ClariLegal had the pleasure of interviewing Mark Smolik, Vice President, General Counsel, and Chief Compliance Officer at DHL Supply Chain Americas, where he leads the legal, commercial contract management, and compliance teams. After starting out as a law firm associate, Mark moved in-house to Sherwin Williams, where he was actively involved with that company’s overseas acquisition efforts. After Sherwin Williams, Mark moved to Safelite Autoglass, where he served as Senior Vice President, General Counsel and Chief Ethics Officer. He also led the company’s HR department. After Safelite was sold to an acquirer, Mark moved to his current position with DHL, then known as Exel Logistics.
When he joined DHL, the company’s legal department had 7 people. Today, Mark now leads a team of 57 professionals. To hear him describe his team, it is clear Mark has tremendous respect for them and feels privileged to serve in a leadership capacity. During his tenure at DHL, Mark and his leadership team put in place a legal operations team and implemented matter and document management systems as well as e-billing and e-Discovery systems. Mark notes his pride in team members and how they have structured the legal department to “set the standard for the delivery of value as a functional overhead cost-center” for the company. Mark notes that, having worked primarily as a transactional attorney with some litigation experience, he learned lessons in how “not to handle a matter”, along with the value of team as the driver of success in any endeavor. “We’ve accomplished a great deal as a team at DHL. I am so very fortunate to be surrounded by people who are passionate about delivering uncompromising, quality business focused services to our organization”, Mark noted.
Starting off by asking Mark what value means to him, he first noted that traditionally many in-house counsel measure value by the amount of money spent or saved by the legal department. Mark says: “While being good stewards of the organization’s resources in very important and one measure of value, I believe true value is measured based on the perception and feedback from the C-Suite and the board on how my team is performing. One of the greatest compliments I’ve received lately is from my CEO who, at a board meeting, said I had a great team that is deeply engaged with the business. His perception is his reality and I need to be very cognizant of that. We put ourselves in the shoes of the leaders of the businesses we serve making sure we provide pragmatic advice in a trusted advisor capacity.”
As for relationships with outside legal services vendors, Mark notes that how much money is spent with them is important but is not the most important factor when evaluating value. To Mark, the most important driver of value in external relationships is having outside counsel or legal service vendors who: (1) have taken the time to truly understand DHL’s business; (2) have earned the trust and respect of his team to deliver quality work at a cost that reflects the hyper-competitive landscape for service providers, and (3) are proactive in their communication and delivery of services. Mark states that, when considering whether a vendor is delivering value to DHL, he and his team ask questions such as “are we partnering with a firm that puts themselves in our shoes and really understands our expectations and the internal disciplines to which we are held accountable”. Mark says that he and his team typically answer such questions in the affirmative when outside counsel or legal service vendors engage, without prompting from Mark or his team, in issue-spotting and taking steps to proactively mitigate risks.
We asked Mark how the organizations for whom he has worked typically defined value. Mark says that in his experience the more experienced executives, such as those with whom he currently works, measure value based on several factors including consistent performance, credibility, and team leadership, coupled with a pragmatic business oriented approach to solving issues handled by his team. “The fundamental objective of a strong legal department is to work closely with the company to identify and mitigate legal and related risks. The more a General Counsel and his or her team partner with the business to proactively identify those risks before they become issues, the more likely C-Suite executives will see meaningful value being delivered”, says Mark. His advice to up and coming General Counsels: “the more you come to be known as a business person with a law degree rather than merely a lawyer, the more likely you will be perceived as a trusted advisor to the business.”
We asked Mark to cite an example of how he and his team delivered non-traditional value to his organization. Mark cites how, in 2012, he met with his CEO to capitalize on local and state economic development initiatives tied to job creation and growth. Mark proposed a project to identify incentive opportunities the company could capture by opening or expanding facilities. The project ultimately enabled the legal department to capture millions in incentives and led to the creation of a team dedicated to investing in economic development initiatives. Mark cites the project as an example of the company’s value propositions of “thinking way outside the box, identifying opportunities to really create value where it never existed before” and bolstered the value of the legal department to the organization.
We next asked Mark to share his insight on the traditional relationship between corporate law departments and law firms. Mark notes that many firms truly believe they deliver superior value based on their standards but they rarely ask for feedback from their clients. Mark and his team provide that feedback, which has led to a substantial increase in the overall performance and value delivered by his firms. Mark believes it incumbent upon outside counsel to push the conversation on value but sees how law firms are caught in a bit of a Catch-22 – many law firms have a pyramid compensation structure that is often the inverse of their clients. As Mark puts it, “oftentimes law firm corporate clients have a pretty strong, stable, financial base that is not tied to employee (partner) compensation. Clients can be flexible in their pricing models enabling them to offer variety to different customers. Law firms still generally rely on the traditional hourly rate for services offering little creatively and flexibility in pricing. The challenge I see for many law firms is their compensation structure (an inverted pyramid) hampers their ability to be creative with fees and explore new ways of delivering value that, in some instances, might necessitate investment of time that that might not be guaranteed to be compensated.
We asked Mark how he sees the RFP process and vendor management tools as assisting in the value conversation. Mark believes the traditional RFP process is broken and meaningless; however, he does believe that new processes can measure vendor performance and hold them accountable by establishing expected value up front. If RFPs in the legal industry are to be effective, Mark believes they should have prospective vendors answer the same questions using the same metric measurements to enable an apples-to-apples comparison of proposals. Mark also believes RFPs should foster the competitive aspect of the bidding process, and mentions how expert consultants and new, innovative software platforms such as ClariLegal bring efficiencies to the RFP process and help make it an important and valuable tool for the legal department and the procurement team.
Lastly, we asked Mark about his thoughts on business model alignment through the value chain – does he see business models of clients and vendors as out-of-alignment? Mark notes how law firms haven’t quite figured out alternative fee arrangements and as a result they aren’t used consistently throughout the legal industry. Mark believes this is due to law firms being unable to figure out how to charge AFAs without upsetting their internal compensation models. As a result, Mark notes how the hourly fee remains the predominant business model for law firms, although more and more clients are pushing back in favor of more fixed/flexible fee arrangements. Mark observes how hourly fees are entrenched with many law firms operating profit margins that exceed their clients’; however, he notes the status quo won’t likely change until a ground swell of clients push back on the hourly fee business model.
About Mark Smolik:
Mark Smolik leads the DHL’s legal, commercial contracts management, compliance, and economic development teams. He also serves as Global Chair of the company’s Supply Chain Legal Services Practice Group. The company employs 48,000 associates throughout the Americas and provides third party logistics, supply chain management, and contract packaging services to many of the world’s largest companies. The company also provides general management, professional back-office support and creative marketing services through its Williams Lea TAG operations.
Prior to joining DHL, Mark served as Senior Vice President, General Counsel and Chief Ethics Officer of Safelite Autoglass where he also led the Human Resources and Government Affairs departments. Prior to joining Safelite, Mark served as Senior Corporate Counsel with The Sherwin-Williams Company.
Mark received his Juris Doctorate degree from the Cleveland Marshall College of Law and his Bachelor of Arts Degree from John Carroll University. He is a member of the Board of Directors of Columbus 2020, the economic development organization for the eleven county Columbus, Ohio region. Mark also serves as a member of the Board of Advisors of LogicForce, and the Board of Visitors of the Cleveland Marshall College of Law. He is a frequent speaker, and the author of several articles and publications, on the changing dynamics of the legal industry. Mark also serves as a member of the Board of Qualmet LLC, a legal technology company.
About the Authors
James Johnson is principal attorney of First Venture Legal, a Cambridge, Massachusetts-based law practice focused on corporate and transactional law for very-early-stage startups. James assists entrepreneurs and small business owners with corporate formation and structuring, contracts, commercial law,
employment matters, and early-stage fundraising. His practice utilizes alternative fee structures to deliver value-based service to early-stage ventures. In addition to practicing law, James works with ClariLegal, focusing on building out its innovative platform and spreading the word of ClariLegal’s mission to reduce cost and complexity in legal vendor selection and management for law firms and corporations.
Cash Butler is the founder of ClariLegal (www.clarilegal.com), a preferred Litigation/Legal vendor management platform that matches corporations and law firms with the right vendors who have the right service offering at the right price. A seasoned legal technology innovator, Cash has over 18 years of experience in the legal vertical market, primarily working in eDiscovery, litigation & compliance. Cash is an expert in value pricing and vendor management.