Corporate law departments often assume that they and their law firms have a clear understanding of each other’s goals.
Most would likely also agree that winning a litigated case would be a good example of a goal that the two parties share. But the deceptively simple question of whether or not winning cases is a shared goal — or if it’s even one of the more important outcomes — becomes complicated when the culture of each of the parties is incorporated into the discussion. To parse this critical question from a performance management perspective, LexisNexis held an industry webinar recently. Soliciting input from expert practitioners on both sides of the goal equation, we sought to identify goals that are important to both corporate law departments and the law firms they hire, arrive at a holistic definition of success, explore the behaviors that should be encouraged to generate success and, finally, discuss metrics and measurement related to success. Webinar participants included Steve Popelsky, Assistant Vice President of Litigation Services at the Motorists Insurance Group based in Columbus, Ohio, Mike Ethridge, a partner with the law firm of Carlock, Copeland & Stair, LLP a practice that primarily represents insurance carriers and corporations, focusing on construction litigation, insurance coverage litigation, and personal injury claims, and Kris Satkunas, Director of Strategic Consulting, LexisNexis CounselLink. Dan Ruderman, also a member of the LexisNexis CounselLink Strategic Consulting group, served as the webinar’s moderator.Following is a digest of the webinar’s key discussions.
Ruderman: Let’s begin by asking the question—What is success? Popelsky: The thing about the question of success is that it’s different for every organization. Ruderman: Obviously there are differences in the way companies view things — but they also have a lot in common when it comes to their law department’s goals. So why can’t we just measure wins and losses? Or why can’t we just measure costs? Isn’t that really all that matters at the end of the day? Popelsky: Cost is really important for some companies and not for others. The same is true for law firms and any organization, really. Why isn’t the win a success? Well, it can be, but if you win at the expense of something else it’s not a success. Or maybe it’s a success for one party and not for another. Ethridge: I agree. I think it’s important in this day and age of risk management and conflict management and all of the changes that are going on in the legal profession to not lose sight of the fact that the insurance company and the corporation might think of success differently. Ruderman: That’s an interesting point. Let’s expand on that.
Ruderman: How do we tie the idea of culture back to the question of success? Is there a specific formula to follow? Popelsky: You can’t just give people the answer. You have to give them a process that leads them to the answer that works for them. Ruderman: That sounds like there’s extra effort involved. Popelsky: While it may be a little unsatisfying to come into a discussion like this and learn that you have a lot of work ahead of you, I can tell you that the last time we conducted a full-scale analysis of the organization’s culture it yielded some incredible conversations about what we were trying to accomplish and for whom. In our organization, we identify ourselves primarily as a customer service organization. And our questions were along those lines. Our wins are along the lines of how well we serve our clients and are not necessarily related to what happens in the courtroom. Ruderman: Do you have anything to add to that, Mike? Ethridge: Sure. One of the things Steve just said is really important, which is we all want somebody to hand this to us wrapped up in a package with a bow on it and to tell us, “Here’s the definition of success, this is how you make it happen.” That’s just not possible. So I think it’s important to be open to the fact that a lot of what we’re asking and talking about isn’t going to have clearly defined answers, and that’s okay. The important thing is that we’re asking the question. Ruderman: Framing the question is a critical part of the process, then? Ethridge: I think again, picking back up on something Steve said, what we have to remember as lawyers is that we, too, like insurance companies, are in the business of service. When we ask the question of how do you define success, what we’re asking is, “How do we best serve the client?” Ruderman: Thank you, Mike. What are your thoughts, Kris? Satkunas: I absolutely support all of the comments that both Steve and Mike have made. From my perspective on this in talking with both our corporations and with law firms over the years, it always surprises me when I walk into a room with our clients and they ask me, “What should we measure?” And my answer to that is always, “Well, tell me what’s important to you, and then I can suggest some things that you should measure.” Ruderman: And that gets the ball rolling then? Satkunas: I’m generally met with a blank expression because they haven’t thought about what’s important to them. When the four of us started talking about this broader topic, probably over a year ago now, I think all of us shared some similar experiences and we wondered why is it so hard for people to figure out what’s important to them when it’s so critical in terms of knowing whether they’ve been successful and to be able to build the relationships between in-house and outside counsel. That being said, to Steve’s point, it takes time. It’s not something that you can just answer within an hour’s conversation. You need to really understand the culture to be able to assess what is important to your organization. Ruderman: Thanks, Kris. Anything else? Satkunas: Just a couple of thoughts. I think that oftentimes people assume. Whether in the claims department or the law department, they assume that firms know what’s important to them. They make that assumption, or vice versa: that law firms think that they know what success looks like for the client, or they think that the experience they’ve had with other clients is relevant to the particular client that they’re talking to. Well, the fact is, their client base is going to have various objectives and define success in many different ways.
Ruderman: You said that you had a couple of thoughts. What’s the other one? Satkunas: Yes, just one other comment on this subject. I mentioned that I often get asked the question about what to measure, and when I ask what’s important, the angle that a lot of people take when they don’t have an answer is, “Well, just tell us what everybody else is measuring and we’ll measure that.” But that’s the wrong way to solve the problem of defining success. So I encourage them to figure out what’s important to them. Ruderman: There are skeptics out there that are going to say, “Look, success is if you win the case and success is if you drive your costs down.” Let’s talk about that. Why is it such a challenge to find out and why is it that asking what everybody else is doing is the go-to methodology? Ethridge: I agree that it’s highly important that we begin to ask ourselves this question of what are the things that matter to us? What’s important to us? What are our values? If we don’t have real clarity on that and we don’t operate from the place of clarity around what matters to us, then it’s never going to be in sync with anybody else. That part of the process is essential and I think it’s very difficult for lawyers because lawyers really struggle with abstract things. We like the concrete. We like structure. We like clear definition. To deal with concepts that are more abstract, more amorphous, are real struggles for firms. Ruderman: So that’s the main obstacle, then? Ethridge: The other thing that I think is probably true for all organizations is it’s a lot easier when you’re just three or four or five people that come together with a shared mission and shared culture and have real clarity around what that culture is. But, as you begin to achieve some success, and as you grow, that becomes more and more difficult. I think as firms grow beyond five, six, eight, nine, ten, then you have a lot of equity partners that are in the leadership roles and they have different values. And the more these firms grow, the further down that path they continue, the more obscure what matters to them becomes and the more difficult it is to have conversations with clients about how you get in sync with measuring success. Ruderman: That’s a revealing observation, Mike. Do you have anything to add, Steve? Popelsky: Well, I think there were some pretty good comments there. Looking at this from the point of view of the law firm — which I have not been associated directly with for many years, but work with every day — it’s part of the question of after you figure out what your culture is, what’s important to you, then figuring out who your key stakeholders are. This is a very involved process. There could be literally hundreds of stakeholders, but not all of them are key stakeholders. Ruderman: Explain what you mean by “key stakeholder.” Popelsky: For the law firm, for instance, you would say that a key stakeholder would probably be the partners—and the families that depend on the partners for their income and for their living. And the defendant policyholders who rely on the attorneys to provide that defense that secures their own interest. And also the insurance carriers that provide the business that supports the whole thing. This is a very involved discussion. What it really comes down to is sitting down with the people in your organization who are in contact with your stakeholders, and figuring out which relationships are the most important. Once you figure out which relationships matter to your culture, you can figure out what the needs, wants, and desires of those relationships are, and then you can have a really strong idea of where you want to take those relationships. Ruderman: That’s a lot of keep track of, Steve. I think you said that there’s definitely a business answer; it’s maximizing the business. And then you also said that this is all interconnected. You also brought up the policyholder and their entire business and the impact of a case on the policyholder, which I think would tie into your company’s business, right? I mean, you’re not in the business of losing policyholders. Popelsky: We identify ourselves through our key stakeholder, which we consider to be the independent insurance agent. And while our efforts seem almost entirely devoted to the policyholder, it’s that relationship with the independent agent that defines our success as an organization. I think all this comes out on a practical basis in your strategy discussion with your defense counsel at the outset of a new litigation. It’s a discussion that should continue through the life of that file, and as the matters on the ground change and information becomes available, that strategy discussion should include it.

Ruderman: The value of quantitative expertise is definitely something to keep in mind. Before we move on, do you have anything else to add on metrics? Satkunas: Just a couple more thoughts. The first is about how you go through that process. As you’re brainstorming, you don’t want to let yourself be limited in terms of what data you think you have. You may decide that something is important to you and start talking about all the ways you could measure it, and then you might throw those things out because you can’t measure it. On the other hand, you might decide to start capturing data going forward that lets you measure that. So keep all of the ideas on the table in that brainstorming session. The second thing is to keep in mind that subjective reviews can be quantitative, as well. If you decide that one of the most important things to you or your organization is that your law firms communicate with you and give you a status update on a weekly basis, you could have your counsel enter some sort of an assessment of “Does the law firm communicate with me as well as it should?” and then have them rate that on a scale of one to four or something like that, and then it becomes quantitative. And one last thought — law departments might want to consider representing the metrics they decide to measure in a graphic scorecard. A scorecard enables them to compare law firms side by side to see how they rate across the spectrum of key metrics. We’ve helped many of our CounselLink users create scorecards and the consensus is that they’re a valuable management tool. Ruderman: That’s a good review of metrics from the law department side. What about from the law firm’s perspective, Mike? Of the things that you measure, what would you say is the most important to you? Ethridge: I do try to measure the cycle time of my cases. Over the last few years, I’ve created a variety of spreadsheets where I’ll track details on certain categories of cases, like a residential construction case, for example. I track the average cycle time for a commercial construction case or a coverage case. And then we can also look at jurisdictions and see how that affects it. Ruderman: Do you track any other metrics? Ethridge: Costs in litigation and budget compared to actual costs. Those are other things that are fairly easy for us to measure. And one of my personal most important things to measure is my initial prediction of how the case is going to come out. You know, how early was I able to make a prediction as to how the case would get resolved and how that compares to the ultimate resolution of the case I’ve been practicing now for I guess 28 years, plus or minus, and doing what I do for a living, you lose a lot of cases. We defend cases, we defend folks who get sued when they make mistakes and cause other people damage. When that’s what you do, you don’t have a total win column and zero in your lost column. Ruderman: So the ability to predict outcomes is critical for you, regardless of whether it’s a win or a loss? Ethridge: Exactly. Over time, what’s become important for me is my ability to accurately determine as early as possible for my client or my carrier where this thing is going to end up. And I think that’s a metric that really transcends a lot of others. If we can done this as long as we’ve done it, we become more accurate with that. Those kinds of predictions probably make people in the world of metrics and actuarial science cringe because they get a little scared whenever you want to measure predictions. Ruderman: Steve, would you like to comment on how you handle metrics on your side of the table? Popelsky: This is a huge field. We have developed measures around cycle time, compliance and forecasting evaluation. We’ve benchmarked with the larger community. We’ve also created a subjective scorecard with a lot of the things about the relationships that we care about, and we quantify that to use with the metrics we developed. And we’re willing to share this with our defense partners. We think that’s important. It’s a two-way street. We’re not just delivering this news to counsel, we’re discussing it in a non-pejorative way. We want feedback. We want to know what we could be doing better, to know where we figure in these relationships. Ruderman: How does the data you capture and analyze and the information in your scorecard relate to actual outcomes? Popelski: It’s just data. It doesn’t mean anything by itself, it’s only meaningful if we put it to use on the ground for practical wins. For us, the data tells about the relationships. We think that good behaviors based on good relationships generate good outcomes. We’re not terribly concerned about what happens in a particular case if it’s a product of what we consider to be good behaviors. And we have a lot of discussion about that. When we meet with our counsel, we’re not talking about, “Hey, we gotcha on this.” We’re saying, “Hey, we’ve noticed that this has occurred, we’d like to talk about how it came about and what generated it.” If we have clarity around the kind of relationship we have, everything else turns out good. And our results have turned around on these concepts. Ruderman: That’s a valuable real-world lesson that should resonate with all of us. Thank you, Steve, Mike and Kris, for sharing your insights.