“You can’t boil the ocean,” said Kris Satkunas, director of strategic consulting for LexisNexis CounselLink, during a webinar focused on driving operational efficiency in the legal department. Instead of trying to accomplish everything at once, she suggested honing in on a handful of metrics that clearly identifies what is most important to the legal department.
“The legal department is a cost center we have heard,” Satkunas said. “Using data related to cost savings can help demonstrate the value of the legal department to the organization.”
During the discussion she offered three examples of real-life legal departments in various industries in which the legal department used a well-defined, systematic process to better manage its outside legal partnerships in the areas of price, panel selection, and matter budgeting. Here’s a closer look at one anecdote she shared:
The Insurance Company
A large insurance company sought to put a data-driven law firm assessment process place by using a scorecard approach to better determine pricing of matters. In order to accomplish this, the legal department first identified what attributes were most important to the legal department in an outside counsel partner. In doing so, the legal department realized that some of the attributes it deemed to be most valuable were more subjective in nature, such as:
- How well does the law firm communicate with the legal department?
- How creative is the law firm in its approach?
Once the legal team settled on a handful of key attributes against which to measure the department’s outside legal vendors they quantified them on scale of 1 to 4 to develop a scorecard. As a result of developing a scorecard approach, the legal team is now able to draw comparisons and make more data-driven decisions on how well their legal vendors perform in these areas. In essence, the legal department now uses a systematic, closed-loop process by which to measure outside counsel partners and makes direct comparisons on matter pricing. In addition, it uses the feedback it gets from the process to share with its outside legal vendors and let them know where they stand. As an added bonus, the legal department’s relationships with its outside legal vendors are improved and the department is headed towards a much more data-driven vendor management process.
“Select the best metrics that are most important to you,” said Satkunas.
3 Drivers of Operational Maturity
According to Satkunas, there are three drivers of operational maturity in the legal department:
- Enterprise Legal Management (ELM) solutions that route information and documents related to legal matters and automate tasks that people might otherwise have to manage manually, is an example of how technology can be used to drive maturity and allow staff to attend to more core work responsibilities. In addition, ELM solutions can help the legal department communicate more efficiently and effectively, internally and externally with their law firm partners.
- Analysis is another essential part of the maturity process. The discovery and communication of meaningful patterns of data can be used to make more informed decisions related to matter cost against the legal budget. By looking at consistency of outcomes, legal departments can better understand and forecast the various phases of the matter life cycle.
- Process. Quite simply, process refers to the number of steps or actions the legal department needs to take to reach a particular end. Determining budgets or assessing outside law firm panels are both examples of actions that require a detailed process.
Bringing these three things together can get the legal department to the best place, Satkunas says.
Although Satkunas says there is no right or wrong place to be on the maturity scale, she encourages legal departments to advance as close to the maturity side as they are ready to go.