Page 12 - CCCA63_2010

CCCA_V4No3_Dept-Performance-V2.qxd:CCCA_V1No2_Dept-MgLaw-V1.qxd 9/2/10 7:28 AM Page 12 Performance In The Law Department / or of business unit alignment every self-reliant, eliminating timekeeping and department and its law firms. three years. reducing time in meetings not tied to spe- Prepare multi-year terms of engage- cific legal work. ment with your primary firms. These Alignment: Rotate lawyers’ alignment should cover capabilities, performance away from half of their business units every Inside / Outside Mix: Send all routine standards, work type, volumes, price and three years for coverage and effectiveness. legal work to law firms for a fixed fee by non-chargeable services.They should also file or for annual volumes. Tender this set out what the firms should expect from Workloads: Estimate the backlog of work every three years.There is no strate- the law department. work for each lawyer — typically two gic value and very little financial value for days — for important and essential items. private sector legal departments, except External Spend Controls: Increase use Focus should be on workflow manage- for insurers, to do this work internally. of fixed fee arrangements by matter or ment rather than on workloads. by phase of matter to control external Monitoring and Metrics: Ensure your legal costs. Time Recording and Charge-backs: metrics and reports have more non-finan- Require detailed matter budgets with If you must maintain it, consider time cial contribution metrics than financial. number of hours by fee earner for all mat- recording for the same three months each If costs dominate the reports, you will ters with more than 25 hours. year to serve as a management tool. be evaluated based on costs rather than Ensure matter budgets are detailed to If you must have charge-backs, consider on effectiveness. the point of showing the number of hours an annual allocation of internal legal costs by task for each fee earner.A total maxi- rather than doing so on a matter-by-matter Cost of the Legal Department: mum cost per matter does not allow an basis. Consult the CFO for a formula. Establish your worked hours based on an analysis of the proposed distribution of If charging external fees to business average month.Thus, 50 hours per week work within a firm. units or projects, have law firms identify for 46 weeks (vacation and statutory days Pay firms a performance bonus if they the charge-back co-ordinates on the removed) is 2,300 worked hours. do not exceed approved and detailed mat- invoice and have them send separate Target your fully-loaded hourly cost at ter budgets 90 per cent of the time and invoices to you for each of these. 45 per cent of the average hourly rate for the rest of the time do not exceed by the same mix of work from law firms. more than 5 per cent each year. Having More Lawyers: In-source legal Target your “chargeable hours” at 90 work from law firms as a fast-track way to per cent of worked hours for all lawyers There are more resolutions than on save money and grow the department. A except those holding supervisory posi- New Year’s Day. Something to think minimum of 600 external hours must be tions in the department. about.There is much to do. in-sourced to cost justify a new position in the legal department. Effectiveness: Define three effectiveness Richard G. Stock, In-source a greater share of complex cor- indicators for the legal department.These M.A., FCIS, CMC porate, commercial and regulatory work. can include contribution to strategic cor- is a partner with Measure and report on the savings. It may porate and business targets, increased self- Catalyst Consulting. not be necessary to add lawyers in order to sufficiency for operational support by the The firm has been in-source certain volumes of work. lines of business,and improved satisfaction designated by the Co-counsel complex legal work with levels of internal users. Canadian Corporate law firms as a way to reduce senior partner Counsel Association as a Recognized Supplier of time from law firms. Selecting Firms: Move beyond creating a Law Department Services Consulting. It is the panel list to making commitments to law Recognized Provider for Legal Department Pressing Issues: Create 10 per cent firms for a planned,multi-year configuration Consulting designated by theAustralian Corporate capacity in the legal department with and volume of work.The commitments are Lawyers Association. For law department strategy explicit protocols for users of the legal not guarantees but should be relied upon for that works, Richard can be contacted at (416) department, tools for users to be more planning and pricing purposes by the 367-4447 or at rstock@catalystlegal.com. 12 CCCA Canadian Corporate Counsel Association FALL 2010