The legal department has been seen as the one area of the business that did not function according to the rules of business. However, times are changing. Effective GCs are implementing initiatives and approaches that make them proactive business partners.
To help get and keep you on track, Susan Hackett, CEO of Legal Executive Leadership; Susan Kennedy, GC at Ornge; and Joe Milstone, CEO and Co-Founder of Cognition, conducted a business session for legal department leaders at the CCCA National Conference in April. It featured 12 concrete operational tips that CLOs could implement using their own customized value scorecards.
These strategies were largely drawn from practices successfully employed by leading companies across a number of industries, and the scorecard included “marks” on various value criteria such as need, complexity, efforts, barriers and cost.
Below is a summary of the twelve toolkit items to help make your legal department more business-savvy in its approach and distinguish the value your team provides.
1. Embrace strategic planning.
■■ Engage in your organization’s strategic and operational planning processes, as
this demonstrates business credibility and ensures contribution for later filter-down to legal.
■■ Be attuned to resulting corporate objectives over both short- and longterm, and how management’s incentives are or are not aligned.
■■ Calculate legal’s role beyond daily reactive activities, and establish internal objectives and incentives in the departmental business plan.
2. Crunch the numbers.
■■ Calculate effective time-based rates for internal staff (using full-loaded numbers that include benefits and overhead allocation), so you can properly compare against external legal and other cost options.
■■ Understand the quantity of “billable” work generated and truly available (due to more inherent interruptions and non-“billable” requirements like operations meetings) to properly gage productivity.
■■ Don’t neglect “softer costs,” such as burnout, boredom and morale, and resulting voluntary and involuntary attrition.
■■ Using past and present data, develop time estimates and process maps for more routine internal matters.
■■ Understand where you provide the best value in-house versus what is more efficiently externalized.
3. Use legal department key performance indicators (KPI's).
■■ KPIs are specific, periodic measurements related to progress.
■■ Measure results, not activity. Measuring hours/quantity is mostly riskless and controllable, but it also reinforces a cost- rather than value-centred perspective toward the department.
■■ The best way to establish legal metrics is to align with the business’s objectives and resulting business metrics. For example, if clients are looking to speed up the delivery of goods to
market, your metrics in turn should focus on advancing contract processes and prioritizing the conclusion of facilities or supply agreements.
4. Harness the power of big (and small) data.
■■ Focus on the meaningful data you already likely have but can’t control or
properly sift through.
■■ Establish a few data goals, and then reverse-engineer the tasks that would precede them.
■■ Operate in increments. Use bite-sized chunks for motivation and momentum.
■■ Leverage external firms’ data managements systems, which will be different and often more sophisticated than your own. Direct the firms as to what you want (for example, aggregated data among groups of clients).
■■ Only engage in data analysis if you promise to follow through on the conclusions and directions it provides to you.
5. Know the art and process of departmental budgeting.
■■ Remember that last year’s actuals are only a great predictor of what happened last year.
■■ Estimate workflow and timelines for upcoming supportable business projects, as this will affect your people, systems and costs.
■■ Engage with business clients to proactively “negotiate” timing and spacing of needs to ensure success on expectations.
■■ Be cognizant and vigilant of any changes to the department’s addressable scope of work associated with different levels of budgeting.
■■ Negotiate and establish special project categories not affecting budget.
■■ Share or download costs for priority and unforeseen projects with business units.
■■ Be your department’s CFO and use tricks of the trade like other units. For example, appreciate that internal negotiation
is likely and use legitimate accruals to avoid “use it or lose it” results.
6. Evaluate, survey, assess and recast dynamically.
■■ To determine how to get the job done better, faster and cheaper, you have to engage in both critical self-assessment and client feedback loops.
■■ Once your clients have defined the results they want you to focus on, reverse engineer them to design aligned KPIs and evaluation criteria/measurements.
■■ Nothing motivates client service and solution orientation more than having clients score lawyers on those criteria. Incorporate surveying into the standard after-action process and act on the results.
7. Engage internal clients like external customers.
■■ Be practical, speak in plain language or business terms (not legalese), don’t over-lawyer and never lose composure with clients.
■■ Articulate objective service levels to manage expectations and establish benchmarks. When questions are common to a subject, communicate your regular response in the form of an FAQ or playbook to allow for “self-service” of answers.
■■ Collaborate with clients on workflows and metrics.
■■ Understand that your advice will not always be taken. Be clear about the times when it is not optional.
8. Know the business, know the business, know the business.
■■ As cost advantage erodes, operational, company and industry knowledge become the core differentiators of in-house counsel.
■■ Self-initiative and operational “volunteering” is the best place to start demonstrating commitment.
■■ Consider periodic internal secondments to business units.
9. Leverage external counsel and outsourcing effectively and untraditionally.
■■ Consider new options, such as shifting work in-house (to the legal department or other units of the company) and outsourcing current work done internally (to law firms with better business practices and other non-law firm service providers).
■■ Implement true “partnership” deals with external providers, such as mutual business sales/referrals, value pricing, holdbacks and bonuses.
■■ Pursue secondments not only to your department but also from your department to the outside provider.
■■ Utilize technology improvements to share data, project and billing updates, general information, and precedents.
10. Implement a project management and teamwork approach.
■■ Deploy project management training, principles and approaches within the department.
■■ Consider the department as responsible for optimal resource calibration on projects. It is, in effect, the hub with possible spokes including traditional law firms, new model legal service providers, on and offshore LPOs, technology and managed services solutions, paralegals, and other non-lawyer personnel and business enablement.
■■ Create virtual and dynamic project teams, and then disaggregate legal work by its component parts and assign components to the best and most efficient teams.
11. Vigilantly assess, utilize and train on technology solutions.
■■ Ensure you are fully leveraging company technology and IT resources before looking outside.
■■ Take advantage of the robust assortment of affordable, SAAS-based legal technology available now. Keep up to date on new developments or use “concierge”/consulting services to do so.
■■ Manage creeping technology costs. Technology on its own will not solve a process or cultural problem.
■■ Be realistic of internal resource capabilities to implement and utilize new technology, and consider managed service solutions as an alternative.
■■ Plan and focus on significant training time, and make sure to measure and follow up on whether lawyers are using the systems.
12. Communicate your results in business terms.
■■ Keep communication frequent but not overwhelming.
■■ Report in business terms. Consider income statement style reporting with demonstrable value-add as the “revenue” line off of which costs are deducted and net achieved.
■■ Stick to value versus volume approach from KPI lessons.
■■ Avoid cost comparison to traditional
external counsel performing the same functions, as that is a cost-centred approach and there are increasingly more lower cost options available.
Who are the "Unprofessional" Players in Today's Legal Market?
April 12, 2019
September 29, 2011
The Higher Use of Lawyers in a Data- and Tech-Enabled World