOG Budget + IBD – Absorption Rollup < ZOG – Return or Re-invest

Rollup > ZOG – Ask for the Balance

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Take-Aways:• Can do this all of this properly if you start in the final month of the FY

• Suggest starting in the final month of Q3

• Communicate a structured schedule to the GC and P.A. Leads with defined deadlines and milestones

• Ideally, the “Foundational” work of mastering your understanding of your department’s current year

costs is best done all year long, or at least quarterly.

• Templates for individual P.A. budgets and a consolidated template have been provided to you.

• Maintain budget by shooting for ZOG, demonstrating productivity, re-investing and providing a sound

business case for more when justified.

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Other Considerations:• Benchmarking:

• Pros / Cons

• https://www.xakiatech.com/blog/budget-benchmarks-

where-do-you-stand

• Technology:

• SharePoint

• MS Teams