The other day, I was experiencing some electrical issues in my house that caused the lights to dim and get brighter at random times. I called an electrician. After spending a few minutes at the fuse box, I asked him, “What do you think you need to do?” His answer, blunt and to-the-point was, “I don’t know. I can’t operate until I diagnose.” His statement made me laugh, I guess because I started to think about how many times we truly “operate” before we “diagnose.” I’ve actually noticed this often with customers and prospects in the the area of metrics and reporting.
For the last few years, the buzz in the legal spend management industry has been around metrics and reporting. Metrics are a standard of measure and can assist you in determining items such as effectiveness, impact, and value. As helpful as metrics and reporting are, in some cases they can easily become overwhelming. Collecting metrics and reports for your department is valuable, but as my electrician pointed out, without a clear understanding of the problem or issue, you might just end up doing exploratory surgery- which equals wasted time and money for your department. You need a clear understanding of why you are gathering these metrics and reports, your plans for the data, and how you will go about collecting the data.
Why are you gathering these metrics and reports?
I often hear customers talk about how they need more metrics or that they want more reports. They want to know what types of data other clients are reviewing. Unfortunately, once we provide them with the information they request, they become overwhelmed and aren’t sure how to use the data. Of course, there are a handful of standard reports and metrics such as “Top Ten Billed Matters” or “Cycle Time” that are beneficial to all organizations. However, with the amount of data available, it is important to be selective about what reports and metrics are the most beneficial for your organization. Companies may use some of the same measures, but each organization will weigh these items differently. Start thinking about overall company objectives. What type of measurements do the CEO, COO, and CFO find important? Does your company have an overall goal/strategy? If the company has a cost-cutting, productivity (doing more with fewer resources), or risk mitigation mandate, the reports and metrics you should focus on will be quite different for each objective. With a clear, corporate-aligned objective, you will understand why you are gathering certain reports and metrics and it will be much easier to reduce your data down to the necessary components.
How will you collect the data for metrics and reports?
There are many different ways to gather data for metrics and reports. Matter management systems, legal spend management systems, internally created databases, business intelligence tools, and even your own firms can all be excellent sources of data. Recently, in the CLM (Claims & Litigation Management Alliance) Litigation Management Study, March 2015, almost 80 chief claims and chief litigation officers were asked to name, “one thing that you wish your outside firms did a better job of, that would make them stand-out in their peer group, and that would make your life easier.” The survey noted that for the first time, there was frequent mention of firms to “provide their own metrics about their performance/provide year-end self-evaluations using metrics/provide metrics that mirror how companies view performance” (p. 25). Having firms provide you with performance metrics may seem like a good option, but again, the client needs to define targets for the firm so it has a clear idea of how the company measures performance.
What are your plans for the data?
Once you know the overall corporate objective for your department and have the metrics and reports in place, it is important to design a strategy for what you will do with this data. For example, if your corporate objective is to cut costs, you may collect data regarding your most non-compliant firms, firm rates, cost per matter, and staffing mix on matters. Now the question becomes, how will you use this data? Creating a plan to act on this data is important. After reviewing firm rates and staffing mixes on cases that went over budget, will you have a discussion with the law firm about cost? Will you re-evaluate how you assign cases in the future? Will you track any savings derived from your new plans?
So, remember, before you jump on the metrics and reporting bandwagon, running reports and gathering metrics are only as good as the issues they help you solve. Avoid the approach of gathering certain types of data just because you know that is what others in the industry are evaluating. Having a thorough understanding of your company’s objectives and departmental objectives should be the driver behind your metrics and reporting. Once you come up with a plan on what to gather and how to pull the information, make certain you put your findings to good use. You can have all the information available at your fingertips, but not taking action on it renders it useless.