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Consultation board round table: measuring and communicating the value of the legal department

It’s a common refrain that the business sees the legal function as purely a cost centre, with the real value that in-house lawyers provide going largely under the radar.

The latest In-house Consultation Board meeting focused on how to benchmark and broadcast the success of the legal department, using the report of a recent survey of more than 2,000 senior in-house and private practice lawyers by the Thomson Reuters Institute as a jumping-off point (see Blog post, Thomson Reuters Institute 2022 State of Corporate Law Departments report). As well as examining the upward trend in the level of external legal spend reported by corporate law department leaders, the report discussed how the legal department can avoid being a cost centre, and what metrics it can use to demonstrate its value.

In June’s meeting, board members described their approach to shining a light on the legal work being done behind the scenes and quantifying the elusive benefits of averting crises.

Internal benchmarking: utility, innovation and tackling attrition

Any benchmarking process you put in place will take time and resources to set up and embed, so think about the utility of what you are planning when you first approach the issue. For example:

  • how will you use the data you are gathering, and
  • what will it help you achieve?

External spend is relatively easy to track but may be of limited use when it comes to showing value: two otherwise broadly comparable organisations might have wildly different legal spends due to different business strategies and legacy issues. The organisation spending more is not necessarily being less efficient in terms of meeting the business’s aims. There are other metrics that might speak better to the efficiency and value of the legal department.

Look at quality, not quantity

One board member noted that their initial approach of looking at the number of matters worked on, and their value, had evolved to become an internal deep dive into what the matters actually involved.

This led to a more fundamental review of the shape of the legal team, resulting in benefits for individual lawyers, as well as the business. The review revealed that the team were often acting as a sales support function, and that recruiting more contract analysts and negotiators would improve productivity. In addition to responding to the needs of the business, this had had a positive impact on the rate of attrition in the legal team as the profile of their work changed.

Think negative

Rather than measuring money spent, think in terms of time saved or exposure reduced. Training and upskilling the business and creating self-service content can pay for itself by freeing up the business’s time, as well as Legal’s.

It is hard to measure how much less work is coming to Legal as a result but, for example, data on downloads of self-service content can act as a proxy measure for time saved and potentially for reduction of risk over time, if downloads increase. Again, automating routine tasks can give more space for legal team development and have a positive impact on morale, mitigating attrition.

Look for “syncs” of time

Slightly removed from a strict benchmarking objective was the idea of “syncing” meetings with other internal teams whose work often intersects with the legal team’s, such as the policy, data protection, risk or compliance teams.

Several board members found these discussions to be helpful in identifying work synergies or eliminating duplicated effort. Talking through the teams’ different perspectives of the same issues also meant that sometimes a productive combined approach could be found.

In addition to potentially speeding up resolution of existing matters, such cross-team discussions may represent opportunities to create additional efficiency enhancements, like more playbook answers.

Benchmarking by the business: gathering feedback on the unsung heroes, and singing their praises

Members generally agreed that systematically getting feedback from the business on how Legal was performing could be difficult. Senior lawyers are often called in only when something has gone wrong, and only hear about the biggest wins that Legal has supported. The “invisible middle” of timely, competent and commercial advice that forms the bulk of what a legal team does is rarely noticed.

Seeking such feedback is not purely a backslapping exercise. It is difficult to argue for more resource when there is a lack of awareness of how much is being done to keep things running smoothly. As one board member put it:

“What lawyers do, if done well, is often completely invisible.”

Members had attempted various methods of gathering more feedback. For example:

  • Post-matter completion round tables. Holding these is often only achievable on big ticket items and, of course, such events are themselves a time commitment.
  • Post-matter questionnaires. These are more easily administrated and keeping them at a high-level is the best way to encourage responses.
  • Quarterly “after sales” meetings. One meeting participant organised meetings with the Managing Directors of the relevant businesses to talk through recent matters.
  • Larger surveys. These could request views on all legal services provided to the business, whether in-house or by external providers. They had twin benefits for one board member: as well as giving the legal team some helpful validation and incentive to perform, they also provided data that could form the basis of useful discussions with panel firms.

When the going gets tough, the tough get talking

Whichever method was used, there was a broad consensus that making opportunities for dialogue was important, not only to share data gathered, but to gauge the mood of the business and nip potential issues in the bud.

One participant spoke of the “general astonishment” and increase in questions from the ExCo on being presented with concrete data about numbers of supplier contracts, NDAs and so on successfully concluded. At the other end of the feedback scale, they commented on the value of informal discussions, which allowed them to read the “mood music”. Another member agreed, adding that taking action to address pockets of dissatisfaction was doubly valuable: it gave scope for process improvement and showed the business that Legal were listening.

There can be an understandable temptation to push benchmarking down the “to do” list in favour of other more urgent tasks. However, done effectively, investing in benchmarking processes can more than justify the initial outlay. The theme that came through most strongly from the meeting was the importance of simply engaging with the concept of the legal team’s performance as something to be measured and improved – and talking more, not less, in busy times.

Benchmarking resources

Practical Law has several resources that you may find helpful when considering your approach to benchmarking and putting the results of your data gathering into practice, including:

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