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Series Introduction: We live in a data-driven world. A decade ago, few had heard of big data or data analytics. The legal market too has become increasingly data driven. The legal market increasingly relies on analytics both to support law practice and manage legal organizations.
In-house counsel is focusing more and more on data—especially metrics—to prove their value to the organization and manage the legal department. PwC issued in June 2020 an excellent white paper, Legal department metrics: Understanding and expanding your impact. It explains why metrics are important to manage legal departments and offers a catalog of ten types of metrics with explanations.
As a starting point, legal departments can ask and answer three questions, which frame several key metrics to prove value and improve performance. This is the first of a three-part series, each answering one of the three questions.
The first question we examine is how do you save time and money while strengthening vendor relationships? As the PwC white paper notes, “Like all support functions, the legal department competes for budget each financial year.” General Counsel and heads of legal operations must have command of their finances to prove their value to the C-suite and gain appropriate corporate funding for the legal function. A mix of answers is possible:
Gain compliance with invoice guidelines. Smart clients partner with their outside counsel to achieve good outcomes cost effectively. They want to focus on strategy and work well together as a single team. Yet legal operations professionals still need to ensure their law firms comply with outside counsel guidelines. Fortunately, they can have the best of both worlds. The key is to avoid spending time and energy on all the details. Rather than review bills manually, legal ops can use enterprise legal management (ELM) software to enforce billing accuracy. The software applies rules to review each line item—often tens of thousands of lines across bills in one month—and reject or question time and expense entries. The system notifies firms and provides opportunities to address flags and make adjustments. By delegating bill review to software, compliance is assured, freeing time to focus on other initiatives.
Standardize invoices to simplify review (“uniform presentment”). Even with software processing invoices for guideline compliance, lawyers and legal operations professionals still need to review at least some invoices for substantive issues. Bill review is tedious and inconsistent if dealing with multiple formats: paper, PDFs, MS Word files, and even some LEDES-format print-outs. To speed review, all invoices should be in the same format, irrespective of how law firms issue them. An effective ELM ingests all formats to present them uniformly, without any manual reformatting or data entry. This also ensures a single invoice review process; with all in the same bucket, review is not only faster, it is more uniform. This saves time and simplifies workflows for both outside counsel and the legal department.
Track budget vs. actual savings. If General Counsel had a single metric only, it would be staying within budget. And now, with COVID causing budget pressure or worse, it’s even more important. To ensure staying under budget, whether the original one or COVID-adjusted, tracking spend is essential. And that happens at three levels:
- Matter. More mature legal departments require law firms to provide matter-level budgets for matters exceeding a specified dollar amount. An ELM allows law firms to submit matter budgets digitally, with assumptions. Then, as firms issue invoices, the ELM produces spend vs. actual reports. (The legal department can also manually enter budgets.)
- Portfolio. Where organizations have portfolios of related matters (e.g., torts or employment cases), they can group matters into related ones to track the entire portfolio.
- Department Total. All outside counsel matters roll up to total spend and an ELM also tracks that with numerous choices for how to “slice and dice” the data, for example, by region or over time.
Show ROI on your ELM purchase. As a cost center, legal departments typically must justify every line item in their budget. That’s easy if licensing an ELM, which has a fast and sizable return on investment. The ELM itself helps track the savings, for example, from invoice review, volume discounts, and prompt pay discounts. It is a straightforward task to tabulate savings and compare them to the ELM licensing cost—a comparison CEOs and CFOs will appreciate.
Amy leads the design, development, and delivery of educational programs that benefit various LexisNexis® user communities. She has dedicated the past 15 years to adult education and has a passion for designing learning experiences that meet each learner’s unique needs. She is adept at using technology to facilitate the learning process and lives for that ‘a‑ha’ moment in learning. Amy earned a B.S. in Biology from East Carolina University and an M.Ed. in Training and Workforce Development from North Carolina State University. When not working, Amy is an avid DIYer and can be found working in her garage on various projects.