A new LexisNexis CounselLink study conducted in partnership with the Corporate Legal Operations Consortium (CLOC), indicates corporate legal operations professionals rank financial metrics as most important to the legal department. Participants were asked to rate 15 key metrics on a scale of 1 to 10 based on their level of importance to the business.
Each key metric outlined in the study supports one of the following three legal department objectives:
- Financial Control
- Outcome and/or Risk Management
- Operational Efficiency
While all of the metrics rated as important among survey respondents, with an average rating of 7.4 out of 10, three relating to financial control were voted most important:
- Total Department Spend Versus Budget
- Outside Counsel Spend
- Budget Forecast and Accrual Accuracy
Digging deeper, the study asked participants to rate their level of satisfaction with reporting on the various key metrics.
While they’re overall unsatisfied with their ability to report on the 15 metrics surveyed, with an average rating of less than 5 out of 10, the majority of the financial metrics surveyed rated higher than that average.
According to the report, there’s good reason for the uptick in satisfaction ratings for most financial metrics:
“Our analysis of the Metrics Importance and Reporting Satisfaction scores reveals a strong correlation between importance and satisfaction. Respondents are more satisfied with their ability to report on metrics they think are highly important and less satisfied with their ability to report on metrics they view as less important.”
There were some exceptions to the rule, however. The report shows some outliers, or metrics for which the degree of satisfaction in reporting is disproportionately lower than the perceived importance. Such is the case for two metrics, in particular:
- Cycle Time. 57 percent of respondents say this is a highly important metric, yet only 7 percent have a high level of satisfaction with reporting it.
- Satisfaction with Law Firms. 55 percent say this is a highly important metric, but only 12 percent have a high level of satisfaction with reporting it.
In these instances, the report determines legal departments and their vendors should strive to improve their reporting capabilities.
When asked to rate the legal department’s level of automation for reporting on the 15 key metrics, the study concludes there’s a great deal of effort involved in collecting data for the various key metrics, with very little automation available for reporting them.
“As legal departments take on an increasingly significant role in supporting corporate objectives, their reliance on metrics and analysis will increase in kind. Knowing which metrics to follow and having the ability (preferably automated) to report on them in meaningful ways will thus become an even more critical part of the legal operations professional’s contribution to the enterprise.”