This entry was originally posted on Wired Innovation Insights.

Businesses of all kinds, including corporate legal departments and law firms, are increasingly relying on evidence-based decision making to achieve positive results. When legal leadership decides to implement strong data capture, analysis, and benchmarking practices, it can help to bring the department’s results into far better alignment with the organization’s overall business goals. For many legal organizations that are moving to this model, the change involves improving and building upon the systems that are already in place. When undertaking this process, it is crucial that the team starts with an understanding of how the department currently runs and how successful it is… and then improves upon that success.

Capturing the Current State

To understand the current state of data capture and use in legal performance management, there are several important steps that legal leaders (such as GCs, CFOs, and Managing Partners) and their teams must take. Reports and other data tools must be scrutinized, along with department processes. And internal stakeholders must have a chance to express their opinion of the group’s effectiveness and go-forward strategy. There are several important steps to take in order to collect all of the necessary data.

Gather all reports and metrics. Internal reports are of course key, but the team should not overlook relevant reports and analytics from Finance, IT, Human Resources, or any department that might track information on legal performance with respect to budgets, financial goals, and staffing. Some of these may already be used in making strategic decisions, but others may not. At this stage, the team should not limit their information gathering only to those metrics that are currently put to good use, they should think more broadly and be sure to include any that are not currently leveraged, but might include useful data.

Interview stakeholders both inside and outside the legal team. Anyone with a view into the relationship between the law department, the larger company, and law firms should be interviewed, for example internal employees, company executives, outside counsel firms, clients, business partners, and other stakeholders. The goal is to learn how the interviewees interact with (or within) the ecosystem, what their needs are, and any impressions they have of the business-to-law relationship. Although it’s anecdotal, this information is critical. It helps the team set good priorities and can even highlight pain points that can be addressed quickly to establish confidence in the positive impact of the team’s work.

Document results. The metric-gathering and interviews will likely yield a large amount of very useful information. To ensure that this information remains useful as recollections of this phase grow dim, the team must document the results. They should record the processes, procedures and policies, both good and bad, that have been identified during interviews with stakeholders. Recording the gaps that have been identified in the existing metrics is also a critical piece. These documents will become key references when decisions need to be made on how to proceed with improvements.

Taking a Deep Dive

With carefully-documented results in hand, the GC, CFO, Managing Partner, or other project leader should review the findings carefully. When doing so, it’s useful to keep the following questions in mind:

  • Are the current reports and metrics focused on strategic information that can help with decision-making? Do they provide information on internal or outside counsel performance, or are they simply descriptive? Are all of the potentially helpful reports already in use within the organization?
  • Are there processes and staff in place to help capture the most relevant metrics on an ongoing basis?
  • Is the existing communication between the organization and its stakeholders open, clear, and sufficient? Would better or more frequent communication improve service for the clients?
  • Is there transparency into legal costs/fees and can these be accurately projected in advance?
  • Are decisions currently made in a data-aided manner?

The goal of this review is for all parties to get a comprehensive and in-depth understanding of the organization’s current state and understand how team members, stakeholders, and overall performance could be better served by improved analytics and processes.

Any suggested improvements resulting from the review should be documented with references to the investigation results that gave rise to the suggestion. To better comprehend where each potential improvement fits into the organization’s operations, it can be useful to map each piece of collected info to the appropriate segments of the legal management model that I described in my previous post. This can help the team to see which potential improvements might impact the most critical areas.

For example, many GCs who undertake this process discover an opportunity to increase discipline around outside counsel usage and relationships. Concentrating most or all OC work with a few key law firms can save on legal spend, increase efficiency, and improve collaboration. However, this process is only successful if it is managed in a data-centric manner. When this type of structured approach is taken, it can help bring results more closely in line with the company’s larger business goals.

Improved internal discipline is another common candidate for further development. Close examination might reveal that, despite excellent legal knowledge, the team may not be using standard, efficient processes for activities such as establishing budgets, utilizing alternative fee arrangements, or communicating with clients. Further, the study may find there is a need for critical expertise in managing, understanding and implementing analytics solutions to realize the required improvements.

The specific changes that business of law leaders choose to implement will of course depend on what is uncovered by the investigation into the current state of the legal organization. Metrics and documentation are key, along with the right expertise and a culture that recognizes the importance of data-driven decision making to both financial results and legal outcomes.

About The Author

Dave Gorman