In the first five articles of this six-part series, HBR Consulting has offered perspectives on ways that law departments can drive cost savings, increase efficiency and add value through the effective engagement and management of outside counsel. These articles have covered a variety of topics, including leveraging benchmark data, the value of data in the rate review process, an inside lawyer’s role in the business of law, matter level budgeting, and implementing and managing alternative fee arrangements (AFAs). This sixth and final article in the series will touch on an element that is a component in all of these: defining and measuring success.
Measuring success is the all-too-often overlooked piece of the initial implementation of these types of programs and initiatives. This article will focus on defining success and the role that a solid technology platform can play in measuring success and providing the data needed for leadership to make informed decisions.
How do we measure the effectiveness of our initiatives?
Anyone who has been keeping up with trends in the legal world has no doubt heard about the increased pressure that law departments are facing to become more efficient and reduce costs. In response to these pressures, law departments are taking on initiatives to better manage:
- Internal resources through workload assessment and allocation optimization
- Outside counsel through the development of management programs, preferred provider panels and convergence efforts
- Overall spending by shifting work to lower cost resources including legal process outsourcers and e-discovery service providers.
Despite the significant investments being put into these efforts, we continue to hear the same question: “How do we know whether these programs are actually delivering the anticipated benefits?” Law departments are struggling to measure and track the results of these programs. This is an important question, and one whose answer should be defined in the initial phase of any of these initiatives.
While the definitions of many of the programs and initiatives mentioned above continue to become more concrete, and the related best practices become clearer, the definition of success will continue to vary from law department to law department. For example, some law departments implement preferred provider programs to reduce spend or deepen relationships with a core group of firms, while others are interested only in reducing the number of firms engaged and simplifying the process of managing their firms. Some departments implement AFAs to drive down matter costs, while others are focused on increasing budget predictability and reducing quarterly budget variance. The first step a department needs to take when implementing these programs, or determining the effectiveness of existing programs, is to define what success means to them.
Tracking the right elements
Once program success has been defined for your department, the next step is to look at the related people, process and technology, and determine which actions are required to align those three key elements with the defined goals of the program. While many organizations are doing a fine job defining the program roles and responsibilities for internal and external parties, they often miss out on one key component: ensuring that they are utilizing process and technology to properly track, monitor and measure the success of the program. Whether it’s firm reviews at the end of each matter in a preferred provider program, or shadow billing an AFA arrangement, it is important to any program that the drivers of success are captured in a way that allows for sufficient insight into the results of the program.
In one example, a client who was looking to optimize its approach to litigation settlements compiled five years of historical data related to its litigation to analyze the trends. They found that for a certain type of high volume litigation, if they didn’t settle the matter within 13 months, it was likely to continue on for at least 24 months, and the results were often the same or less favorable, all while incurring higher costs. Armed with this information, they launched a “Timely Settlements” program. They educated their internal counsel and developed a formal arrangement that incentivized outside counsel to settle those cases before they hit the 13th month. These goals were worked into their preferred provider program, formal measurements were defined, and the related data tracked for each case in their matter management system. Their firms were scored on how well they performed against goals, and with the proper guidance and incentives, the company began settling new and existing matters faster, and at an overall lower cost than they had been historically. This is a great example of defining goals, tracking the right data, and using that information to measure success.
Utilizing the right technology
Just as important as knowing what needs to be tracked is having efficient, easy to use tools to track and report out those elements. Many corporate law departments are still facing issues with disparate data and too many systems tracking related information. In the absence of enterprise tools, law departments added point solutions one-by-one over the years, and many now find themselves with separate systems for e-billing, matter management and document management, while still using spreadsheets or home-grown databases to track important information like settlements and dispositions. In these situations, it is difficult to ensure data is being captured consistently across systems and is therefore challenging to quickly generate reliable reports. It’s important that organizations look at how their systems are integrated, and consider the benefits of consolidation into a more modern, platform based, enterprise legal management solution.
Remember, to determine the effectiveness of your internal and external facing programs, the key steps are: define what success means to your department, determine the data elements that are required to measure progress against that definition of success, and ensure you have the proper tools and technology in place to capture and report on those data elements consistently and effectively. By following this approach, you will be able to have confidence that your efforts paid off and continue to identify areas for operational improvement and improved efficiency.
Stay tuned for HBR’s next InsideCounsel.com series, where we will provide insights and examples related to aligning your law department strategy with the corporation’s strategic objectives.