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By Yin Wilczek
Avis Budget Group Inc. is developing new metrics that would measure the true value of its legal department, Executive Vice President and General Counsel Michael Tucker told Bloomberg BNA.
Traditionally, companies assess their in-house attorneys in terms of whether they closed a transaction, how much it cost for them to perform the task, and whether the next transaction can be closed faster and cheaper. That doesn’t show the true effectiveness of corporate legal services, he said.
Avis instead is focusing on the legal department’s impact on the company, Tucker said. It is asking questions such as: did in-house counsel increase Ebitda [earnings before interest, tax, depreciation, and amortization], and did they make life and the environment in the company easier. “We have changed the paradigm about how a company views its legal department,” he said. “It’s only by that holistic view of legal services that you can make the decision of whether to pursue a transaction or litigation matter, or any other project that impacts the risk profile of the company.”
Avis, based in Parsippany, N.J., is a global automobile and truck rental services provider with about 30,000 employees. Through its Avis and Budget brands, the company operates more than 11,000 rental locations in about 180 countries.
Tucker, who’s also the company’s chief compliance officer, runs a legal department with more than 50 employees in the U.S., England, France and other countries. He spoke to Bloomberg BNA June 5 on the sidelines of the Association of Corporate Counsel’s Legal Operations Conference in Chicago.
Tucker said the drive for more holistic metrics has helped Avis in adding legal headcount, litigation, and even in how it works with outside counsel. The company has reduced its outside counsel from 672 law firms to fewer than 10.
The typical convergence process focuses on cost, but Avis is focusing on how effective the law firm has been as the company’s legal services provider, Tucker said. The questions Avis is asking include: did the law firm help the company become more profitable or cost effective, did the impact on the business justify the investment made, and did the law firm itself make a profit.
“This is a completely different way of looking at and evaluating the services that your law firms provide,” he said.
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