"That which is measured tends to get done."
The empirical data era has unquestionably arrived for the IHL community and it reflects the fact that visibility and insight creates actionable intelligence at a time when the IHL community must demonstrate better decision making.
The empirical data era also reflects the fact that this is now a time when all decisions need to be capable of justification and performance must be demonstrated. Increasingly, if you cannot demonstrate a result then a result has not been achieved.
Legal data analytics entails extracting actionable knowledge from data to assist IHLs in decision making that seeks to task finite legal resources against exponentially growing legal and compliance support needs.
Commentators such as Bill Mooz have noted how IHLs should be using their “great data troves” to contribute to the effectiveness of business operations as diverse as the management of supply chain disruption.
Legal analytics can also inform IHLs on a wide range of issues, including matter forecasting, process improvement, legal strategy, comparative legal costs, billing optimisation, resource management and financial operations.
Historically, many decisions inside the legal department were made on the basis of hunches or guesses. Law firm relationships were typically based on old-school networks and personal relationships.
Going forward, such an “Old Way” of doing things is not satisfactory – personal preferences and relationships will have to give way to qualitative decision making that is driven by real data.
IHLs must demonstrate their value contribution. Performance metrics are becoming critical to IHL operations – the objective being to translate the department's goals into empirically measurable units that can show progress and improvement.
IHLs who succeed in ingraining quantifiable performance management tools into their operations produce impressive short and long-term results. So, this Guide unpacks the fundamentals of IHL performance metrics.
IHLs are now measured and evaluated through the lens of spend management, efficiency improvements and favourable financial outcomes - and again, if you cannot prove it then the assumption is that you didn’t do it.
IHLs are going to increasingly need to understand the language of business – which is in effect the language of numbers. Whilst by no means an easy task (given historic legal vocational training), it is not an insurmountable one.
Legal metrics are fast becoming a critical tool as IHLs are increasingly asked to join other corporate divisions in assessing (and communicating) performance in an objective, tangible - and quantified (metrics-based) manner.
The legal team that can produce numbers that support its decision making and evidences their results will not only stand out but will be better able to attract increased internal support and value recognition.
Going forward, the GCs that master legal department metrics to enable informed decision making and thus achieve optimal legal resource productivity expression will have an entirely different career trajectory and market value.
Common IHL performance metrics
New Law IHLs (i.e. those committed to transformation) must identify, collect and monitor a portfolio of performance based legal metrics. Critically, no single metric will be determinative, but collectively they are hugely informative.
Common IHL performance areas and categories where performance metrics can be deployed include:
• Overall IHL Performance & Productivity
• Practice Group Performance & Productivity
• Individual Lawyer Performance & Productivity
• Support Staff Performance & Productivity
• Mix of Insourced vs. Outsourced Legal Work
• External Counsel Performance & Cost
• Overall financial performance by relevant unit (e.g. matter, task, practice group, etc.)
Adding a little more “colour” to these IHL performance themes, here are some of the most frequently applied “whole of department” performance metrics:
• Spending efficiency or effectiveness
• Efficiency of outside counsel
• Legal budget structure
• Workload distribution in the department
• Turn-around time (by department)
• Contract analysis (e.g. which clauses are the most negotiated / most often deviate from preferred position?)
• Litigation outcome analysis (e.g. when to settle and for how much?)
• Compliance (e.g. predicting compliance problems based on searching company data)
• E-Discovery costs and effectiveness
• Legal analysis (review of contracts, legal strategies, opponents' briefs, etc.)
• Department process improvements
• Measuring attainment of department goals or KPIs
• Benchmarking – how does your department stack up?
• Internal client satisfaction
• Whatever the C-Suite wants you to measure
• Deviations from authoritative group-wide policies
The only things that limit your ability to leverage data analytics and emergent performance metrics are i) the limits of the data you have on hand, and ii) the number of questions to which you would like answers.
Fortunately, every single IHL workflow will generate a potentially rich crop of data that can be harvested and analysed to yield detailed performance insights and inform decision making.
Note that every workflow inside your IHL will generate harvestable data that can be used to inform performance insights - it is alos easy for IHLs to access most of this data.
As you start to embrace empirical data – you will need to strike a balance between “whole department” and “workflow specific” performance metrics.
More metrics vs Effective Metrics
Noting the above, we also warn that simply having “more performance metrics” is not necessarily a good thing.
Typically, we find that the bigger the IHL, the more aggressively it will want to roll out a legal analytics competency – and such an approach often fails.
As we often say at GLS – “slow your flow” – i.e. start with what is known to work and build from there – less is most definitely more.
As an example, we recently counselled a Middle East Govt. Authority who had a “Top 3 Global Consultancy” design a comprehensive suite of performance metrics for its internal legal team as part of an overall transformation program.
Over a million dollars later – the in-house legal team was saddled with 100s of KPIs ranging from “the time it takes to answer the telephone” through to “have you won 85% of all litigation matters (without any qualification)”.
Obviously, the program rapidly failed – team members were savaged for transgressions against irrelevant and/or impossible targets.
The KPIs imposed on that team were inappropriate for a legal function, unrealistic and failed to take into account the resources actually available to the team to realise such performance levels.
Moreover, instead of the IHL focusing on prosecuting their essential mandate they become slaves to the production of a vast array of metrics that did not even relate to the creation of “real value” for their internal clients.
The IHL suffered massive churn rate as lawyers cycled in and out of the team like a revolving door. Exit interviews consistently cited the overly bureaucratic and administrative environment as a main departure reason.
In effect, the performance metrics program for this IHL was severely disconnected from the operating reality of the organisation and did not focus on measuring what was truly important to the institution.
Implementing a basic legal analytics competency
As you start to embrace legal analytics – the essential message is to start with “small and easy to measure and easy to achieve metrics”, achieve success with them, and then move on to tackle more complex analytics.
The basic process for implementing legal analytics looks like this:
i. Decide what do you want to measure and why.
ii. Locate and obtain the relevant data.
iii. If necessary, clean and structure the data.
iv. Run the analysis.
v. Draw your conclusions/make decisions based on the results.
This will translate into IHLs being able to access significant insights and make far better data-enabled decisions on organically generated and managed data, and validate the results they achieve.
Performance Data: Essential sources
Each source of data will fall into one of four categories: 1) descriptive, 2) diagnostic, 3) predictive, or 4) prescriptive – each category offers its own unique insight.
GLS is of the view that the 3 most effective sources of IHL performance data are as follows:
• Legal Service Request Forms: the legal service request form is without question the most critical source of data – when analysed, it tells you precisely what the IHL is doing, for whom and how often.
We covered this legal operations necessity in Legal Operations Essentials: The Legal Services Request Form: The gatekeeper to effective in-house legal function transformation.
If your IHL does not operate a centralised instruction ingress point (ideally a portal), your team will never be able to fully optimise its performance.
• Billing: this data source tells you what your team cannot currently handle itself, and such data can easily be broken down into more qualitative data to inform external spend decisions.
• Internal Clients: the IHL team serves its business and internal clients – tracking client workload forecasts, support requirements and satisfaction levels is critical.
What resources are available?
Determining what legal metrics to deploy can be a daunting question. Broadly speaking the focus should be on metrics that:
• allow you to best demonstrate your value to the business;
• help you make the best possible operational decisions; and
• are based around data that can be readily collected, analysed and leveraged.
GLS Group can support your roll out of legal department performance metrics in 5 powerful ways:
• GLS Legal Transformation Tube Map this includes lines for Legal Operations, IHL Performance and Data Analytics – providing insights as to their essential components.
• GLS Legal Department KPI Manual introduces you to the most common IHL metrics, what they mean, how you measure them and what they will tell you – to allow you to self-implement.
• GLS Workflow Specific Metrics we can give you access to performance metrics specific to any of the 15 IHL Lines and help you to implement them.
• GLS Department Wide Metrics we can help you design a tailored suite of performance metrics for your team and help you implement them - we typically recommend starting with “basic” and “proven” metrics first.
• GLS IHL Metric Management we can harvest, analyse and report the performance of a team or a workflow and help you to i) interpret the results, and ii) implement optimisation strategies.
On the GLS Legal Operations Centre, you can access the solutions you need to support your move into performance metric based IHL decision making.
• All IHLs must be able to explain team performance by reference to hard data
In Part J, we will look at a critical “binding agent” concept for IHL Transformation – namely a framework for IHL decision making that will place all IHL decisions into a strategic transformation context:
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