Nathan Cemenska, Director of Legal Operations and Industry Insights for ELM Solutions, hosted an informative ELM19 session on law firm scorecarding for corporate legal and insurance claims departments. Nate was joined by Heather McClow, Manager of Legal Operations at Lowe's Companies, Katie Sanderson, Analytics Manager: Legal at Duke Energy, and Brad Spicer, Vice President, HQ Claims Manager at The Cincinnati Insurance Companies. After a rocky start featuring two fire alarms, the group talked about the value of law firm scorecarding and how to ensure successful results.
A law firm scorecard is a simple idea: it is a way to compare outside counsel firms to each other by listing a series of categories and assigning a score to each firm. The idea is to provide a structure within the matter workflow that allows an apples-to-apples comparison of any two or more firms based on criteria that are important to your organization. These criteria should normally be a combination of subjective, qualitative traits – such as creativity, responsiveness, and knowledge-sharing – and quantitative data, such as average rates and performance against budget.
Why use scorecards?
There are many potential benefits of implementing a scorecarding program. It provides a structure in which to collect feedback on outside counsel and supports decisions about whether or how much to continue using particular firms. It also helps ground firm assignment decisions in real data rather than leaving them to the intuition or habits of claims handlers or in-house attorneys.
Katie talked about the value of scorecards as a way to identify gaps and to provide feedback to outside counsel firms, particularly during annual review. It may sometimes make sense to share information about how a firm compares to the benchmark against the average. For example, if a firm is taking too long on a matter, showing them the average cycle time of similar firms can be a great way of motivating them to pick up the pace.
While this may seem like a confrontational move on its surface, firms are usually grateful for the information. They genuinely want to know how they are being evaluated and what they need to do to increase their chances of earning more business and keeping their current clients.
Which firms should you score?
It probably doesn’t make sense for every legal or claims team to score every firm they work with, at least not when just starting a new program. Many legal departments set a cutoff below which they will not collect scorecard information. Fifty thousand dollars was an example cutoff – if the legal department spends less than that amount with a firm annually, it may not be worth the effort of keeping a scorecard on them.
Claims departments, however, are less likely to have a minimum engagement to trigger scoring. It’s common for these teams to handle a very large volume of small cases, so scoring only the largest ones wouldn’t provide enough data or apply to a large enough percentage of the cases they assign to counsel. The key is to decide what makes the most sense for you as an individual organization.
What should you include on scorecards?
Not too much. A scorecard form should be relatively brief – Heather suggests no more than ten questions to encourage participation. “Attorneys are busy,” she said. “Don’t give them more work.” The form should only take about five minutes to fill out at the conclusion of a matter. It’s a good idea to include one comment box where users can enter anything important that isn’t captured in other fields.
Questions should be subjective. The objective information will come from the data captured in budgets, invoices, etc. The scorecard form is the opportunity for those who work closely with the firm to record their degree of satisfaction with the work and results. Ask questions like how appropriate staffing was and how responsive the firm was to communications. For these types of questions, a scale of 1-5 is useful. Yes/no questions like whether the matter outcome was positive are also helpful.
The client panel members have found scorecards useful for many aspects of running legal operations well. Brad has been using scorecards for ten years and finds them valuable not only for managing relationships with firms, but also for giving in-house attorneys a way to back up their firm assignment decisions.
If your legal or claims department is looking for a way to capture knowledge, make it accessible throughout your team, and help outside counsel meet your needs, a scorecarding program may be the right tool for your organization.