Every once in a while, a new way of doing business catches on and becomes a game changer in an industry. A well-executed metrics program can do just that for corporate legal departments. For example, while most corporate legal departments do a decent job managing performance, in some capacity or another, proper tracking and management of metrics can take the business to an entirely new level.
In my experience of coaching legal department operations to demonstrate value with data, there are four key reasons metrics are important for effective legal operation.
1. Sets Clear Expectations. The first step any legal department should take before deploying a metrics program of any kind, is establishing clear objectives for the legal department. Once those fundamental goals are set, metrics can be used to compare how well the legal department is doing against those goals. In other words, it gives accountability to the legal department in terms of how well it is meeting those defined objectives.
2. Levels the Playing Field. By establishing a clear set of metrics, the legal department can measure goals consistently across all outside firms. In essence, all legal vendors are measured and held accountable to the same set of standards.
3. Strengthens Relationships. Good communication is the hallmark of any great working relationship. In this case, metrics are extremely useful because the data enables the legal department to set and communicate clear expectations with law firm partners; metrics strengthen inside and outside counsel relationships. In my experience, most firms appreciate the open dialogue and use the feedback to drive performance.
4. Improves Results Across-the-Board. It’s common knowledge that you can’t effectively manage what you can’t measure. By establishing clear metrics, the legal department can begin to see not only how it can improve its own internal processes, but also how outside firms can improve law firm process. Ultimately, this more holistic picture, helps drive improvement overall.
How to Get Started with Metrics
There’s a perception that implementing metrics take an inordinate amount of time and effort which leaves some in corporate legal uneasy about developing a formal program. However, it doesn’t have to be a painstaking process. At a high level, legal metrics simply involve a thoughtful discussion to determine objectives, the identification of the means and measures to track progress and report. Here are the fundamentals for getting started.
Define Attributes of a Great Legal Advisor
Going back to those deep discussions in the legal department, the most important first step to any good metrics program, is defining what qualities encompass a great outside legal partner. Once those attributes are clearly defined, the legal team can begin to see how well legal partners are measuring up against those goals. Whether those qualities are associated with securing positive legal outcomes or communicating well with the legal department, step number one, begins with identifying what is most important.
Define Measures of Effectiveness
Although each legal department is unique and objectives can vary greatly, based on goals and the overall culture of a company, the following three key metrics are nearly universal and can help drive improved performance in virtually any legal department.
• Assessment of Outcomes. Tracking how often a firm settles legal outcomes during litigation can be a quantifiable way to see how well outside firms are performing in that area. This can be easily tracked, by giving each firm a score from 1-5 where one identifies the least outcomes settled and five being most outcomes settled or vice versa.
• Measurement of Price. Measuring by cost is another simple way to drive improved performance in the legal department. Whether the legal department wants to determine the average cost of a matter with outside counsel during litigation, or measure and compare the price of firms via hourly rates, simply putting a few metrics in place related to price can help the legal team draw comparisons and negotiate rates with legal partners based on the data.
• Measurement of Compliance. Once the legal department sets various practices in place related to billing guidelines, for example, metrics can be created to gauge how well legal partners are complying with those practices and corrected, if needed.
Use Scorecards and Dashboards to Measure Success
Whoever is involved in the law firm selection or review process should have access to a scorecard or a simple dashboard to compare and contrast how well outside legal vendors are doing in those areas.
This provides two very important benefits. First, it can be used to inform internal communication showcasing how well legal vendors are doing in key areas and highlighting any outliers, for example, a firm doing poorly in a specific area. Second, it can be used as a tangible product to drive ongoing discussions regarding performance with outside counsel.
On many occasions, I am asked for best practices for using metrics. It’s usually best to decide and agree on, what needs to be measured before implementing any type of metrics. Depending on where the department is with its use of technology, using an enterprise legal management (ELM) solution is a good place to start.
Lastly, remember to practice good hygiene. In other words, make sure the data the legal department is tracking is providing useful data. If not, it’s time to clean it up and reassess.