Alun Swift, head of marketing and revenue operations at Apperio, started the roundtable with a simple stat from the Deloitte 2020 Legal Operations Survey: 74 per cent of in-house lawyers felt they did not have clear and accurate measures for work performed by internal and external sources.
In lots of cases legal teams feel left behind by other departments in businesses when it comes to data analytics. Other departments have great key performance indicators (KPIs) that generate really powerful data driven dashboards.
“For legal teams it is difficult to know where to start, our work doesn’t lend itself to data driven performance measures,” bemoaned one of the panellists.
Legal teams need to justify themselves to the board
Legal teams are competing with other departments for funding from the CEO and CFO. Given that the other teams, such as the finance and operational teams, are comfortable using numbers, they have advanced KPIs that can be put in flashy dashboards. This give them a head start in budget discussions.
“We are looking at budgets for next year and if you can’t demonstrate your value those discussions can be quite awkward,” shared one panellist.
How to measure legal performance
One of the panellists recently installed software to track the contract requests that were coming into the legal team. This had two benefits. It made the system more efficient as the app asked questions about the case before sending it to the correct lawyer. It then also enabled them to track the number of hours that were spent working on these contracts.
One issue a panellist raised was that, although tracking time spent working is useful, it doesn’t provide a measureable figure on the value added to the business. A suggested solution to this was to work out how much money it would cost to bring in external lawyers to do this work instead. That number reflects how much internal lawyers are saving the business. From one panellist’s experience “using external lawyers can be five times more expensive”, therefore being able to keep this work internal saves the business a large amount of money.
For litigation and risk lawyers, an easy way to track their value add is to look at how much money they have saved the business from potential liabilities. This could either be through pre-emptive action or in trial. For example, if a competitor has been fined by the regulator, but your business has avoided this due to effective pro-active legal advice, that number can be added to a performance measure dashboard.
What are the issues with using performance metrics?
Some of the panellists were concerned that a lot of the nuanced value add from the legal department can’t be measured in numbers. Ticketing systems and contract tracing systems can take away some of the personal value that lawyers add.
“Sometime people will just walk over and ask an easy question but if everything needs to be ticketed, this isn’t possible,” said one panellist.
The recommended solution to this is that there is still value in anecdotes when quantifying value and statistics are there to augment them. Data is there to help measure performance but poorly thought out KPIs can distort lawyers’ incentives. When putting together dashboards for board presentations, include KPIs like fines avoided, contracts drafted and tickets responded to, but also include endorsements from colleagues and customers.
In-house teams are feeling increased pressure to demonstrate the value added by their department. GCs, Legal Operations and in-house counsel wish to be more proactive in the data they provide, for example to CFOs, CEOs and the Board, yet may lack the experience or resources to implement extensive reports and provide relevant analysis.
Many teams are starting by harnessing data already available to them, including information from digitised e-signature and internal ‘ticketing’ processes for legal queries. These systems can provide useful insights into the volume, value and areas in which work is required, particularly for departments seeing high volumes of such requests.
Legal teams have also found that by working more closely with other departments, including marketing, finance or HR teams, they can demonstrate qualitatively and quantitatively the value of their in-house legal function. This increased engagement can lead to the simple automation of low-risk contracts and provision of self-service tools to speed up business processes. In addition, these interactions may result in more proactive interventions, for example with employee relations, to directly reduce potential cost risks to the business.
Having improved data allows legal teams to ask more informed questions based on past experience – such as ‘why is this a trend’, ‘why are these users raising fewer tickets’, ‘how can we optimise this type of work’ or ‘how can we forecast these costs more accurately’. By utilising a number of sources to collect valuable data, and then relating these findings back to the company’s objectives and key results, legal teams may clearly demonstrate their value using the same language and metrics as relevant to their business.
Apperio is a legal spend analytics and matter tracking platform that helps in-house teams demonstrate value by providing greater visibility on in-progress and billed external legal work. As a single system of reference for all matters, the platform surfaces data to help spot trends, accurately forecast budgets and identify gaps in service provision, enabling in-house teams to plan and manage their department proactively.