Neither author and journalist Michael Lewis nor Hollywood celebrity Brad Pitt could predict how the book Moneyball (published in 2003) and the related film (released in 2011) would impact the legal profession following the Global Financial Crisis. Conduct an online search of the terms “metrics,” “Moneyball,” and “legal” and thousands of articles, blog posts, PowerPoints, and recorded seminars pop up. The link is not surprising; Moneyball provided the legal profession an easy analogy for metrics-phobic attorneys to initiate a conversation about legal work and metrics. It seemed like a good first step into the world of big data. The leadoff question is too easy: If we are like the Oakland A’s and must “do more with less,” what data can we collect to better select outside counsel and reduce spend?
Surely, it’s a good discussion to have, but is collecting data on outside counsel a la Moneyball truly the best first step? Legal departments looking to initiate a metrics program are better served by looking at legal matters overall, rather than concentrating exclusively on a subset of matters that go to outside counsel. Before looking at external legal spend, each legal department must develop a solid foundation and understanding of the company’s portfolio of legal matters. In order to start achieving efficiencies, what should a legal department prioritize and collect? And once collected, what action might be spurred to achieve greater efficiency?
Complete legal metrics series
It’s a mantra uttered by all attorneys: “I am being tasked to do more with less.” Any attorney in the legal department can feel this challenge, but are they able to quantify it? If legal matters are the “units” of a legal department, how many units are being handled by the department overall? Can your department (or the individual attorneys) count the number of matters started on January 1, handled throughout the year, and closed on December 31? Once you understand the total number of matters handled on an annual basis, you can drill down further and start asking some more interesting questions concerning staff workload and legal spend.
Now that you know the universe that makes up the entirety of your company’s legal matter portfolio, assess and review the allocation of work between in-house staff and outside counsel. There is no “one size fits all” in terms of work allocation between the two options. However, according to the 2016 Thomson Reuters In-Sourcing and Efficiency Report (Efficiency Report), more legal departments are attempting to move work once done by outside counsel to in-house resources. This move is in recognition of the efficiencies that come from the bond between in-house lawyer and the internal business client as well as the superiority of the in-house resource’s greater knowledge of the industry and the business. A department should consider creating a key performance indicator around moving more work in-house to more efficient in-house resources.
Once the department knows the split of work between in-house attorneys versus outside law firms, the department should then determine what types of matters, by subject matter and type, are going to outside counsel. This question is important because of the follow-up question: What can be done to bring that work in-house? Unless your legal department has a litigation specialist, it is unlikely that litigated disputes will move in-house; these should remain the domain of outside counsel. But is your department sending transactional matters and contracts to outside counsel, and if so, why? According to the Efficiency Report, legal departments turn to outside counsel for contractual and drafting matters because of complexity or volume of work. In an effort to bring more work in-house and reduce complexity, legal departments should consider creating playbooks and annotated templates specific to the department, or, rely on commercially created forms and templates from trusted resources. Does the complexity of an agreement stem from the lack of internal expertise within the in-house team? Or, based on this data, is there a particular type of matter (by subject matter) that is consuming outside counsel resources? If so, consider building your team’s expertise in that area to keep more work with effective in-house team members. Consider extending your team’s existing knowledge and expertise on a lesser-known legal subject with annotated articles and checklists as guidance. For instance, perhaps you have no in-house expertise in social media but your company needs a new policy and guidance for its employee manual. Rather than farming that work to outside counsel, legal departments can benefit from technology tools offering policies, checklists, and other trusted resources. Finally, departments should undertake a review of business processes to remove attorneys’ administrative burdens. Once those burdens are cleared and the in-house attorney is armed with technology and resources, she can extend her expertise.
It is critical for legal departments to understand their company’s legal matter portfolio. Too often, departments want to immediately conduct a Moneyball exchange about outside counsel spend. While this is an important metric, having a solid foundation about the department’s overall legal portfolio and the allocation of matters between in-house and outside counsel resources can lead to strategies, action, and technology that drive more work to more efficient and effective in-house resources. In the next installment in this series, we’ll drill down further and discuss staffing metrics that might be collected about both in-house attorneys and outside counsel.
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