10 Tips for Helping Corporate Legal Departments Demonstrate Value

I've spent a great deal of time over the past several months speaking to corporate law department professionals regarding their operational challenges. One of the recurring discussion themes has been about the need to show their management teams and shareholders how they operate a best-in-class legal department that contributes meaningful value to the organization.

Based on those “best-practices” ideas, here are 10 tips for helping corporate legal departments measure and demonstrate their value to senior management:

1. Identify Metrics That Are Actionable and Drive Results ' Then Track Them

Tracking and analyzing the right metrics will give you the insight you need to make the right decisions on how to allocate your law department budget. Consider, for example, the use of alternative fee arrangements (AFAs) versus traditional billing methods. Corporate counsel must be able to forecast whether the use of an AFA will result in a cost-savings or whether a traditional billing method represents the better, more cost-effective alternative for a particular matter. Law departments also need to align their goals with the larger organization's goals. Meet with your business stakeholders to make certain that the metrics you're reporting on correspond to the key areas the business is focusing on, allotting dollars toward the right projects.

2. Distribute Regular Updates on Key Metrics

Promote specific ways in which your law department delivers value and contributes to the overall success of your organization. Circulating critical information on a consistent basis, like spend versus budget, diversity tracking, spend by matter and spend by business unit can help you identify key negotiation points such as volume discounts, billing rates by firm and staffing model by firm.

3. Improve Technology Solutions

Implementing e-billing and matter management solutions enables you to more effectively collaborate with outside counsel, forming stronger relationships and improving efficiencies. In the short term, technology solutions can get a law department's outside spending under control. In the long term, your solution helps you view trends for greater cost savings and more efficient budgeting. E-billing and matter-management solutions enable you to develop and track budgets for each matter, automatically manage events or tasks across multiple firms, and share relevant documents, often using a templated system that standardizes the process while accommodating different types of matters.

4. Position Yourself As a Thought Leader

How do other organizations perceive your law department? Forums that allow you to share best practices with external peers, as well as promote yourself as an indispensable company asset who runs a high-performing legal team, ultimately shine a positive light on your organization as a whole. Participate in user groups, speak on a panel when invited, and share your experiences with other inside counsel via online communities.

5. Find Additional Ways to Cut Costs

Always look for ways to save. Analyze travel budgets and entertainment expenses. Save time and money utilizing alternate technologies: Hold virtual meetings through video and Web conferencing technology such as Skype and WebEx; instead of printing and faxing changes, consider paperless alternatives such as electronic editorial and review tools, electronic faxing and e-mail. Review legal and IT staff so that you're using them to their fullest potential ' and don't pay for their downtime. Optimize your internal resources for additional cost savings.

6. Reassess How Outside Counsel Is Chosen

Think creatively when selecting outside counsel for your matter. Consider implementing competitive bidding and initiating requests for proposals when selecting outside counsel to handle new matters. Develop a standard process that outside counsel can use to compete for your business; one that will encourage your current firms to offer competitive pricing and continue to prove their value.

7. Allocate Work More Effectively By Identifying Top-Performing Outside Counsel

Pinpoint the outside counsel that consistently delivers results on time and on budget (case results and fees are a set of metrics to consider) and begin to assign even more projects to them. Once you've identified the top-performing firms that deliver the best value for the money, you can send appropriate matters to them with confidence, knowing you've identified those that work efficiently, that are results-oriented and client-focused.

8. Re-evaluate Outside Counsel Fee Arrangements

AFAs can be a powerful way to cost-effectively utilize the expertise of outside counsel without breaking your law department budget. Consider tying fees to performance, negotiating fixed fees for larger work volumes, or using hybrid agreements (a combination of fixed and hourly rates). Remember that the more work you have to give a firm, the more leverage you'll have when negotiating fees. Volume discounts, for example, can give you more negotiating power. Finally, it's important to understand the methodologies that outside counsel use to determine their fees. Request pricing strategies, and expect firms to provide them. We work with several companies that have implemented AFAs, including one customer where 90% of its litigation matters are billed on an AFA, just 10% of them still billed according to the billable hour.

9. Use Alternative Outside Counsel Resources

Consider using contract attorneys on your cases or outsourcing your legal services overseas. Contract attorneys could offer significant savings over what a law firm would normally charge, and the savings from off-shoring can be even greater.

10. Optimize Internal Resources

Skilled paralegals are priceless to law departments. Instead of sending tasks to outside counsel, use paralegals to perform work appropriate to their level that requires an understanding of your business or access to business teams and to help keep your costs down. In addition, implementing routines on how recurring work is handled, as well as creating templates for documents wherever and whenever you can, is crucial to enhancing your law department's overall efficiency.

Conclusion

In the end, the best advice may well be to turn insights such as these 10 tips into specific action steps. The fact is that corporate counsel now have a tremendous amount of data within their organizations and have a wide range of software tools available to help them convert this data into meaningful information. By putting this information to practical use, in-house legal executives can make better decisions and demonstrate greater value to their corporate management team.

Michael Lipps is vice president and managing director at LexisNexis, the developer of LexisNexis CounselLink, an e-billing, matter management and litigation hold company that helps corporate counsel measure and demonstrate value. For more information, contact the author at [email protected].

The economic conditions facing most U.S. businesses over the past few years have brought to the surface a stark reality: It is no longer enough to simply be a great lawyer and risk manager; corporate counsel must be effective business managers and be able to demonstrate the value they create for their companies in order to be considered successful.

Corporate legal departments are coming under increased scrutiny to prove their value to the executive team like any other cost center in the company. According to a recent LexisNexis CounselLink survey conducted by ALM Legal Intelligence, 94% of U.S. in-house law departments feel pressure to demonstrate value within their organization. See www.lexisnexis.com/trial/uslm141789.asp?access=JCM141789 (registration required).

The survey found that the most common way this pressure is manifest is with demands to reduce spending on outside counsel (78%), followed by reduction of risks (65%), reduction of law department budget (64%) and forecasts of future costs (60%). The results of the survey illustrate that this pressure to demonstrate value is ubiquitous across companies in every industry and in organizations of all sizes.

I've spent a great deal of time over the past several months speaking to corporate law department professionals regarding their operational challenges. One of the recurring discussion themes has been about the need to show their management teams and shareholders how they operate a best-in-class legal department that contributes meaningful value to the organization.

Based on those “best-practices” ideas, here are 10 tips for helping corporate legal departments measure and demonstrate their value to senior management:

1. Identify Metrics That Are Actionable and Drive Results ' Then Track Them

Tracking and analyzing the right metrics will give you the insight you need to make the right decisions on how to allocate your law department budget. Consider, for example, the use of alternative fee arrangements (AFAs) versus traditional billing methods. Corporate counsel must be able to forecast whether the use of an AFA will result in a cost-savings or whether a traditional billing method represents the better, more cost-effective alternative for a particular matter. Law departments also need to align their goals with the larger organization's goals. Meet with your business stakeholders to make certain that the metrics you're reporting on correspond to the key areas the business is focusing on, allotting dollars toward the right projects.

2. Distribute Regular Updates on Key Metrics

Promote specific ways in which your law department delivers value and contributes to the overall success of your organization. Circulating critical information on a consistent basis, like spend versus budget, diversity tracking, spend by matter and spend by business unit can help you identify key negotiation points such as volume discounts, billing rates by firm and staffing model by firm.

3. Improve Technology Solutions

Implementing e-billing and matter management solutions enables you to more effectively collaborate with outside counsel, forming stronger relationships and improving efficiencies. In the short term, technology solutions can get a law department's outside spending under control. In the long term, your solution helps you view trends for greater cost savings and more efficient budgeting. E-billing and matter-management solutions enable you to develop and track budgets for each matter, automatically manage events or tasks across multiple firms, and share relevant documents, often using a templated system that standardizes the process while accommodating different types of matters.

4. Position Yourself As a Thought Leader

How do other organizations perceive your law department? Forums that allow you to share best practices with external peers, as well as promote yourself as an indispensable company asset who runs a high-performing legal team, ultimately shine a positive light on your organization as a whole. Participate in user groups, speak on a panel when invited, and share your experiences with other inside counsel via online communities.

5. Find Additional Ways to Cut Costs

Always look for ways to save. Analyze travel budgets and entertainment expenses. Save time and money utilizing alternate technologies: Hold virtual meetings through video and Web conferencing technology such as Skype and WebEx; instead of printing and faxing changes, consider paperless alternatives such as electronic editorial and review tools, electronic faxing and e-mail. Review legal and IT staff so that you're using them to their fullest potential ' and don't pay for their downtime. Optimize your internal resources for additional cost savings.

6. Reassess How Outside Counsel Is Chosen

Think creatively when selecting outside counsel for your matter. Consider implementing competitive bidding and initiating requests for proposals when selecting outside counsel to handle new matters. Develop a standard process that outside counsel can use to compete for your business; one that will encourage your current firms to offer competitive pricing and continue to prove their value.

7. Allocate Work More Effectively By Identifying Top-Performing Outside Counsel

Pinpoint the outside counsel that consistently delivers results on time and on budget (case results and fees are a set of metrics to consider) and begin to assign even more projects to them. Once you've identified the top-performing firms that deliver the best value for the money, you can send appropriate matters to them with confidence, knowing you've identified those that work efficiently, that are results-oriented and client-focused.

8. Re-evaluate Outside Counsel Fee Arrangements

AFAs can be a powerful way to cost-effectively utilize the expertise of outside counsel without breaking your law department budget. Consider tying fees to performance, negotiating fixed fees for larger work volumes, or using hybrid agreements (a combination of fixed and hourly rates). Remember that the more work you have to give a firm, the more leverage you'll have when negotiating fees. Volume discounts, for example, can give you more negotiating power. Finally, it's important to understand the methodologies that outside counsel use to determine their fees. Request pricing strategies, and expect firms to provide them. We work with several companies that have implemented AFAs, including one customer where 90% of its litigation matters are billed on an AFA, just 10% of them still billed according to the billable hour.

9. Use Alternative Outside Counsel Resources

Consider using contract attorneys on your cases or outsourcing your legal services overseas. Contract attorneys could offer significant savings over what a law firm would normally charge, and the savings from off-shoring can be even greater.

10. Optimize Internal Resources

Skilled paralegals are priceless to law departments. Instead of sending tasks to outside counsel, use paralegals to perform work appropriate to their level that requires an understanding of your business or access to business teams and to help keep your costs down. In addition, implementing routines on how recurring work is handled, as well as creating templates for documents wherever and whenever you can, is crucial to enhancing your law department's overall efficiency.

Conclusion

In the end, the best advice may well be to turn insights such as these 10 tips into specific action steps. The fact is that corporate counsel now have a tremendous amount of data within their organizations and have a wide range of software tools available to help them convert this data into meaningful information. By putting this information to practical use, in-house legal executives can make better decisions and demonstrate greater value to their corporate management team.

Michael Lipps is vice president and managing director at LexisNexis, the developer of LexisNexis CounselLink, an e-billing, matter management and litigation hold company that helps corporate counsel measure and demonstrate value. For more information, contact the author at [email protected].