ELM Solutions’ white paper “The Call for Innovation in the Law Department” is focused on improving efficiencies and controlling costs as a pre-requisite to innovation. It is difficult to agree that this enough to create strategic value for the company. While helpful, the paper is silent about a critical element of a law department’s value — results.

You get what you measure. A key performance indicator (KPI) for “Strategic Impact” challenges the law department to choose its priorities, show more leadership, offer more resources to corporate business priorities, and re-think its critical competencies for senior counsel.

Inside counsel operating as the hard-working “artist-in-residence” is not a sustainable model. For the most part, it is not strategic in its approach and there are not enough hours in the day. Innovation should be a stand-alone performance indicator for the law department, because it focuses on strategic initiatives more than on operational support in the delivery of legal services. It requires leadership with a sensible allocation of resources.

For the most part, the best innovations are externally focused. Commercially astute solutions are well-received. A second performance indicator measuring strategic impact with select initiatives underscores the contribution of the law department. It requires innovation and out-of-the-box thinking by the General Counsel.

Four management challenges are being addressed by the law departments of progressive companies:
• Coverage, organization and resources;
• Efficiency, workflows and workloads;
• Value performance, metrics and KPIs; and
• Legal spend and costs.

Five steps are described
1. Determine the department’s activity levels;
2. Select a handful of performance indicators that are part of the value proposition;
3. Manage work traffic in the department;
4. Assign and align the right amount of legal and paralegal resource with each user group; and
5. Actively manage the cost of external counsel in two ways.

Six processes support process improvement. The first three focus on the customer for value engagement. They include value creation, figuring out how the work gets done and removing waste. The fourth requires evidence-based decision-making, fifth is people empowerment, and the last is sustainable process improvement.

Process improvement will be successful when client behaviours change to require less legal service and more self-sufficiency from clients.

Up to 50% of the operational support provided by law departments to business lines can be standardized or kept with business units. There are 5 steps to preparing a good business plan for the law department: alignment with corporate priorities, detailed work estimates, work allocation protocols, improving practice management, and metrics. Accurate forecasts and good business plans improve the value of the law department.

A 4-part assessment tool to guide law departments is profiled and critiqued. It covers opportunities for creating value in the company, optimizing talent for higher value work, operational effectiveness, and the effectiveness of external counsel. The article comments on the 20 segments supporting the assessment and suggests several new assessment questions.