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Littler Leader On HR Venture With Tech Firm

May 7, 2015, 9:31 PM

Pictured above: Scott Rechtshaffen, chief knowledge officer for Littler Mendelson.

Littler Mendelson on Wednesday announced the launch of ComplianceHR, an automated software product that in-house lawyers can use to navigate routine workplace laws without having to pick up the phone or type an email to actually consult a lawyer.

Need to hire an independent contractor in Florida? ComplianceHR provides the documents needed to quickly make the hire. Employers can use the tool when making new hires to determine when to administer drug tests, write non-disclosure agreements, among other things. But will it cannibalize Littler’s core business of advising clients on employment issues?

Said Scott Rechtschaffen, chief knowledge officer for Littler: “We’re a law firm of 1,000 attorneys. I don’t know any who get calls every day from clients who say, ‘we’re about to engage an independent contractor, is it legal?’ They just don’t get those calls.”

The company is a joint venture with the technology companyNeota Logic. Its CEO Betsy Braham will also hold that role atComplianceHR; Lori Brown, former managing shareholder of Littler’s Miami office will serve as the president and chief operating officer and Tami McCutchen, a principal in Littler’s Washington, D.C. office will also be involved as a vice president and managing director.

The product will be priced on a per-use or an enterprise basis, depending on the agreement, according to Jen Klein, Littler’s director of public relations and communications.

Big Law Business spoke to Rechtschaffen to obtain a better understanding of how ComplianceHR will work and how it originated.

Interview Excerpts:

Our attorneys are primarily engaged in litigation and strategic advice, so I don’t think this is taking work away from them. It’s embedding compliance into the natural process.

Whatever money this company makes is going to be plowed back into the company... It’s not a verein. We have an ownership interest in this company.

This is not the first time we’ve done something like this. Back in around 1996, we started an online training company, called ELT.

I got immersed in knowledge management and now have at least 35 people who work for me, including 15 attorneys and we do nothing but knowledge management and help the firm innovate.

Below is a lightly edited transcript of our interview with Rechtschaffen.

Big Law Business: What is Compliance HR and how did it get started?

Rechtschaffen: It’s part of our vision as a law firm that more and more of our services have to move online. We’re an information-based organization in the middle of an information revolution and yet … very few organizations offer services online. We saw an opportunity to partner with a really cutting edge software company.

Big Law Business: Take me back and explain how that partnership started?

Rechtschaffen: It’s a very long story that goes back 10 years, at least. The software that Neota has was originally in another company, and that company did not succeed. I was looking for some sort of the decision tree software that would allow us to analyze decisions and fact patterns. I was looking for the solutions … and I’ve known one of the founders of Noeta for years, and it was really karma. We considered different approaches and finally we came up with the idea, let’s just form a joint venture.

Big Law Business: And who do you envision using ComplianceHR?

Rechtschaffen: We envision the clients being in-house legal departments and their H.R. departments. This really is a tool for legal professionals to help them make decisions more quickly and effectively. It’s just not an efficient process the way it’s done now.

Big Law Business: So basically, if a company is hiring an independent contractor then ComplianceHR has a questionnaire that will help them figure out what needs to happen legally?

Rechtschaffen: Exactly. They can quickly review the details and say, ‘Yes this meets our guidelines,’ and make a decision. And it also provides whatever other paperwork goes with the engagement. It really is a very effective way of ensuring compliance.

Big Law Business: Isn’t this going to eat into your core business of advising clients on these matters?

Rechtschaffen: That’s a terrific question. It’s certainly — it’s a challenging question and I’m stumbling because I’m at the annual client conference and just sat through a presentation about drones and my head is spinning with possibilities. Look, there are disruptive technologies … is this going to make lawyers more effective? Yes. We’re a law firm of 1,000 attorneys. I don’t know any who get calls every day from clients who say, ‘We’re about to engage an independent contractor, is it legal?’ They just don’t get those calls. Our attorneys are primarily engaged in litigation and strategic advice, so I don’t think this is taking work away from them. It’s embedding compliance into the natural process. Clients, they’re really not using lawyers to make those decisions. In-house legal doesn’t have time to engage with H.R. every time they hire a new employee.

Big Law Business: So how does this help Littler? Will it increase your profits or help attract new clients?

Rechtschaffen: Hopefully both. As a law firm, we’re not a tech company and we’re not a sales organization. We see this as an extension of our brand, of the way we deliver services. There are all sorts of legal technology companies … we’re not focused on the consumer marketplace.

Big Law Business: Will the company always be run by Littler attorneys?

Rechtschaffen: No, it’s not run by Littler attorneys. We have a separate management team. There’s really three major people involved and two of them have ties to the firm.

Big Law Business: What will the financial arrangement with Littler and ComplianceHR be?

Rechtschaffen: That’s not something I feel comfortable getting into. For now, this is a standalone company that is not sharing revenue with us. Whatever money this company makes is going to be plowed back into the company.

We have a financial interest in the company. It’s not a verein. We have an ownership interest in this company. It’s a standalone, LLC, Delaware company. Our primary investment in this company is our knowledge, our expertise.

Big Law Business: Do you envision future opportunities to build other companies like this?

Rechtschaffen: Absolutely. This is not the first time we’ve done something like this. Back in around 1996, we started an online training company, called ELT [that focused in online workplace compliance issues]. We supported and grew that company for over a decade. And we sold it about four or five years ago to a private equity company.

We also have a whole suite of products, called GPS. We have an online database where clients can look up [workplace] laws in every jurisdictions. And it sends out alerts every time laws change. We have productized a service for clients

We also haveLittler CaseSmart, which is a complete reengineering of the way we handle single plaintiff litigation and administrative agency challenges, like the EEOC alleging discrimination or comparable state agencies. We went through and did a complete workflow analysis and found what are the pain points? What are the things that a senior lawyer did that maybe a junior lawyer should be doing? ... We completely went through the process and gave the client better service. Every client gets a dashboard that allows them to see the status of any individual matter.

Big Law Business: What’s your background?

Rechtschaffen: I was a practicing employment lawyer. I became a shareholder. I’ve been with the firm for 30 years. We’re not adverse to new ideas … and for some reason I just gravitated to these type of projects. In 2000 or 2001, the firm held a strategic planning. We were a smaller firm but we had a vision of being what we are now, maybe 60 offices. We asked: how do we maintain quality across offices? I got immersed in knowledge management and now have at least 35 people who work for me, including 15 attorneys and we do nothing but knowledge management and help the firm innovate.

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