How Do You Measure What Matters in a Legal Department?
How Do You Measure What Matters in a Legal Department?
Adding an effective metrics program to a company’s legal department can increase visibility and promote positive change.
Metrics help organizations improve transparency and enable better decision making when it comes to managing costs and promoting productivity. Ultimately, driving more of the right behaviors – and discouraging the wrong ones. For legal departments, metrics help:
- Demonstrate the value of legal department contributions to the business
- Build relationships with internal stakeholders, law firms, and vendors through transparent and data-driven decision making
- Make smart adjustments in staffing or spending to better align with peer benchmarks
- Identify bottle necks in productivity to ensure the right work is done by the right resource without unnecessary bureaucracy
- Instill financial discipline and accountability – ultimately leading to reduced spend and alignment of cost to value
In the end, what gets measured matters, and if the legal department does not have the data to measure timely and effective delivery to the business, they cannot fully demonstrate their value and positive impact on the business.
5 Steps to Establishing an Effective Metrics Program
1. Establish Program Objectives
Identify what your metrics should capture and align them to department goals. What is driving leadership’s need for metrics? Has the department been given a mandate by the C-Suite to cut spend by 10%? Or is the objective to measure quality and case outcome? Or have business partners demanded more transparency in legal chargebacks?
2. Identify Stakeholder Audiences
Who are your stakeholders? What kind of information and what level of detail does each stakeholder group need to make good decisions? How often do stakeholders need updated data? The answer to these questions will help identify which performance indicators to track and the frequency of report distribution.
3. Pinpoint Where to Obtain the Data
Will data be obtained from external sources, or can it be gathered from internal systems? Is significant effort required to aggregate and cleanse the data prior to reporting? Who will be responsible for creating those reports on an ongoing basis?
4. Identify a Reporting and Data-Visualization Solution
Choose a technical solution that provides you flexibility to modify reports as business needs evolve. Focus on dashboards and data visualization that help your users understand the information you are presenting without significant hand-holding and training.
5. Tell a Story and Provide Context
When engaging with leadership or delivering executive reports, it is important to add interpretation of the data so the story behind the numbers is told. Supplementing your presentation with benchmark and trend comparisons can highlight areas of opportunity that might otherwise go unnoticed.
Bonus Step: Incorporate Data-Integrity Best Practices Into System Design
The more time spent upfront on change management and explaining the importance of data quality, the better the output. This requires going above and beyond during system design and training to incorporate detailed process workflows and best practices.
- Focus the ask on what is required – unnecessary or empty data fields create ambiguity when trying to identify trends and aggregate information
- Define and enforce standard taxonomies so that you have a strong foundation for report filtering and parameters (e.g., UTBMS task codes, matter types, document types)
- Validate data entered in system fields and avoid free text by using lookup tables and character/format validation rules
- Emphasize importance of data entry and integrity in training with end users and centralize data-entry responsibilities to “power users”
- Perform periodic audits of data accuracy and identify value-add cleanup efforts
- Update your baseline assumptions to accurately reflect year-over-year changes
Roadblocks to Developing Metrics
If measuring performance was easy, everyone would be doing it. Unfortunately, many legal departments face significant roadblocks when trying to set up their metrics programs. The most common roadblocks are:
- Aggregating Data From Multiple Source Systems – Extracting data from disparate systems requires in-depth knowledge of export procedures and manual effort to aggregate multiple data sets into a single reportable source.
- Inconsistent Data Capture – inconsistent or missing data can result in inaccurate or misleading metrics and extensive cleanup efforts.
- “Out of the Box” Report Limitations – Standard reports often do not meet the unique business requirements of the legal department and its stakeholders.
- Real-Time Data – Synchronizing data capture and reporting cycles can require complex coordination to ensure metrics are up to date and accurate.
- “Boiling the Ocean” – Providing your audience too many metrics can dilute the impact of those that are most important.
- Limited Budget and Human Capital – Limited funds, manpower, or analytics skills can inhibit a robust metrics program.
A global manufacturing company had recently centralized the legal department’s management of routine contract requests to a global center of excellence. To support a companywide analytics project, the contracts group developed a robust metrics program to measure delivery to clients across the globe. Key metrics included:
- Average number of days from submitted contract request to delivery of a first draft
- Average number of days until a signed contract is received
- Average number of days a request is spent with the other party or business partner
- Percent of contract requests turned around within group cycle time goals
- Contract volume trends by type, business division, geography, and complexity
To facilitate metrics tracking, the project team implemented a workflow-based contract management system with an integrated data-visualization tool. Contract activity and the legal team’s productivity was successfully reported back out to legal leadership, contract administrators, and business partners through a combination of self-service dashboards and administrator-run reports.
A bank facing a large discovery burden had already spent 30% of its case budget before discovery started. As a result, the head of litigation initiated a project to proactively monitor discovery spend and set guidelines for how to allocate work among internal and external resources. The project team gathered law firm invoices and analyzed key metrics, including:
- Internal and external discovery costs as a percent of total case spend
- Hours by timekeeper level for commoditized discovery activities (e.g., first-pass review, privilege log creation, production execution)
- Document review cost per hour versus lower-cost alternatives
- Ratio of full to targeted collections and associated turnaround time
- Average file size of documents collected, reviewed, or produced per custodian or case
Based on this analysis, a business case was established for insourcing discovery project management from outside counsel at an expected 3-to-1 cost savings. The metrics supporting this case justified implementing a new staffing model and building out a successful internal project management team for future discovery operations.