Re-Defining Service Levels
Author: Richard Stock - Lexpert, April 2012
Business units seldom question the professional competence of the legal department. But they frequently complain about turnaround times and responsiveness – even when the responsibility for the delay is with the business unit. It is normal for business units to expect timely service, or at least some semblance of predictability for the completion of legal matters and their phases. However, requests for service and supporting documentation too often arrive at the 11th hour.
Despite this, experienced consumers of legal services and experienced members of the legal department seem to manage well enough without a formal and documented set of operating practices and performance standards. But this can hardly be characterized as a cost-effective process and the most effective use of legal resources. Improvisation and bursts of extra work rarely address the backlog of work. They generate stress because of the urgency of the work and 50-hour weeks to meet deadlines. They certainly leave little time for the legal department to take on special projects and to make a greater strategic, developmental contribution to the organization.
It is the nature of business to have to deal with crises and last-minute requests. Legal departments are on the receiving end and do not control the gate when it comes to workflow. But there are measures that can be introduced to level out the workflows and to generate capacity. The first of these is a guideline or policy which lets managers and professionals know “when to call their lawyer”. There are benefits to introducing such a guideline, but few legal departments have them in place. First, it manages risk for the company when preparing commercial agreements and managing litigation. The risk can be financial, reputational or legal. Some guidelines are quite explicit about mandatory consultation when certain criteria are encountered.
The second benefit of guidelines is cost-effectiveness because early involvement of the legal department allows priorities to be juggled and wasted effort kept to a minimum. So, guidelines typically suggest early involvement of the legal department when standard conditions of contract are not likely to be used, claims or incidents are likely to be litigated, parties to negotiations are from another national jurisdiction, or generally when the business unit has doubts about the company’s legal position. Forty years ago, my manager advised, “Better an overlap than a gap.”
Introducing a guideline on “when to call the legal department” does not mean instant compliance by the business unit. Some business units are reluctant to “slow down business” by involving legal too early. That is where service level agreements (SLAs) play a role. Fewer than 10 % of legal departments have these in place with their primary consumers of legal services. Event-driven and relationship-based legal services are the norm. Multi-year SLAs typically contain a few sections. They define the stipulated scope of services (type, frequency, volumes, etc.) needed from legal. They set out a few operating principles: triggers for early involvement of legal a business unit commitment to providing clear instructions and supporting documentation, anticipated timelines, and a way to have the relationship lawyer participate in business meetings once or twice a month. The SLA identifies the legal team and relationship lawyer, and it specifies who in the business unit can / should call the legal department. Some agreements propose quarterly briefings and performance evaluations as a way to keep everyone focused.
Business units will go along with all of this when they can get predictable performance, i.e., service and results from their lawyer. It helps to have explicit standards for service. The relationship lawyer can always respond to a quick question by phone or e-mail within 3 – 4 hours. For something a little more involved, say a matter that requires less than 25 hours of legal work, the business unit should be able to have it completed within 10 business days. More significant projects can take months to complete. These should be the object of legal project management (LPM) by the legal department. The resources for each phase and task are defined along with the planning assumptions and time frame for each. The business unit should be asked to sign off on the legal project plan. This helps to make them an informed and accountable consumer of legal services.
Is it too much bureaucracy to introduce guidelines on when to call the legal department, service level agreements, relationship lawyers and service standards? Like orthodontics, it takes judgment to know if the pain worth the gain. Business units are always in a hurry and most lawyers will be reluctant at first. Give it six months of across-the-board application, and most stakeholders will believe the new measures have always been in place.
Re-defining service levels makes business units and lawyers more efficient. More importantly, it makes them more effective contributors to the company. Key performance indicators for legal departments are increasingly outcome-oriented. Improving efficiency by becoming the smarter, better, faster legal department is assumed. The real question is, “What difference do the lawyers make?” The answer is in helping the business unit deliver the results called for in the corporate business plan. A more disciplined approach to consuming and providing legal services translates into greater value for the organization. Progressive legal departments are doing this today.