Performance Management

Article sets out descriptions of 11 key performance indicators (KPI) arranged in four categories
Client-Facing KPIs: strategic impact, results, innovation
Business Process Improvement KPIs: operating practices, service, technology
Talent KPIs: knowledge transfer, competencies
Financial KPIs: total legal spend, unit costs, external counsel
Objectives and targets should follow each KPI.

Clients want to measure the effectiveness of legal services by introducing “metrics”. They want an answer in terms the company can understand. The article applies Thomas Davenport’s 6 dimensions of knowledge workers as a guide for setting goals and getting results from legal counsel. Knowledge workers crave autonomy, it is usually difficult to specify detailed steps and the flow of knowledge compared to other types of work and serving commitment to anything depends on “fair processes” to get there. Nevertheless, it is possible to carefully assess workflow and workloads of law departments and their law firms to eliminate work and advisory functions that are operational support but of little strategic value.

This e-book reprints a portion of our articles from our on-going series of articles in the on-line magazine Legal Business World. This second, short 47-page volume contains 2 articles on law department organization and resources, 4 articles on Performance and Metrics, and a final 2 articles on benchmarking, surveys and retreats.

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.

There are at least three basic competencies which corporate counsel should master by the time they reach their 10th year of practice: efficiency, relationship-building and legal project management. Proficiency in each can be improved with the right protocols and training.

Non-strategic work usually gets backed up in law departments – or so it seems. In fact, backlogs typically average 3 days before input is needed from a stakeholder. Work distribution spreadsheets provide clarity about how in-house counsel spend their time. Rigorous work intake criteria, applied judiciously, encourage business units to be better prepared when consulting Legal. Coupled with quarterly planning, the law department can better influence its workflows and workloads.

The article suggests 5 basic elements that can serve as pillars of performance for law departments. These include the extent of “strategic impact” of the department, specifically the extent of contribution to the strategic priorities of the organization. The second pillar is “intellectual capital” with initiatives to leverage the capabilities of lawyers at all levels of experience. The third pillar of “innovation” is a pre-requisite to ensuring that the law department stays ahead of the demand curve for its services. Managing the “Costs” of internal and external counsel is the inevitable fourth pillar. “Leadership” by every lawyer in the department is the last pillar and a pre-requisite to performance in the other four pillars.

The Association of Corporate Counsel (ACC) released a comprehensive report benchmarking 15 legal operations. The law department maturity model uses three stages to survey the External Resources Management function. Only 11 % of the 316 participants reported they were in an advanced stage for this function. Few law departments made significant use of alternative fee arrangements or of metrics applied to pricing. The article discusses the need for pricing expertise, four questions to include in RFPs for legal services and how to approach alternative fee arrangements.

The article evaluates Counsel Links’ seven characteristics for good metrics. A four-part package to underpin proper metrics must include the department business plan, its budget, and the objectives and development plans for lawyers. However, only about 10% of legal departments have sufficient data that can be analyzed in a useful way.

Innovation as a stand-alone KPI accelerates discussion and action that can make a strategic difference to the company. Examples include greater self-sufficiency of business units, moving away from hourly to performance-based fees for external counsel, and raising the proficiency of the law department’s lawyers regarding leadership, business negotiations, and project management. The best innovations are dedicated to corporate projects and business unit priorities.