Lawyers are trained to reason by analogy. Data doesn’t much matter. So the profession mostly makes decisions by guess and by golly. Fortunately, the metrics movement among corporate law departments (Rees Morrison’s General Counsel Metrics (@reesmorrison) and CEB General Counsel Roundtable leading the way) is bringing data into the discussion. We begin to have evidence to test the hunches.
In its latest report, CEB draws upon analysis of 180 legal department budgets to identify nine things that really work, nine specific actions that a department can take to reduce costs. Surprises? No.
Do the obvious: in-house is cheaper (assuming level workloads); disaggregate; plan & budget; and so on.
The full list is here. Pat Lamb’s take on it is here (@ValoremLamb). And Catherine Moynihan, @CathJMoyn, of the Association of Corporate Counsel, @ACCinhouse, says CEB’s findings are consistent with what ACC sees among its Value Champions.
At Neota Logic, which is a technology company and in the business of doing professional advice differently (or different, as Apple used to say), we’re most interested in one tactic that CEB identified, and one that it didn’t.
Invest in Legal Operations Capabilities – CEB says that 80 percent of large legal departments now have a professional (maybe a lawyer, maybe an MBA) whose full-time job is to think about (and manage toward delivering) improvements in department services. Faster, better, and these days especially, cheaper. Law firms started down this road many years ago, creating senior positions devoted to practice technology, knowledge management, business development and, more recently, project management, service delivery and pricing.
Our experience, as lawyers practicing in firms serving corporate clients and as a technology company providing tools to those same clients, has been that Legal Operations Officers, when they have general counsel support, make a dramatic difference in a department’s ability to think and act innovatively and effectively. Lawyers have day jobs – managing litigation, counseling business people, putting out fires. However much they want to improve the ways things are done, they don’t often have the bandwidth. That’s what Legal Operations can do – leverage lawyers to enable innovation. So we applaud the trend toward appointment of Legal Operations Officers that CEB identified.
Demand Management – CEB did not talk about demand management, but we think it is a vital tactic for reduced costs and improved outcomes.
We are indebted to Susan Hackett (@HackettInHouse, @LawExecs) for introducing us to the concept of demand management, a technique for reducing external counsel costs in litigation by active case management. (The Association of Corporate Counsel, @ACCinhouse, has an excellent article on demand management at Royal Bank of Canada.)
We think demand management can be a far broader and more useful concept for law departments. Analyze the sources (the root causes, if you will) of legal work that flows into the department, and then follow the analysis upstream into the business – to solve business problems before they generate legal problems; and to embed legal guidance in business processes precisely where and when it’s needed, without adding demand to the legal department’s agenda.
Demand management, as reconceived here, is one of the things that Neota Logic does. Applications built with our technology:
a) Answer routine legal questions for business people who would otherwise not get legal advice at all (because doing so via traditional methods is too costly, too distant, too time-consuming), thereby reducing mistakes and consequently the demand for mistake-fixing legal services; and
b) When (a) isn’t enough, intelligently route the not-so-routine questions to lawyers after collecting all the basic information that usually wastes the first two hours of the lawyer’s time.
Working to the same goal, Lisa Damon’s Seyfarth Lean team (@ldamon) helps legal departments to do rigorous upstream analysis and then identify business and process improvements that can prevent legal problems before they occur.