It is an undisputed fact that a legal department’s goal is to provide legal advice to both business units and management, and shepherd these on all legal matters to achieve their business goals while minimizing risk. Modern legal departments, however, have been increasingly pressed in recent years to provide a higher-quality legal support. Either if they are providing direct legal advice to any of the company’s unit or indirectly retaining an outside legal provider, delivery on time and within budget is key. So, in addition to the knowledge of the law applicable to any matter they handle, in recent times there are two elements that legal departments have started to consider essential to achieve their goals and nNone of them are legal. These are (legal) logistics and metrics.

Logistics essentially relates to a timely decision made to (i) assess the business and legal impact of any given new matter, (ii) handle internally or ask an outside provider to handle any such given matter, and (iii) follow-through on such matters, making sure these are handled back-to-back and in a timely fashion so as to add value to whatever business unit legal is providing service. Logistics then deals with everything that takes place from the moment a matter is assigned to the legal department or outside counsel, to the moment it is closed. Timely decisions and delivery are here essential.

Metrics, in turn, relate to measuring the performance of the outside firm (and the legal department) as regards handling such certain matters. Metrics provide valuable information in connection with efficiency and quality, therefore establishing whether the legal department made an adequate use of its resources. Whether efficiency or quality is paramount, metrics would provide hard numbers as to an adequate performance of anything and everything that allows to track management decisions. Metrics therefore help assess the data relating as to how was the quality of the logistics decisions made

Metrics should be set against certain goals sought, so as to establish standards to be met. If goals are set across the board, then it is easier to measure performance of an outside counsel and the legal department itself. In this regard, communications are closely related to metrics as once expectations are set, it is key that legal departments work with the outside counsel to communicate what their goal is, and work together with them in a plan to help them perform as expected. This is essential as most traditional legal services provider do not focus on metrics and therefore guidance by the legal department is needed.

In connection with this, there are at least three questions to answer in order to calibrate and set expectations:

  1. What areas of the work outsourced to a legal provider should be subject to metrics? Metrics to be used for outside counsel performance should consider any work and its ancillary elements that are being outsourced.
  2. What should the focus of metrics be, quality or quantity? These certainly depends on the nature of the matters being outsourced. Those matters in which time and cost is paramount, should monitor efficiency metrics. Those matters in which analysis and precision are essential, should consider quality metrics.
  3. What are the most important metrics to consider? There are many metrics to monitor performance. The most relevant ones are the the following:
  • Legal spend, by tracking and monitoring the billing records law firms provide as regards hours, cost and seniority of those involved in the work provided and matching these against (x) the accuracy of the information provided by firm and (y) the expectations set by the legal department.
  • Matter management, regarding (i) day-to-day matters, by tracking turnaround time and cost regarding back-to-back document drafting, review, negotiation and closing, (ii) projects comprising large volume of documents, by tracking document abstraction turnaround time and cost and (iii) strategic or regulatory matters, by tracking the quality of the work provided and the seniority of the counsel involved. Note that while (i) and (ii) are cost and time-focused metrics, (iii), is quality-oriented.
  • Case management, by tracking timely processing of any legal matter, using intuitive, easy-to-handle platforms and avoiding any relying on reaction.

All of this results in Key performance indicators or KPIs, which over time provide a standard of delivery that outside counsel has to meet by way of creating processes and other patterns used to achieve the goals set and communicated by the legal departments. This ultimately results in itemizing to the extent possible the turnaround time and cost for most legal matters outsourced, which in turn helps the legal department meet their goals in terms of budget and timely response. By way of example, any legal department would then get to know the cost and delivery back-to-back time that a given type of contracts would take.

Metrics are then valuable elements to be used to boost performance of both the outside counsel and the legal department, adding value to the business and integrating legal knowledge with business timing and cost.

By Matías Avila Nores

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