As any lawyer who has negotiated a contract knows, if you want to get a point across, you need to tell a story (the more concrete, the better). To send your CEO to sleep, read him the indemnity clause of your standard supply contract in detail. To wake him up again, tell him who will be on the hook to pay if some goods your company ordered go missing in transit.
Corporate legal departments face a unique challenge in telling their story because there is frequently a disconnect between what lawyers and business leaders think is important. That makes it hard to argue for bigger budgets, more control or greater influence in key business decisions. Tell your story convincingly, however, and decision makers will invest human capital and technology to make your department even better - and talented employees will stay for longer, too.
The secret to measuring and advertising the legal department’s value to the business is setting the right KPIs. In the US, where Fortune 500 companies regularly use quantitative KPIs to judge their department’s performance, metrics such as legal spend as a percentage of revenue, litigation win rates, or the percentage of work hours handled internally versus outsourced to law firms are now commonly found on general counsel end-of-year report cards.
Quantitative benchmarking is becoming more widespread in Asia. Thomson Reuters, in partnership with Asian Legal Business, recently conducted a survey of 400 general counsels at Asian corporations, and found that several quantitative key performance indicators (KPIs) are now in regular use in the region.
Our survey found that average response time of the legal department, outside counsels spend and litigation exposure were the KPIs most regularly reported in Asia. In addition, 24% of respondents reported being measured against average metrics for their industry. Such metrics can be obtained from consultants or from proprietary data held by service providers such as Thomson Reuters.
The move to hard numbers on a standard scale is a big step towards evidence-based decision making for in-house counsel. Yet it also comes with challenges. One of the biggest is that businesses are typically set up to capture financial metrics. Adding custom metrics for the legal department to the mix creates the daunting tasks of collecting, processing and analysing the numbers that feed into those metrics.
Most legal departments in Asia still tackle this manually, using tools such as Excel spreadsheets, and without the luxury of dedicated human resources. This approach can create more problems than it solves, as it tends to result in hard drives full of stale, inaccurate data that is updated in a frantic rush whenever management wants to look at the big picture. It is also highly prone to human error and it is non-scalable.
If you want to tell your department’s story in numbers, the gold standard is to replace fallible manual reporting with a digitised legal matter management system that automatically monitors and updates reliable data. The more automated the data collection process, the more uniform and valuable the data will be. Departments with significant external spend should also adopt automated billing and spend auditing. Those that largely generate their own documents should begin by automating document creation.
Using KPIs to raise your department’s profile within the business is an important step towards being a true business partner. Before you get started, make sure you have the necessary tools and technology to do the job effectively.
To read more about how to tell your legal department’s story, download our white paper, Top 10 Ways to Tell Your Legal Department Story.
Thomson Reuters provides legal management systems that can help you both benchmark and automate your legal operations. For more information, contact: legalsolutionsasia@thomsonreuters.com
