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CCCA_V7No2_Dept-Performance-V4_CCCA 13-05-16 2:56 PM Page 8 Performance in the Law Department Measuring the right stuff How performance data helps legal departments achieve their potential. By Richard G. Stock very general counsel should have per- Eformance data on hand that covers seven bases. Without this information, the legal department cannot achieve or report on its full potential. But with the right informa- tion in hand, it is straightforward to gener- ate the necessary metrics, that is to say Key Performance Indicators (KPIs) with specif- metrics are applied to the legal depart- workflows and workloads as one of the top ic initiatives and targets that make sense for ment. General Counsel universally report two challenges for legal departments. a legal department. And none of it depends that these metrics or KPIs are ill- Add to this that 75 per cent of legal on timekeeping! fitting and fail to capture the value of the departments do not have a written business No general counsel can properly manage legal department. plan aligned with the corporate business a legal department without solid perform- But what else does the company have to plan and fewer than 10 per cent have a writ- ance data. Ten years ago, many corporate go on? Traditional indicators like head- ten forecast of the demand for legal services legal departments were regarded as an count or legal spend as a proportion of for the next year. This can work if the model emerging, useful part of corporate over- corporate operating revenue paint a sad is to run a hospital emergency room, but not head. Public sector legal departments have picture. More recently, KPIs have migrated a strategically focused legal department. been in place for 20 years, initially function- away from structural indicators like these, With a modest amount of analysis, gen- ing as captive law firms with a heavy focus to add process indicators that include pro- eral counsel will find that 20 to 40 per cent on litigation. In recent years, they have ductivity and general satisfaction levels. of their resources are dedicated to holding grown to accommodate policy, program These are important, but they still fail to internal clients’ hands and attending too and regulatory requirements. capture the developmental and strategic many meetings where the contribution is Corporate legal departments have contribution of the legal department — diffused. Begin by asking each lawyer to grown in number but remain relatively assuming there are such contributions. complete a spreadsheet describing the dis- small in size, with over 70 per cent having tribution of their time for the past year by fewer than 5 lawyers. Many remain vulner- Strategic vs. operational type of legal work and by business unit. Be able to budgetary cycles. Regardless of Legal departments tend to be responsive, if sure to leave room to record administrative size and industry sector, almost all legal not reactive, to demand for legal services. and professional development time. Use departments are ill-prepared to answer the Few have any written guidelines in place percentages, not hours, and apply these to question “What difference do the lawyers about when to call the legal department, the number of worked (not paid) hours per make?” There is a real increase in the preferring instead a classic relationship- year for each person. frequency of demand for performance data based arrangement where “clients” call the Next, evaluate the proportion of time directed at legal departments. Sometimes, lawyer about an unlimited range of topics that each member of the department spent the inquiry comes from the CFO’s office. and invariably do so too late. This modus on matters that were strategic, critical proj- Other times, it comes from the office of operandi can work for a law firm, but not ects or cases, or part of significant business ISTOCKPHOTO.COM corporate planning. In the absence of for a legal department. CCCA’s 2012 or policy development. Only count mat- something better, general performance Barometer Survey reported escalating ters that required at least 50 hours of time 8 CCCA Canadian Corporate Counsel Association SUMMER 2013