Part 3: Leveraging Analytics to Select the Right Vendors

In our prior post, we answered the question, are the resources in my department working effectively and efficiently? Here, we answer the third key question, how do we know we are working with the right vendors? This provides the data to score, benchmark, select, and manage law firms and other providers.

Score and review vendors to assess meeting expectations.  Legal ops should systematically score and review their law firms and other providers to determine objectively if providers meet prospectively set success metrics.  The best practice for doing so relies on a mix and balance of metrics, which can include overall cost management, compliance with guidelines, diversity, and subjective reviews per matter. The General Counsel and head of legal operations need to select metrics and assign a weight to each one so that the ELM can compute a single overall score. CounselLink, for example, offers a vendor scorecard that customers can use out of the box, or they can create their own using different data points. If providers do not meet expectations, that provides opportunities for constructive feedback and coaching or, eventually, changing providers.

Select vendors for diversity and inclusion. Historically, law firm marketing meant delivering glossy brochures to clients. Now, clients want solid information on law firm experience, expected cost, and diversity. ABA Resolution 113 (2016) established a standard diversity survey that many clients require law firms to complete. It reflects diversity only at the level of the entire firm. The ELM software takes this a step further to enable assessing diversity at the matter or client level. Law firms can enter the diversity of each fee earner using multiple categories. Clients that require this can better assess diversity of their teams. They can also prevent fee earners without diversity profiles from billing, and, over time, move work to firms that consistently have more diverse teams.

Benchmark performance internally and externally. Systematic and comprehensive use of an ELM provides a rich source of in-depth data that legal operations can use to generate a range of benchmarks. As the PwC report cited above explains, many benchmarks exist. Common ones include total cost, cost predictability, matter duration, leverage, outcomes, and rates. The choice depends on the view of corporate and department priorities. Some benchmarks, especially law firm rates – depend on external data (e.g., CounselLink has a database of law firm rates) and others rely more on comparing firm and internal performance.

Conclusion

This series explores how legal departments can add value with data and analytics by answering three key questions:

1. Drive cost and time savings
2. Optimize the allocation of legal department resources
3. Select the right vendors

In the modern, data-driven world, the CEOs, COOs, and CFOs see the full range of corporate functions using metrics, data, and analytics. They now expect their legal departments to do the same. And that is a good expectation to have because regularly monitoring the right metrics helps drive better decisions. Legal operations professionals can use an ELM to collect a range of data on costs and other factors. With the data and tools in place, the legal department can analyze and report on metrics that drive these three key strategic determinations of legal department performance.