Good metrics program is crucial for strategic planning and success of the law department.
In today's competitive world, law department leaders are forced to move forward aggressively in order to be cost efficient. The legal function needs to be managed like the rest of the business. High level of accountability requires general counsel and their staffs to achieve familiarity with the kinds of data and benchmarks that have become available only recently. This information can help law departments to improve their operation efficiency.
Effective law department metrics programs allow creating a framework for continuous evaluation against short-term and long-term objectives. Good metrics program also contains components that lead to direct action. Law department metrics may provide a solid platform from which to demonstrate to clients how the law department is supporting business objectives and adding value. Besides, metrics program analysis can be used to determine the optimum size of the law department, the appropriate mix of roles within the law department, as well as a cost-effective balance between external and internal legal services.
Most law department metrics provide quantitative information, such as speed, cost or quantity of delivered services. However, one of the biggest challenges in legal service metrics is to assess its quality and value. A common tool used by some law departments is an internal client survey, which typically focuses on quality and priority of legal services. The survey may contain the following questions: Are legal services contributing to the growth of the business", Do legal services help improve compliance, mitigate business risk, and reduce liability exposure" Benchmarking through law department surveys might also prove a helpful starting point.
Law department metrics program may consist of the following perspectives: Litigation, Non-Litigation and Intellectual Property Matters (Active Matters, New Matters, Closed Matters, and Average Matter Cycle Time), Compliance (Ethics Line and Hotline Calls, Cycle Time for Hotline Reports, and the Number of Employees to whom Code of Conduct and Ethics was Distributed), General Expenses (Law-related Expense and Expense of Temporary Internal Staffing), as well as External Legal Spending (Total Fees Paid for Outside Counsel and Total Fees Paid for Legal Research, etc.).
External Legal Spending perspective provides a comparison of inside costs with outside legal expenses. This data can be useful for certain types of legal work. For example, this perspective may analyze the average cost of filing a patent or drafting a contract in-house, compared to the cost of using an external counsel. This perspective also compares the allocated cost per in-house attorney hour with standard billing rates of an outside counsel.
To improve law department efficiency, it is important that lawyers are engaged solely in legal services, and not used in other corporate activities that should be done by compliance, human resources, or other departments. For instance, the law department may create protocols which are to be followed by the clients before calling the department's lawyers. This measure helps assure that lawyer time is more efficiently and effectively used. Similar online contract provisions may be developed, so that non-lawyers can accomplish initial drafting and legal review can be streamlined.
On one hand, implementing the proper metrics is crucial to a legal department's success. On the other hand, good metrics program provide information that helps a department gain the trust and respect of company executives.