Shaping Strategy and Metrics for the Legal Department
Richard Stock - CCCA Magazine, Vol 4, No. 1 (Spring 2010)
John Frank, VP, Deputy General Counsel and Chief of Staff for the Legal and Corporate Affairs Department at Microsoft, presented the Strategic Framework and Foundational Metrics of his legal and corporate administrative law department at a small meeting of General Counsel and Associate General Counsel in early December 2009. No company in the audience had the scale and resources to compare - more than 400 lawyers and hundreds of other professionals and staff for a total in excess of 900. The departmental budget, including external counsel, approaches $ 1 B. Everyone readily understood the strategic significance of the legal / IP portfolio to Microsoft's business success. More importantly, Frank offered practical advice about strategy and metrics applicable to law departments of all sizes.
The Legal and Corporate Affairs Department is large enough to have dedicated resources looking at the company's strategy, and then to define goals and develop scenarios over a period of months every year. The department's Strategic Framework consists of a 3-year strategy with defined outcomes that summarize a course of action assembled on a scorecard with 30 indicators spread across seven headings that are directly tied to goals and outcomes of the business. Thus, Economic (four indicators), IQ and IP (nine indicators), Software and Additional Services (four), Citizenship (one), Inter-Operability and Anti-Trust (four), Operational Excellence (three), and People and Culture (five indicators).
Frank explained that legal strategy must be integrated with Microsoft's enterprise strategy, because "effectiveness is doing the right things". Strategy development requires considerable work, if it is to be relevant to the business units and contribute to the company's success. While there are many systems of strategy development, the key is to pick one, make it manageable and to use it across the department. Several features to remember about the There are at least three essential features to look for in a Strategic Framework : they must shape priorities, influence the deployment of legal and other professional corporate resources, and support reporting of the department's contribution outside of the department.
The framework must be aligned and robust. Microsoft's scorecard is aligned with business group and corporate strategies, it is compiled quarterly and senior leader performance evaluations are directly tied to achievement of the scorecard. There are strategy development systems of all shapes and styles, and most can be made to work well in law departments of different sizes and types. Frank emphasized the importance of properly resourcing "your strategic bets" with the right talent and with the money to do the job. By "strategic bets", he meant those select goals and targeted outcomes taken from the 3-year strategy in which the Board and executive management anchored the next level of growth and success for the company. In this case, the right talent is a combination of internal and external counsel. Finally, Frank added that communicating the game plan across the department, and selectively within the company, are essential to do "with a predictable rhythm".
The "foundational" metrics for the department are not strategy-related per se. Instead, they consist of familiar components in support of balanced management of the law department.
with its primary drivers of responsiveness and timeliness, in this case using web-based Sharepoint and the participation of 90,000 employees
with a "finance dashboard" using summaries and detail at the matter level and at the firm level
employee satisfaction and organizational health
using a host of metrics used elsewhere in the company; among these are workgroup effectiveness, job satisfaction, flexibility, teamwork and collaboration, performance management, the contribution of the immediate manager, work-life balance, and career development.
Many companies will combine the result of the eight indicators for employee satisfaction to create an engagement index. Microsoft calls its compilation the "Workplace Health Index" (WHI). Pressed for more detail, Frank explained that the initiatives for workgroup effectiveness are currently focused on improving team and project results. In part of the business, this means counting median business days for cases closed. In addition, it means business process re-engineering that relies on six sigma programs and Microsoft tools to streamline how business units can best use the department and to reduce the amount of time lawyers need to spend to get things done.
Does a Law Department Need All of This?
Every law department needs to be strategically aligned with the business. It is no longer enough to reduce the cost of the legal department compared to those of law firms or to last year's total legal spend. It is not enough to have satisfied internal users ("clients"). To be effective, a law department must be strategic. And to be strategic, a department must be relevant ("aligned") and must deliver results against a game plan set out in advance. Many departments today are well managed. They will have most of the foundational metrics (client satisfaction, budget performance, and employee engagement) in place and they will perform well on those. But none of this makes them strategic contributors.
Is it enough to look back on a year and single out the events, issues, and transactions that were noteworthy, and put this into the annual report? Not if the department and its members want to have more impact than the year before. Perhaps 30 indicators spread across seven categories are too many for most departments. Still, it would be easy to select 10 indicators for a scorecard in a company of less complexity than Microsoft :
at least two affecting the bottom line of the company, likely measured by the success of several business units
perhaps three or four
people and culture
at least two, especially as it affects the capabilities of primary users or law firms
resolution of visible disputes
at least one or two
Each of the categories and accompanying goals and metrics should find their way into the Board-approved strategic business plan.