Clear data and analytics are powerful tools that support important organizational decisions about legal operations. Adopting a metrics-driven approach to these decisions is particularly impactful for claims litigation organizations, where the volume of active cases typically represents a significant financial investment, particularly with outside counsel. Even small steps toward increased metrics maturity can position a claims department for substantial savings.
Don’t Just Show Results, Drive Results
Many insurance carriers have gotten very good at capturing their data for analysis and generating reports. This is an absolutely essential step in establishing a metrics-driven approach. But maturing your processes in order to generate the maximum value from that data is also crucial. That means having a program of metrics that not only reports on the department’s performance but also drives improvement by revealing insights you can act on in pursuit of your operational goals.
To do this, you need a more sophisticated reporting program than a simple collection of reports on how much the department has spent on outside counsel. Mature metrics reflect business intelligence that shows where changes or refinements to your activities will make the biggest difference. For example, you should be able to look to your data for help assigning cases to outside counsel based on each law firm’s past performance on similar cases.
A Range of Reports Provides a Full Perspective
One important tenet of a mature and robust metrics program is utilization of differing report types in combination with one another. Creating reports in different categories helps to ensure that you are getting a full picture and providing information that is appropriately targeted to various roles within the organization. Some teams may have unusual circumstances that require a different mix of report types, but most will benefit from adopting a mix of these report types:
Outcome Reports – These reports provide information on subjects such as average total claim cost, number of claims received vs. closed, and performance to budget, helping management evaluate the overall performance and results of the claims defense program. Intended to show results at a high level, outcome reports normally do not include information on specific individuals, or even law firms, but focus on large groupings of matters by organizational unit, claim type, etc.
Performance Reports – While they often mirror the subject matter of outcome reports, performance reports include granular data to demonstrate individual or small group results on topics such as financial performance, claim inventory, and other operational measures. They are most useful evaluating performance against stated goals, such as reducing case age by a number of days or keeping the combined attorney rate for a particular claim type below $200 per hour.
Exception Reports – Exception reports are used tactically to provide very granular information about activities that can significantly impact the department’s success. They identify issues such as claims going awry, individuals failing to comply with disciplines, or events that impact management plans. These reports are so important that they are often reviewed on a daily or near daily basis. They always include the individuals accountable for the results so that they are immediately actionable.
Combined Reports – Combined reports usually address several different aspects of one or more claims or law firms. They are designed to summarize all relevant information in one place, facilitating performance evaluation or strategy development. One example is law firm evaluation report cards, which measure quality, cost, level of services, compliance, rate history, etc.
Analytic Reports – These are the most important reports because they highlight the areas with greatest improvement potential. They identify likely opportunities to reduce cost, loss, and inventory. Analytic reports should be generated by individuals with a good understanding of the legal process who can properly interpret the information and generate iterative reports that help find the root causes of the results.
This is, of course, only a brief introduction to the development of a mature metrics program. For further details, as well as information on the other aspects of an effective and actionable analytics program, download our whitepaper Claims Defense Metrics Maturity: Five Key Disciplines for Creating Excellent Metrics.