The General Counsel (CG) in most industries remains under pressure to operate efficiently, reduce costs, and maximize existing resources. To properly measure how successful an attorney is operating today under these mandates, it is vital that internal legal teams have a system of metrics and measures in place. By measuring efficiency, CGs can demonstrate their value to the organization and can provide proof points that help your legal department earn the trust and respect of company executives.
Are the GCs on board?
In a recent survey, CGs were asked, “Do the metrics provide a useful and accurate measure of the value of the legal department to the business?” In response, 66% of the General Counsel (CG) said that the metrics do not provide a good measure of the value of the legal department. Additionally, the majority of CGs reported that they do not use metrics to assess the performance of the legal department (58%) and do not believe that metrics help analyze the value of the legal department (66%).
Measure cost vs. value
Why? When considering Conferencing metrics in general, they are generally designed to measure only the cost of the legal department to the organization, rather than the value of the department. For example, the most common metrics in legal departments are:
* Legal expenses as a percentage of corporate income
* The cost of an outside attorney
* Costs of the Outsourcing Department of Internal Legal Processes
* Cost per subject
* Average billing rate
It’s easy to see that these metrics have more to do with cost than value. To accurately capture value, a legal department must tell a complete and balanced story and show not only the money an attorney spends, but how much that department has kept the organization from spending or losing. There are several methods to measure the tangible and intangible value of a legal department. Here are a few:
* Customer survey feedback focusing on service quality, efficiency, marketability and communication.
* Evaluation of the success rates of the subject
* Calculation of dollars saved by negotiating better rates or AFA with external advisors
* Documentation of where the LPO team added business value on an issue
* Track the real risks that were avoided
* Tracking the cost of internal legal resources versus external hourly spending
* Periodic reports to the company and / or the board of directors.
Going back to the aforementioned survey, the majority of CGs believed that their internal legal teams were viewed as legal advisers and strategic business partners. In fact, only 19% reported that their internal teams were viewed solely as legal advisers. This shows that CGs are being asked to play a bigger strategic role in their organizations. It also reinforces the need for CGs to use metrics to demonstrate value. As we approach the middle of the year, CGs will likely continue to seek new ways to increase the efficiency of their departments, while constantly working to deliver more value to their organizations as strategic partners.
Find out more about: US Legal Conferences & UK Legal Event 2014