Forward-Thinking Law Firms Incorporate Metrics

In my last blog, Jason Anderman of the Law.com network discussed savings and profits and how cost-predictability can make all the difference in the world. When you’re looking at how companies measure law firms these days, such efficiency can be sustained, he insisted, by using knowledge management and process improvement efforts.

Here, Anderman follows along the same lines and expands on the topic of creating a compelling presentation while interviewing a few folks who regularly evaluate and hire law firms.

Speaking on best-in-service models, Anderman asked Sabine Chalmers, Chief Legal and Corporate Affairs Officer, Anheuser-Busch InBev, what metrics has to do with it.  Chalmers answered that they will become increasingly important in law as they already are, in other aspects of business. “In marketing and sales,” she said, “they…judge…based on statistics, whether you are considering brand health or deployment of advertising resources.”


Although it’s more difficult to measure law services, they will come into line with that approach, too, eventually, Chalmers noted.  It’s become the norm of late for procurement departments to manage counsel budgets, and they use metrics.

What might throw a wrench into the process is the fact that lawyers are generally wary that legal services are not well understood by corporate procurement.  “The way to bridge the perceived gap between procurement and legal is to have an informed conversation” so that the procurement managers and lawyers are on the same page, Chalmers observed.

There are a few services that can be treated as commodities, to make them more measurable.  “Legal services that can be commoditized, such as routine contracts and debt collection, offer opportunities to partner with procurement teams…”  This will allow procurement to arrive at the most cost-effective, high-quality legal services model.

But how to arrive at “best service” if you’ve not yet developed a gold standard to compare against? “[T]here is a scarcity of good and reliable benchmarking data regarding law firms (beyond simple spend, turnover and geographies measurements)…” and what is out there is hard to pin down and even harder to come by.  More advanced data and education would help, Chalmers said, but a simple survey isn’t sufficient.

“You need an organization to perform this task and you need participants to collect data over a specified time period.”   Chalmers mentions she’d look twice at a firm that outsources some of the more standard work to “more efficient” areas.  “I would definitely give firms top marks for trying to innovate in such a manner and for using knowledge management and training.”

Steve Harmon, the Associate General Counsel for Cisco Systems, Inc., intimated that it all stems back to the outdated concept currently held of legal departments. They have, he says, changed.  They no longer function as a gate-keeper; instead they are now more of an adjunct, helping the business achieve its goals.

Very little is black-and-white, says Harmon. Instead, it’s all a matter of balancing risks.  So, in order for clients to understand those risks, they need “metrics that improve the quality and define the value of our work so we can best balance risk”.

When dealing with discrete transactions, you need to have a grasp on cycle time. (He gives the example of how important it is for  sales attorneys facilitating such a core business function to focus on the time involved.) That’s one metric. Another important metric is predictability.  In this area, metrics would track “the disposition of matters” and how much work was involved.

“[T]he ability to predict the outcome of litigation is essential to formulating an appropriate alternative fee,” he explains.    Much of what attorneys do is “more repeatable” than they think, he says.  “Anywhere you can create categories of work that can be measured and consistently evaluated, there is an opportunity to outsource that work to a legal services provider in an efficient manner while improving quality.” To read more, see: http://www.law.com/jsp/cc/PubArticleCC.jsp?id=1202480840994

-EM

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