This is the second of two blog posts on how the legal operations function is driving department performance by heeding the calls for efficiency, value, and insight. The previous post was about improving efficiency and increasing value, while this one is focused on the insight that can be gained by properly using legal department data.
In the modern world, data and analytics have become essential to law department management. While it is common for companies to use the data generated by their e-billing systems to report on financial performance, too often they don’t look deep enough to uncover the data’s true business value. The spend data captured by your e-billing system can help with efforts such as outside counsel and vendor selection, structuring of AFAs, staffing and resource allocation, budgeting and much more. One of the most efficient ways to quickly review captured data is through the use of dashboards. With at-a-glance views of key metrics on legal spend and operations, they can provide business intelligence and insights you can act on to improve legal department performance.
Using internal data to identify cost drivers and opportunities for improvement is critical. And using benchmark data from external sources in conjunction with internal data is valuable because it allows for law departments to reliably evaluate performance against peers and measure progress over time. For example, benchmarking data can confirm if your department is paying fair market rates and can show you whether your matters are being closed at a typical rate within each practice area.
Examples of basic, high-level metrics to begin with include:
- Matter activity by practice area or assigned attorney
- Invoice status
- Net matter spend
- Spend by open invoice
As time goes on and you become more comfortable with the kinds of decisions that analytics can support, it will make sense to create additional metrics to further hone department management.
Measure and Evaluate
Set up goals and key milestones to keep on track. Depending on your program, you may decide to track and run metrics on a quarterly basis, at annual outside counsel review time, at matter close or some other interval. Taking action on your findings at those times is the key to driving results. For example, if you see a decrease in on-time budget submissions from one of your outside counsel firms, work with them right away to correct the issue before it becomes a long-term problem.
You should also create a dashboard with metrics that highlight the value your program is bringing to the company. Such visibility will provide senior management with the tools they need to evaluate your efforts and recognize your success.
Start Small and Scale Up
A journey of a thousand miles starts with a single step. There is no need to start your metric program with every conceivable report available from day one. Success comes from prioritizing the spectrum of choices and deciding which to begin with for maximum benefit. A commitment to correct priorities and the specific improvements you want to deliver is essential; it also allows you to break large efforts in manageable pieces.
A clear question can help you to start defining those priorities. A question such as “How can we reduce costs?” could lead to an analysis of which work should be kept in-house and which should be sent to outside counsel. On the other hand, it could prompt more focus on strategic use and enforcement of outside counsel billing guidelines or could lead to establishing a value-based fee arrangement on a specific group of matters. Data from your enterprise legal management system can provide an enormous range of information to support your efforts.
There’s no time to waste. For help getting started on your program to increase efficiency, value, and insight, download our whitepaper The Call for Innovation in the Law Department, and check out our website for more information on LegalVIEW® Dashboards.