Is your legal department doing great or just so-so?
The presentation I moderated at the ACC Annual Meeting drew a capacity crowd because of our great panel that included thought leaders from a large law department, Molly Dodge from Capital One, and a small law department, Jim Sullivan from FMC Technologies, as well as the general counsel of the ACC, Jim Merklinger. The topic tapped into what keeps many in-house counsel up at night – how do we know if our law department is doing great or just so-so?[youtube=http://www.youtube.com/watch?v=scdzlEBf3FA]
Here are key recommendations that we heard today from the experts:
1. When it comes to showing what the law department does for the company, “trust me” doesn’t work anymore. You need to show numbers that prove your value. We heard stories about management meetings in which all of the other departments had charts and graphs showing their efforts on behalf of the company, information that was conspicuously absent from the law department. In-house counsel are now expected to have hard data to back up their claims that their work is valuable. For example, in-house counsel are now creating detailed reports to prove that they are generating savings in legal spending, handling more work more efficiently and effectively reducing the company’s legal exposure through preventive training.
2. Get all of your work/lawyers/firms into one system. You can’t manage what you can’t see. The panelists stressed the crucial first step of getting all of your legal projects, both internally and with outside counsel, into one system run by the law department. This should include e-billing and online access from outside counsel so that all of the data that you need regarding spending, budgets, status, deadlines, documents and more is flowed in directly, without the law department having to re-enter data. The sooner you put a system in place, the sooner you’ll have good data that you can use.
3. First come the internal metrics. Even if you’re just using a spreadsheet, you can begin to analyze trends in spending, legal inventory, exposure and more. The panel discussed specific internal metrics that have helped them to establish baselines for key developments in the legal landscape of their companies, as well as identify areas to improve performance.
4. Should lawyers do this? The panel provided two very different responses to this question. One law department saves standardized reports for the lawyers to run and analyze on a regular basis, making it easy for each lawyer to analyze how they’re doing and to take responsibility for addressing the developing trends that they find. The other law department, in the interest of removing as much administrative work as possible from their lawyers, has non-lawyers create, run and analyze reports for the department and its practice groups, based upon input from their lawyers. In addition to saving the lawyers’ time, this approach ensures consistency across a larger legal department, and re-purposes the special knowledge and expertise that the staff develops over time.
5. Next comes external benchmarking. You may have held your firms to a 1 percent rate increase last year, but if the rates that you’re paying are in the 95th percentile for comparable law departments, you may have a problem that you need to address. The panel and audience discussed specific sources of external benchmarking data that permit law departments to compare their performance with their peers, including the online resources that are available to ACC members (both ACC and non-ACC sources were described in the course materials). Most of this benchmarking data is based upon periodic surveys of law departments.
6. The wave of the future – analytics from online systems. The reliability of the survey data discussed is a concern, given the difficulties of keeping the information current and of knowing whether the survey responses received are in fact accurate. These shortcomings are solved by capturing data directly from online systems where legal work is being handled (for example, taking hourly rates from the legal bills that are paid). We saw at this session how Serengeti has aggregated the data from more than 500 law departments and the more than 20,000 law firms who handle their work – providing benchmarking comparisons regarding rates, volume of work, staffing and other key metrics that law departments use to measure their performance. Such benchmarking data is available through reports, as well as in specific workflows, such as tools that analyze the reasonableness of law firm rate increases. As more companies work online with their firms, this rich source of data is immediately available to all of the law departments who use the system, enabling the use of current data to show the comparative value that they provide to their companies.
If you would like to learn more about resources that can help you and your legal department become more efficient, productive and demonstrate ROI, visit serengetilaw.com.