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LEGAL DEPARTMENTS
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Performance Management in Legal DepartmentsWhat gets measured gets done. Legal departments must deliver results and service like all other business units. They must do so as a team and with each member of the department. Our firm's experience is extensive and covers
For further information on Performance Management, contact Richard Stock at rstock@catalystlegal.com or (416) 367-4447. Articles on Performance Management "KPIs for the Legal Department" Four categories of key performance indicators (KPIs) for law departments are described. These are clients, busienss process improvement, people - usually the members of the department - and the financial category, typically encompassing the costs of internal and external counsel. Examples of initiatives and targets are offered. "Performance Indicator Basics" Good methodologies are described for performance indicators in legal departments. Indicators are suggested in four categories: clients, business process improvements, people, and financial. A mix of strategic and operational initiatives is proposed. The weighting is in favor of client performance indicators. "False Measure of Value?" The article highlights several findings from CCCA’s In-House Counsel Barometer 2011, prepared by Angus Reid. A large majority believe that key performance indicators are a very poor reflection of what legal departments do and of how well they do it. Only about 25% of the participants answered the question on how they measure the value of the legal department to the organization. KPIs exist and are used but legal departments tend to be poor at planning and measuring their priorities and work, and then at communicating the results. "Best of Breed" Best practices are gleaned from 11 leading law departments. Annual goal-setting processes are profiled. Efficiency improvement initiatives to reduce business unit reliance, robust client-facing intranet sites, electronic acceptance for e-signatures are all designed to influence workloads and workflows. Some departments' service level agreeements (SLAs) are described and include standard response time techniques to level peaks and valleys in workloads. Resources and innovative cultures seem to be the order of the day. "Effectiveness, Version 3.0" Three steps are suggested to develop a range of solutions to improve the efficiency of a law department. The first is to determine the capacity of the department by categorizing and quantifying the legal, advisory, administrative and strategic work it does. The second step is to characterize and measure the demand for legal services for a 3-year period. The last step helps to sort the cost of the department as a way to work with its "cost-effectiveness". This is done by establishing its fully-loaded hourly rate and setting KPIs for its reduction. Finally, departments must become much more forward in gathering data about their effectiveness from primary users.
"Reaching Legal's Full Potential" The survey of 11 US national and multi-national companies focuses on talent management. Most legal departments collaborate with human resources in using formal systems to identify the most promising legal talent in the company. Core competencies for excellent performance are highlighted and cover select knowledge, skills, and attributes. The article ends with a discussion of leadership effectiveness and talent management systems.
"The Mature Law Department"
The changing demographics of long-standing legal departments are discussed. The build-up of operational support requirements by business units compromises the availability of the legal department for strategic advisory work. Six competencies for senior corporate counsel are described in detail. In combination, they are designed to leverage their contributions within the organization.
"A Valuable Asset?"
Three reasons are given why General Counsel should develop a working definition of the value of the legal department to their company. The question is posed about whether corporate counsel that have "clients and a practice" find it more difficult to make a strategic contribution. Five business competencies are defined and essential for corporate counsel of intermediate experience to master: customer focus, an achievement orientation, resourcefulness, critical thinking, and a strategic business sense.
"Are General Counsel Too Risk Averse?"
A number of surveys of corporate counsel are referred to in addressing the severity and urgency of reducing total legal spend. The need for legal departments to acquire project management and other business skills is emphasized. Yet, there is a palpable reluctance in the corporate counsel community to initiating a substantive review of the legal economics of retaining external counsel.
"Competencies for Lawyers?"
Four categories of competencies for corporate counsel are detailed. They are personal attributes (5), such as efficiency, commitment and adaptability; leadership and development skills (3), including innovation, impact and influence; business and client competencies (4), such as customer focus and strategic business sense; and functional/technical legal knowledge and skills such as legal drafting. The array of competencies and advanced degrees of proficiency support recruitment and promotion decisions.
"Should the Legal Department Be Audited?"
Comprehensive “audits” of legal departments are rare. They are designed to provide a reasonable assurance of the adequacy, effectiveness and efficiency of the management structure, process and controls of the department. The Institute of internal Auditors has produced a Development and Practice Aid to assist internal auditors. Audit criteria and principles are described for seven areas: strategic positioning, structure, six elements of the management framework, workflow management, information systems, external counsel, and client satisfaction.
"The Five Pillars"
Five functions must be well managed for a high performance legal department. They include organizational alignment with the corporate business plan and the deployment of human resources for maximum leverage of legal intellectual capital. legal departments should maintain multi-year forecasts of demand for legal services and they should rely on formal competency-based tools to achieve the desired influence. The third function consists of criteria for and the careful selection of initiatives that will keep the legal team focused on priorities. The fourth function is strategic communications and the fifth is a focus on best practices coupled with innovation.
"Lawyers and Retirement Planning"
Smaller rather than larger firms will experience more acute financial consequences for failing to plan for succession in their partnership ranks. The article discusses the applicability of department payments and some of the factors that must be taken into account. Planning for the retirement of a partner should begin 5 years before the scheduled departure.
"The Peanut Principle"
The article examines the alignment of workflows and work allocation with law firm pricing and billing practices. The trade-offs between cost and effectiveness in the delivery of legal services are core to explicit conversations which legal departments should have with their preferred law firms. Good data, clarity about intended results,and fair pricing will improve the odds that everyone gets and gives their money's worth.
"Key Performance Indicators for the Legal Department"
There is malaise about whether legal department contributions are well communicated and appreciated. Results are now critical for effectiveness. The article describes 8 Key Performance Indicators (KPI's) in four categories for use by a legal department: (1) Service Levels (department) - accessibility, turnaround, teamwork / morale; (2) Service Levels (customers) - results, overall satisfaction; (3) the Strategic Impact on external clients, and (4) Efficiency - cost of legal services, Budget performance.
"Reporting Results from the Legal Department"
Too many legal departments get the annual goals wrong. The goals lack strategic value and the measures and indicators do not drive performance. Activity tracking is superficial or only financial. The article suggests countermeasures.
"Auditing in Legal Services"
Auditing is a process which few lawyers welcome when applied to legal services. The article outlines the framework being used in a number of public companies to establish value for money. The focus of the process in on resource consumption. The methodology has not evolved to correlate efficiency with effectiveness indicators such as risk management. The use of critical success factors and key indicators is described as a means of staying ahead of the standard techniques for measuring performance.
"Performance and Service Standards"
Many legal departments have figured out how to integrate legal service standards with corporate performance management programs. Four guiding principles are presented. The application of a balanced scorecard architecture to legal department goal setting is described.
"Symptoms and Solutions for the Ageing Legal Department"
Symptoms of the "ageing " legal department; why an ageing legal department presents problems for the organization and for the lawyers in the department; things General Counsel can do to re-engineer the ageing legal department, using positioning statements, measurable goals and variable compensation.
"Competencies for Counsel"
General Counsel wanting to position the legal department strategically within the organization must demonstrate that members of the department are "best-in-class" performers. Based on substantial benchmarking, this article discusses the array of competencies corporations require of their lawyers for each of personal attributes, leadership and development capabilities, business and client competencies, and functional / technical knowledge and skills.
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