Measuring the value of the in-house legal team

On 20 November 2012, 40 senior in-house counsel discussed measuring value at a LexisNexis World Café event, hosted at Wragge & Co.

The following is a brief summary of the key insights that emerged.

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Value of legal department to business

This can be tangible and easily quantifiable, or intangible and harder (but not impossible) to measure.

Understanding your business and what the key stakeholders really want is a starting point to identifying value.

Monetary value might be created by getting products to market earlier, acting as business advisors, risk management, and reducing overall legal spend.

Ask; how does the legal team contribute to sales success?

The legal department should be a centre of commercial knowledge - it is in a unique position to see an overview of the entire business, to make connections and spot opportunities and risks.

The legal department keeps directors out of jail!

KPIs or SLAs can be drawn up with business colleagues. Expectations change, but they might cover:

• Contract reviews • Response times• Achieving goals• Number of business / legal interactions

Thoughts on measuring

Client surveys are a key metric – these might include number of complaints and quality of advice; but also quality of service, efficiency, commerciality and communication.

Document the business’ expectations of legal as a benchmark.

Post-deal debriefs with business colleagues – where did legal add commercial value?

Quantifying risks avoided – perhaps with reference to losses / fines in competitor companies.

Track cost of internal legal resource versus external hourly spend.

Record the number of visits by regulators.

Regular reports to the business – for example a pie chart showing legal time and resource allocated to each business unit.

Once measured, it is key to communicate the value legal provides in language the business understands.

What are the key ways in which your legal department adds value to your business, and how can these be measured?

* Source: LexisNexis In-house World Cafe tablecloths, 20 November 2012

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What are the barriers to measuring legal department performance? How can they be overcome?

Barriers

Difficulty in finding the time to tackle this – to pull yourself out of the mire.

Perception that numbers are not for lawyers.

Time-recording and charging back time can be a disincentive for the business to use legal; and is often unpopular with legal teams too.

Data on spend can be hard to get hold of – it is often incorrectly coded – or the coding makes no sense.

It’s difficult to know what to measure. What is performance? What does a successful legal team look like in this business?

There is too much to measure – impossible to know where to start!

It can be difficult to express complex legal value in terms that the business will understand – quantifying the intangible and translating into a pie chart is hard!

Proactive value (such as business insight, ideas, preventing problems) is much harder to measure than reactive value (such as fixing problems or reducing cost).

In-house lawyers could add more non-legal commercial value but feel inhibited from speaking up in business meetings.

Solutions

Make time, block time out in your diary for reflection. Get help from other parts of the business if you can. Ask finance/procurement to help you acquire data, or ask PR or corporate communications to help with messaging.To encourage your colleagues to participate – focus on “WIFM messages”: What’s in it for me?Survey the business on what is important. Ask: what do you value in legal? How can we be better than the competition?Understand legal’s fit within the business - shadow a business colleague and focus on developing relationships.Start measuring something! It won’t be perfect but it will show the business that you are tackling the need to show value. Have the courage to simplify and demystify the work that your team does.Intangible value can be quantified, documented and communicated – be creative.Develop the skills (through training or learning on the job) to express rough measurements in ways the business will understand. Overcome a nervousness of numbers by keeping it simple and intuitive. When communicating your value to the business use the right language and tone. Encourage your team to see their work as part of the wider business effort, and to have confidence in their commercial insights.

* Source: LexisNexis In-house World Cafe tablecloths, 20 November 2012

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What would be the benefits to your department of measuring and communicating its value more effectively?

The benefits of measuring the value of the in-house legal team:

Career development and motivation within the legal team.Protecting your headcount.Stronger case for investing in technology. Clarity of what the roles of the team are, and how they fit into the bigger picture.Greater respect from the business – and pay for you and your team!More focus on high-value work – get NDAs off the desk.Work out how to save money and also increase the intangible value of the team.Being able to identify overlaps and duplications in deals, and improve the process.Get more value from law firms, and take a more strategic view of what to outsource.Keep the regulators at bay.Become “super-commercial” lawyers – at the heart of business. Influence the person who holds the purse strings.Control over the work you do, and your destiny. Better communication with the business. Become a true ethical champion.Shout about the achievements and monetary value of the legal team. Better risk management through better allocation of resources.Identify opportunities to create income. Identify areas of risk and trends. Educate business bosses on the value of legal.A clear view of your priorities and strategic vision.A stronger relationship with the board. The ability to promote greater work/life balance (and employee engagement), while demonstrating improvements in productivity.Have the CEO’s ear, and get involved early in sexy projects.Demonstrating your awareness of the need to measure value will be in itself valued by your business.

* Source: LexisNexis In-house World Cafe tablecloths, 20 November 2012

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