Proper measurement is a prerequisite to proper management. You need clean, accurate data before you can be data-driven. If you’re not collecting data now, you’re already behind. The first step towards running the legal department like a business and being data-driven is to decide why you’re collecting the data and then actually start collecting the data.
Take, for example, an initiative to automate the NDA process. When building the business case for an investment in technology like this, you often need to quantify the return on investment. But what do you measure and why? One easy measurement is the length of time between request and completion. This metric alone might have limited informational value. Time to completion tells you nothing about the volume of resources expended or what resources are being consumed. So you refine your measurement to capture the actual time expended by external resources, law department resources and company resources.
You then face the challenge of valuing those resources. External resources normally come with a price tag. But what is the value of an internal resource? These are all additional necessary metrics when building your business case. There is an argument to be made that the proper way to value a member of the legal department is by subtracting their cost to the company from the savings realized by not sending the work to an external provider. But it is just that, an argument, one choice among many to be made in constructing and construing data.
Once you have determined what, why and how to measure, you still have to measure long enough to amass a reasonably sized data set. At that point, you are likely to find that some of the choices you originally made were less than perfect. So you tweak and cleanse the data based on lessons learned and establish a baseline. At this point, you can begin to project the return on investment of your proposed innovation—here, the automated NDA.
Don't let this imprecision in capturing data keep you from starting. The longer you wait, the longer it takes to get good data that can drive strategic behavior. Once the process is stable, the metrics can be measured routinely and you have confidence in your data integrity, cost savings become part of your legal department's DNA and you can be off to the next initiative.
We have been able to quantify savings of more than 300,000 internal hours and $2 million in external cost savings by implementing an Instant NDA process that has shrunk turnaround time from up to five days down to about an hour. Without measurement, the project could not have been perfected and would not have played a material role in getting future projects funded.
Data collection provides the necessary facts for continuous improvement, demonstrates gaps in the process, invigorates those who participate in the redesign, allows you to speak the same language as your business partners, gives legal credibility, provides a mechanism to implement innovative new legal tools across the enterprise and can drive strategy and close gaps that were hidden prior to the data capture.
Some data-driven projects are simple; some are complicated. We recently had conversations with two Fortune 50 legal departments that had the same story to tell. They had set out to turn their mountain of outside billing data into information, data organized in a manner that is useful in cutting costs, maintaining quality and driving partner programs. It took them each five years to clean and harmonize their data feeds. They had to create special teams to build custom dashboards because off-the-shelf products did not meet their needs. These projects have surfaced information that was previously inaccessible and made immediately accessible the kind of information that used to demand months of data analysis.