I’ve been working with people in legal operations for about 20 years. Of course, most of my career has been on the law firm side, so I don’t claim to have an insider’s view of all the trappings of Fortune 500 legal departments. But I have experience as part of the legal team at outside counsel working with GCs, AGCs and legal operations personnel to resolve client problems. So, I understand the relationship between inside and outside counsel.
As more work moves in-house
The truth is that some legal operations departments are more advanced than others. Whether it be technology, access to resources, or just the structure and budget of the department. At the end of the day, however, legal departments are pretty similar. I mean, the role of general counsel exists to provide legal advice and guidance to the business and its leaders and to help manage exposure to risk in general and legal liability in particular. Businesses need legal advisors who understand their business and they need legal operations personnel to support the mission.
The interesting thing to me has always been that the one thing that legal departments are missing is tons of legal talent to handle their legal work. Anyone who’s been paying attention over the past few years can deduce that more work is moving in-house. It’s an open question, I think, whether an equal number of lawyers have moved in-house to handle the increased workload. So, where does this leave us?
I see three options: First, corporations can hire more legal talent. Second, they can rely more heavily on lawyers at outside counsel. And third, they can simply do more with less. My sense is that, at least in the short term, many organizations will choose the third option, and this means there’s some work to be done.
If you can’t measure it . . .
I don’t remember who said it first, but there’s a well-known premise in operations that posits “If you can’t measure it, you can’t manage it.” In the project management circles in which I am known to roam, we use estimates, projections, and tons of post-project metrics to measure whether a project is on track and whether it’s actually achieved a successful outcome. It should be no different when managing a legal matter.
At the risk of oversimplifying the complexity of the work that goes into a legal matter, I have to say that almost all legal actions, cases, investigations, even transactions, each involve a similar pattern of tasks, activities and events each time a new matter arises. This is not to say that the work of lawyers is commoditized and simple; clearly, it’s not. It’s just an observation that anyone working in the legal business should recognize. And having made this observation, it is not unrealistic to make the leap from legal work to project management. My point: If you are leading a case, you are managing a project.
And if you’re managing a project properly, you’re benchmarking, you’re measuring, you’re budgeting, you have deadlines and you’re concerned with the quality of the work. Moreover, if you’re doing this in-house, you’re also concerned about the business value of the work, ongoing operations and validating the success of the project.
Identify what success looks like
Traditional project management metrics relating to scope, time, cost and quality are important in defining the success of a project. But more recent thinking has evolved suggesting that project success should also be measured by considering project objectives. Now, many stakeholders may disagree on what successful completion of a project looks like. It’s somewhat subjective and it’s going to be different for different organizations. That’s why it is critical to define success up front and clearly identify project objectives that are measurable.
At the outset of a matter, therefore, it makes sense to ask, “What does success look like?” and “How will success be measured?” With these two simple questions, legal operations professionals can identify from the beginning what matters most to their organization, how the objectives align with the business, and the value of the outcome to business operations.
Identify measurable data points
You want to know why the billable hour is so entrenched and not going anywhere any time soon? Because it provides a direct, measurable metric or benchmark for the value of a lawyer to a law firm. The billable hour is generally reliable, it demonstrates a form of ROI, and it provides the basis for some of the most important metrics law firms rely upon, like leverage, utilization and realization. Few, if any, firms are tracking the type of work, and none that I’m aware of are looking at the quality of the work (at least not in any systematic way). Heck, many firms don’t even bother to use phase and task codes to categorize their work.
While we’ve come a long way from the days when an invoice from a law firm simply said, “For services rendered” and included a dollar amount, there does still appear to be some dissonance in the legal industry about how best to track and measure legal work and outcomes of legal projects.
I suggest above that legal operations professionals need to identify at the outset of a legal matter what the success of a legal project will look like. Next, they need to explore ways to measure the success of a project.
It’s not about just the simple stuff
According to the CLOC, the Corporate Legal Operations Consortium, in 2018 medium to large sized corporations averaged 400+ litigation matters. These corporations also spent on average in excess of $2 million dollars each on e-discovery. Interestingly, only about half of these organizations use a case or matter management system. Yet somehow, 70% of them track budgeted costs to actual costs on a per matter basis.
My friend John Rowley, the Director of Corporate Sales for ELM software company Onit, have been talking about project management and legal matter management metrics for ten years. “Tracking outside counsel spend and managing to a budget on a matter are quite common, even if most organizations are still doing it in spreadsheets,” says John.
But these metrics are just the tip of the iceberg. Corporate legal operations departments need to “invest some time to figure out the types of metrics you need at a matter level, metrics to measure risk, and outcomes,” John said. Outside counsel spend and budget to actual on each project are no-brainers. In order to fully understand the value of litigation, however, there are other metrics corporate legal departments could be tracking.
Data is everywhere: Capture it
Every legal matter does tend to involve very similar events and follow a pattern of tasks and activities. So, looking at a litigation matter, for instance, one might categorize work into the Pre-Litigation Phase, a Pleadings Phase, a Motions Phase, a Discovery Phase and a Trial Phase.
How might we measure the work in each of these phases? For too many, the default is the time and money spent to draft or answer a complaint or research and write a motion or brief or respond to interrogatories. But more importantly, what about the organization’s exposure in the matter? What’s the value of this case? What are the consequences (think: risks) associated with losing? Is there a phase and task-based budget for the matter? What about the jurisdiction, the court, the parties? What type of matter is it? Which firms are involved? And what about the outcome? Did you even win? These are some of the questions I’d be seeking answers to if my company were involved in litigation. The good news is that this is all information that is easily available.
In discovery, which is an aspect of litigation with which I am particularly familiar, I keep track of all sorts of e-discovery metrics. Years ago, before we had the smart business intelligence tools capable to reach inside any data store, I used to do these case studies—mostly because some lawyer asked me for the numbers, not because I enjoyed gathering metrics.
We would measure every data point we could think of across the spectrum of the EDRM. How much data was identified? How much data was collected? What type of data? Where did it come from? Who are the custodians? How much data per custodian? Per source? How much data was left after filtering and culling? After processing? What data was promoted to review? What is the volume? How many reviewers were involved? How long did it take? Time spent on each document, by file type or data source? How many documents were produced, from what source or by file type?
Conclusion
If legal operations professionals are not measuring these data points across the EDRM, you’re not getting a full picture of where the money is going, how you might re-align resources, or whether you’re over-paying for services.
These are just a few of the metrics legal operations should be tracking. But today, with technologies like machine learning, there are a host of additional data points that may be tracked with relative ease. There’s really no excuse for not gathering metrics.
In the end, it’s true that most of this—gathering and measuring metrics—really does just come down to money. We all use dollars to assess the value of the products or services we purchase. But other informative metrics could lead to new and innovative ways to measure and manage legal risk and new ways of thinking about and making strategic decisions.
Imagine a world in which we know in advance that a wage and hour suit filed by Firm X in the Southern District of New York before Judge Y is going to last 3 years and cost $500K in legal fees to prosecute or defend, and we know the value of the case is only $250K. Wouldn’t that be useful? Think “money ball” for litigation, as one of my good friends likes to say.
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