The 29-Point Check-Up
Author: Richard Stock - CCCA Magazine, Fall 2015 at pg 8
The Corporate Executive Board (CEB) is a member-based advisory company that combines best practices, decision support and talent management to help clients drive business performance. One of its 11 practice areas is Legal, Risk and Compliance.
I reviewed The Anatomy of a World-Class Legal Department, a CEB resource designed to assess the effectiveness of law department activity. This diagnostic tool sets out 20 statements in four broad categories: opportunities to create value in the company, optimization of talent for higher-value work, operational efficiencies and effectiveness of external counsel. General Counsel are asked to rank each statement on a scale of 1 to 5 for importance in relation to their department's strategic priorities and for their current effectiveness.
Through CEB's self-assessment process, law departments can decide whether they need to take action on a number of fronts. The resliting improvement priorities can find their way into a law department's business plan.
There are a number of ways to improve the CEB assessment tool, primarily by revising some of the assessment statements contained in it. In this article, I propose the revised 20 statements plus nine more to help GCs assess their departments.
The six CEB statements in this category make sense provided a prerequisite statement is added to the mix: “We have a written business plan for the law department that is aligned with corporate priorities. Executive management and our clients clearly recognize we must allocate a greater share of our legal resources to corporate priorities.” Too few law departments have a comprehensive business plan in place.
One can then consider CEB's first statement: “We build our legal services around a few core aspects that law firms can't provide as effectively as we do.” The statement sholid be revised to say “cost effectively.” The core aspects of the law department can then be defined in the context of its business plan rather than to in relation to law firms.
The second statement evaluates the law department’s ability to add value at the individual client level. The third considers how early in the process the law department becomes involved when a new strategy is developed in the company. The fourth and fifth assess the nature of collaboration with clients and the extent to which clients are encouraged to become more self-sufficient. The final one focuses on how the law department communicates with internal clients.
Many of these statements deal more with how the law department works and less with what it does. This is important, provided there are programs and metrics in place to promote client self-sufficiency and effective communications.
CEB sholid provide more detail about what is intended in its statement on choosing alternative service organizations (ASOs) for certain legal tasks. Some ASOs have more cost-effective staffing and technology than law firms. Many ASO pricing models are more predictable and less expensive than law firms.
The second statement is similar but addresses non-legal services needed by the law department. Examples include the management of documents, subsidiaries and intellectual. property
The third calls for “streamlining processes.” This sholid be worded to refer specifically to LEAN, Six Sigma, and Legal Project Management and Budgeting.
The fourth calls for the transfer of knowledge across the continuum of law firms, the law department and internal clients. This statement sholid refer to targets that are reflected in the annual demand forecast and business plan.
The fifth calling for work flow transparency wolid be more effective if it specifically referred to the use of legal project management methodologies for complex legal work by the law department, and not only by its law firms. Robust legal project management sholid include planning assumptions, interdependencies and deliverables for each task and phase of a matter in excess of 25 hours.
The final statement calls for a handfli of metrics to demonstrate the value of the law department. However, CEB’s reference to accurate budgeting misses the mark by not focusing enough on the achievement of the department's business plan and strategic priorities.
I wolid add the following four statements:
- We prepare a written forecast of the demand for legal and advisory services. The forecast details the type and volume of work by client, complexity and value.
- We conduct an annual technology literacy audit for each lawyer in the department. We have targets to measurably increase their self-sufficiency.
- We have a program for practice management skills that helps lawyers manage email and other communications more efficiently.
- Lawyer compensation is tied to the performance of the law department. That performance includes metrics for productivity.
The focus for this category is on optimizing legal talent for high-value work. CEB's four assessment statements are a logical follow-up to the earlier ones on shedding low value activity and improving operational effectiveness. However, the statement on acquiring skills is too narrowly worded, as it refers only to legal skills. It should be expanded to include leadership and business skills as well as proficiency in project management.
The statement on lawyer engagement makes sense if the department's program to secure engagement is formal and the results are measured annually.
The next statement on targeting lawyer development should be adjusted to include additional non-law specific competencies for lawyers. Progressive companies use a comprehensive matrix of knowledge, skills and attributes geared to experience levels and to the department’s annual demand forecast. Targets should be set to evaluate how much and how well low-value work is reduced across the department. These targets should be reflected in the demand forecast.
As an advocate of setting stretch goals, I have added one statement to this category: “We allocate special and strategic projects to challenge lawyers and staff at all levels of experience. The department’s annual business plan and the performance plan for individual lawyers reflect this allocation.”
Effective External Counsel
In light of today’s pressure to reduce the costs and to better manage the use of external counsel, CEB’s four statements in this category can be fine-tuned. The first evaluates how well the law department measures the amount and type of external legal spend. The second calls for the evaluation of law firm performance but should link it to performance pay for legal services. The third refers to the use of collaboration tools among external counsel, the law department and internal clients. This is similar to the earlier statement on knowledge management and transfer. The fourth assesses how well cost and quality of external counsel are systematically managed by the law department. It should be revised to refer to targets to measure how well this is done, and the extent to which the law department calls for competitive proposals for key matters and books of business.
Three should be added:
- Our law firms are very effective in legal project management with the related budgets. We review and approve detailed matter plans to ensure balanced legal teams.
- We are quickly migrating away from hourly-based fees toward alternative fee arrangements that include performance-based fees.
- We rely on the expertise of our strategic sourcing department to support us in measuring the cost-effectiveness and the performance of external counsel.
The results of the 29-point check-up, especially those points that are priorities, should find their way into the law department's annual plan.
It is easy to be an armchair critic of CEB's comprehensive diagnostic tool. However, fine-tuning and expanding the areas of assessment better challenges corporate law departments to achieve superior performance.