In-House Legal Data Analytics for Beginners

Let us show you how to get started in legal data analytics. 

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Forward: Richard Conway, Coca Cola Amatil

If you’re like me, the phrase “legal data analytics” is quite daunting.

 

Let’s put it into words lawyers use all the time: what are the facts? Put simply, “legal data analytics” are the facts and evidence about what you and your team are doing. Nothing more complex than that.

Legal Data Analytics Cover Xakia

The law is too big for us to understand completely. So as lawyers, we’ve learned to operate based on principles and intuition. That works for legal advice, but when it comes to the business of the legal department – managing a team, making resourcing decisions, crafting a budget and reporting to management – you need facts. Imagine if your CEO told shareholders “we think we sold more this year and that probably means profits are up.” Legal teams need to start managing themselves based on facts, just like the businesses we work for.

One example (shared in the eBook) from our legal data analytics journey shows how moving from intuition to facts can bring about positive change. Armed with the facts, we can now have informed discussions with our business about what we do. Having the facts, even the very basic ones, will completely change your dialogue with your business.

If you are reading this book, you may be new to legal data analytics. I’m excited for you: there is so much potential for you and your team once you properly understand what you are actually doing, and who you are doing it for. This book will guide you on the “who, what, when, why” information you need – and how to collect it, how to apply it and how to share it.

In other words, just the facts.

The Case for Legal Data Analytics

Welcome to Xakia’s Legal Data Analytics Boot Camp.

 

Xakia Legal Dashboard

To begin, let’s consider where you are now:

  • You are overworked; according to the Association of Corporate Counsel, the number of in-house counsel working more than 60 hours a week has risen by more than 50 percent.

  • Your work isn’t necessarily the most strategic – just the most urgent. In a FindLaw Corporate Counsel Survey, nearly half of participants said they were too busy “fighting fires” to achieve any long-term goals. You wonder what work could be simplified, automated – or maybe eliminated.

  • Your information is disaggregated. You communicate with your colleagues about projects, deadlines and budgets at meetings, at the water cooler or by email – but without a centralized system. Simply tracking “who’s doing what” means sifting through old messages, spreadsheets, Word documents, myriad law firm portals... or worse, what’s stored only in your colleagues’ memories.

Maybe nothing has blown up (yet), but stressors abound.

A colleague’s departure means a hundred mysteries to solve. A query about the Legal Department budget requires a deep dive into 36 law firm bills or worse, their own data “summary” that you need to now collate. What should be a straightforward quarterly report takes hours of trolling through a dozen information sources.

If this is your pain, data is the prescription. At its most meaningful, legal data analytics isn’t about buzzwords like Big Data or synergy or optimization. It’s about improving your performance... and your quality of life. And it works. According to the research firm Gartner, Legal Departments that use analytics to inform their decision-making show higher work quality, reduced litigation cost and lower spending.

This guide exists to make legal data analytics accessible for Legal Departments of all sizes and lawyers of all backgrounds.

You don’t need a giant Legal Department to implement a data program; you don’t need to have a background in math, science or engineering; and you don’t need to find another batch of hours in your day.

As we begin, remember the good news:

  • You already have the data.

  • Collating the data is not necessary.

  • Calculations and analytics can be automated.

Legal Data Analytics - What's the point?

While the power of legal data analytics cannot be overstated, we know the concept of collecting, analyzing and acting upon data can be daunting for a team that’s accustomed to Word-based manual reporting or a smorgasbord of spreadsheets.

Before you start collecting data – which we’ll cover shortly in this guide – consider just a few of the ways it can help your team:

  • Prioritize work.
  • Allocate resources.
  • Identify work that should be automated, eliminated or managed elsewhere.
  • Ensure appropriate staffing and workloads.
  • Manage the budget and allocate costs to business units.
  • Handle external firms, including fees, deadlines and quality.

By quantifying and sorting the work, its risk profile, complexity, resource demands and more, you can measure whether you are getting the right results; when the answer is no, you can adjust accordingly. Data empowers you to stop acting on anecdotes and hunches, and start making well-informed, proactive decisions.
 
Number of Disputes Time Frame Xakia

 

I wanted more visibility and insight into the entire portfolio of matters, with an interest in making sure people were spending the precious limited time of in-house legal resources on the right projects. I wanted the ability to statistically map out and identify places where we could automate work or stop doing things that were low-impact. But I couldn’t figure out a way to do that by email.

- Sean Power | General Counsel, BlueScope Buildings

Data Analytics - the big picture

While better management of capacity, capability and cost is helpful within the Legal Department, there’s another important benefit of legal data analytics: it can demonstrate the value of a legal function to a business.

Volume Of Work Number of Contract Requests Xakia

According to The GC350: Benchmarking Study for the In-House Community, 44 percent of Legal Departments say they don’t have a high profile within their companies. When asked whether they measured the value delivered to the business, 77 percent said no.

This bears repeating: More than three-quarters of Legal Departments do not measure their value whatsoever – despite their strategic importance (and despite the fact that performance bonuses can account for up to 67 percent of in-house counsel compensation, according to BarkerGilmore).

Data will help you advocate for your department. A smart legal data analytics program will address the value drivers that matter most to the C-suite and the board: legal spend, strategic importance, matter risk and monetary significance.

KPMG’s Through the Looking Glass report compiled corporate leaders’ opinions about general counsel and Legal Departments. Their summary: “Great GCs know what is happening within the business, they understand the strategic vision and the regulatory and legal climate, and they can see the risks and opportunities around the corner. No one else on the board has this legal and business perspective.”

As in-house counsel, you have tremendous value. It’s time to use legal data analytics to prove it.

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The Mechanics of Legal Data Analytics

It’s obvious but bears stating: Before you can analyze the data, and before you can act on the data, you must actually collect the data. This may feel daunting if your Legal Department has been running – successfully or otherwise – on anecdotal reporting or a mishmash of systems.

The next four sections in this guide will detail what data points will be most helpful and actionable: the “who, what, when and why” metrics of your Legal Department.

You can collect and crunch this data using a couple of different methods:

  • Basic Excel spreadsheets will make use of software you already have, but you will need to be exceptionally mindful of consistency, both in the way information is entered and described and also in your teammates’ data entry habits.
  • Matter management software for Legal Departments, like Xakia, streamline the process by collecting information for each matter in less than 30 seconds. The matter entry form is designed to ensure relevance and consistency among the data.

Either way, you will follow the same set of steps:

  • Determine what you want to measure. This guide will walk you through a variety of options in the following pages. While there is a plethora of information you can collect, the most actionable intelligence will lie in your “who, what, when and why” metrics.
  • Find a central location where the data will reside. Again, this could be in Excel, matter management software or another project-management solution. When assessing potential homes for your data, don’t neglect the time value of money; while a spreadsheet may seem “free,” it may cost more in man-hours in the long run. Matter management software vendors should provide you with straightforward and predictable pricing based on your Legal Department size and functional needs.
  • Appoint a custodian. Designate one individual who will be responsible for establishing the data fields, ensuring quality control with data entry, and exporting or illustrating the data. While everyone in the Legal Department should feed information into the system, having one supervising custodian will provide accountability and the all-important consistency necessary for meaningful results.
  • Collect consistently. To be successful, your data must be comprehensive – across time, across locations, across your team. Legal Departments are stressed and pressed. It’s important not to present data collection as yet another item for the to-do list, but to integrate it as seamlessly as possible into the existing workflow – to the point where it is almost invisible to those providing the data. While a telepathic data collector may be in the AI pipeline, it does not currently exist… so plan your system with empathy and practicality.
  • Generate reports. Answering one question at a time – “Which business units send the most matters?” or “What percentage of our resources are spent on non-strategic work?” – visualize your data. Use Excel’s chart feature to make a straightforward pie chart or bar graph, or deploy one of your matter management software’s automatically generated reports. Use these snapshots to start diagnosing your problems and brainstorming solutions.

Business people think in charts and graphs; lawyers think in blocks of text. I needed a way to translate our narrative into charts and graphs that show how and why the legal team spends its time.

Sean Power | General Counsel, BlueScope Buildings


I used to literally have a Word document list of items – here are the 42 things I’m working on. Now I get a report and I can tell the board X percent of our work is contracts, X percent is employment and X percent is student appeals. [Legal data analytics] allows me to report to our board a division of work, letting them know our time investment.

Courtney Goddard | Former General Counsel, Park University

ANSWER THESE 11 QUESTIONS (IN LESS THAN A MINUTE)

WHO

1. Who are you doing work for

2. Who is doing the work?

3. Who (and how much) will we pay for the work?

WHEN

7. When will you do it?

8. When will it be ready?

 

WHAT

4. What type of work is it?

5. What is the legal content?

6. What is the value?

 

WHY

9. Why is there risk?

10. Why is this complex?

11. Why are we doing this?

 

The Data

Although every Legal Department is different, the fundamentals of legal data analytics are universal. Every successful data program will cover four key categories: the who, what, when and why behind your legal matters. Once collected and interpreted, these metrics will help make your team more productive, more valuable to the C-suite, and very likely far less stressed.

 

For each of these categories, let’s examine: 

  • What are the key questions data can answer?
  • What inputs (information) do we need?
  • What outputs (insights) can we get?

who what where why Xakia

 

PART ONE

WHO

For your legal data analytics, this comes down to two questions:

  • Who are you working for?
  • Who is doing the work?

In addition, because external firms account for more than half of law firm budgets, this section will also address your legal spend. With some strategic information-gathering on “The Who,” your Legal Department will gain significant insights that can inform smarter resourcing, ensure adequate staffing, ease stressful workloads and lessen budget stress.

CLIENT ANALYSIS

WHO ARE YOU WORKING FOR?

 

INPUTS

While every company’s organizational chart is different, and systems for chargebacks vary widely, every in-house department provides legal work to various business units – from Human Resources to Marketing to Finance. Using your own context, start to answer one fundamental question:

  • Business unit. Where is the work coming from?

OUTPUTS

Your “Who” data will inform important conversations with your department, your business clients and your company’s leadership team, among them:

  • Frequent flyers. What business units are your frequent flyers (or problem children)? Why? Are some departments more prone to legal troubles, and if so, are there opportunities for new policies or training?
  • Ghosts. Are there any business units with a striking lack of legal work? In The GC350’s benchmarking study, 72 percent of corporate counsel said their business units sometimes procured legal services directly. Depending on the nature of the work, this could present problems later – spotting “ghosts” can help eliminate any surprises about the organization’s risk.

MATTERS RECEIVED BY BUSINESS UNIT

 

By Business Unit Chart Xakia

 

According to The GC350

29% of Legal Departments allocate work based on business unit. Larger teams (those with 30 or more) are most likely to have business unit specialists; smaller teams are more likely to allocate work based on experience or simple availability.

RESOURCING

WHO IS DOING THE WORK?

 

INPUTS

The first step in understanding your resourcing is calculating the split between your internal and external resources. While every Legal Department is different, most teams outsource a little more than half their workload.

For your internal resources, determine:

  • Seniority and specialty. What are the experience levels of the personnel in your Legal Department? Do you have subject-matter experts, generalists or both?
  • Individual workload. How are assignments divvied up throughout the Legal Department?

For your external resources, you will want to understand:

  • Type of firm. First, sort your outside providers into law firms and other legal service providers. For law firms, drill down further – consider sorting your firms by size (solo/small, midsize, BigLaw, et cetera) and specialty (full-service or boutique).
  • Panel membership. If your firm uses an outside counsel or other preferred provider program, chart which firms are members and which are not.
  • Spend analysis. How much are you paying to whom? (More on this later.)

According to The GC350

42% of legal budgets are spent internally and 58 percent go externally. The benchmarking survey found these proportions hold true across industries and company sizes.

OUTPUTS

This data, combined with your “what” and “why” data, will help you address:

  • Internal vs. external balance. Are you sending out too much work – and is it work that could be more efficiently handled in-house?
  • Department experience levels. Do you have the right mix of junior and senior lawyers and legal staff?
  • Department capacity. Is the team overworked? Is this shared amongst the team?
  • Panel effectiveness. Is your Legal Department using the panel firms as intended? Are you realizing the cost and efficiency savings you intended? Are members of your team “going rogue” with non-panel firms?
  • ROI. Are you sending simple, straightforward and low-strategic-value work to your most expensive firms? Where might there be opportunities for cost savings?
  • Risk management. Is your highly complex, most strategic work being handled by the right people?

RESOURCES USED ON MATTERS

 

Resources_Used_on_Matters_Chart_Xakia

 

SPEND

HOW MUCH DOES THIS WORK COST?

 

INPUTS

Remember that department spend matters to the C-suite. In Altman Weil’s Chief Legal Officer survey, about one-third of respondents said their CEO or board of directors viewed “controlling legal spend” among the Legal Department’s top three priorities.

Without diving too deep into your ledger – or getting a master’s degree in accounting – take a look at two levels of budgeting:

  • Macro budget. What is the overall budget for the Legal Department? What are the biggest loads on this budget? (We put this category in the “Who” section for a specific reason: Law firms and outside vendor spend accounts for 52 percent of the average Legal Department budget, according to Altman Weil.)
  • Micro – or matter – budgets. For your matters or other budget subsets (such as overall litigation), have you determined a set budget? Are these reliably tracked?

Matter management cost - In-House Legal Data Analytics

 

The Association of Corporate Counsel has identified two links between smart budgeting and overall department and company health:

  • Legal Departments that hit their budgets are more likely to have a seat at the table. In the ACC’s Law Department Management Report, the ACC reports teams that make budget are statistically more likely to have regular meetings with business leaders on operational issues.
  • Legal Departments that hit budgets may be less vulnerable to regulatory investigations. The ACC also found a “strong correlation” between departments that keep spending within budget and departments with fewer regulatory issues.

 

OUTPUTS

A hard look at your financial data can help you assess your financial performance and missteps, including:

  • Internal budget behavior. Does your Legal Department operate above, below or right at budget? If you consistently exceed budget, how could you improve your forecasting? What are the problem areas – business as usual, special projects or department operations?
  • Outside firm issues. Are your outside providers adhering to outside counsel guidelines? How much are you spending per firm? Are you leveraging your largest relationships for alternative fee structures or discounts? Again, refer to the data on matter complexity and strategic value: Are you spending far too much money on basic work?
  • Budget drains. Where does your spending seem out of control? While special projects such as litigation or M&A activity is hard to predict, your business-as-usual projects can lend themselves to solid forecasting – and potential tech solutions.

BUDGET DIAL

 

Budget_Dial_Xakia

 

 

 

Who What When Why Xakia

PART TWO

WHAT

This calls to your Legal Department’s purpose: What exactly do you do around here? A smart collection and classification of your legal work will help you identify opportunities for improvement, ensure appropriate staffing, scout problem areas and more.

The challenge: To obtain data that is at all useful, your team needs a relevant and consistent taxonomy to classify matters.

Example: Consider a trademark litigation matter. John categorizes the matter as “litigation,” while Jane calls it “intellectual property: general.”

Result: The team fails to recognize a trend that points to a problem with the company’s marks and an opportunity for a cohesive battle plan.

You don’t have to address every possible characteristic of every type of matter. You can create actionable intelligence with three categories: work type, work category and matter value.

WORK TYPE

IS THIS ROUTINE OR EXTRAORDINARY?

 

 

INPUTS

Remember that consistency is key; your goal is a system that sorts matters with very little likelihood for inconsistencies or individual interpretation.

 

After years of designing and deploying matter management for Legal Departments, we recommend using three work types:

  • Business as usual: Work being done to maintain the core business, such as routine contracts.
  • Project: Work not likely to be repeatable (or budgeted), such as major litigation or an acquisition.
  • Quick advice: Question-and-answer interaction with your business units – the quick calls and email responses that may not warrant a formal matter opening but should be recorded in some way.

OUTPUTS

This data will inform:

  • Internal resourcing. Your high-stakes work demands different resources than quick advice; for highly strategic matters, responders need to be intimately familiar with corporate goals and how work should be weighed against competing legal requirements. These situations call for direct involvement of a decision-maker, such as the general counsel, while other team members can facilitate business-as-usual work and triage quick advice.
  • External resourcing. At the same time, work type should inform your law firm choice. Your most significant projects should go to law firms with the institutional knowledge and specific expertise to provide value-added counsel. Routine matters can go to lower-priced alternatives.
  • Process improvement. Monitor the business-as-usual and advice fields for “repeat offenders” from your business units. Can you adjust policy, conduct training or introduce self-help tools, such as reference guides?
  • Technology solutions. Mine your business-as-usual and quick advice matters for trends and volume. Work that repeats and doesn’t vary widely could potentially be automated with a legal technology application, such as an AI-powered contract portal.

WORK TYPE

 

Work Type Resource Intensity Chart Xakia

 

WORK CATEGORY

WHAT TYPE OF LEGAL CONTENT IS REQUIRED?

 

 

INPUTS

This refers to the legal subject matter (or practice area, for law firm expatriates). This area is critical: An accurate catalog of matters will help you better address problem areas and identify opportunities for optimization.

No two Legal Departments are the same. For your inputs, ensure your categories and subcategories are specifically tailored to your team, your industry and your company – then ensure your people know how to accurately and consistently record their matters. Whether in a spreadsheet or matter management system, make the choices finite and lock them down, so your team members cannot create their own categories.

Work with your subject-matter experts to create your categories, or mine your law firms’ organizational charts for ideas on practice structure.

OUTPUTS

Look at your activity across categories. Which are spiking – and why? If your work categories are accurately and consistently charted, your Legal Department can start to address:

  • Proactive counsel. Recall the example at the beginning of this section: An organization sees an uptick in trademark litigation matters. The Legal Department could start investigating the issue. Is it a problematic product or packaging – could this be the start of a slew of lawsuits?
  • Resourcing. Growth in specific categories could prompt hiring of subject-matter experts internally. On the external side, look for batches of work that could be better deployed – perhaps sent to lower-priced boutiques or consolidated with one firm to save time and money.
  • Business unit interaction. When you combine work category with client analysis, you can quickly see areas for improvement with your business units. To return once more to the trademark litigation example, the Legal Department could consider implementing a new approval process with Marketing or Product Development to minimize future problems.

What work categories are Legal Departments handling?

  • Corporate: 98 percent
  • Intellectual Property: 92 percent
  • Regulatory: 97 percent
  • M&A: 89 percent
  • Employment: 97 percent
  • Competition/antitrust: 88 percent
  • Real estate and environmental: 97 percent
  • Tax: 85 percent
  • Litigation and dispute resolution: 96 percent
  • Corporate finance: 84 percent
  • Compliance: 95 percent
  • Insurance: 70 percent

 

Source: The GC350

MATTER VALUE

WHAT IS AT STAKE?

 

INPUTS

The most straightforward metric, this gets down to dollars: For each matter, what is the potential risk or reward?

Whenever possible, use the real dollars at stake – simply enter the numbers.

OUTPUTS

This data will inform your resourcing, ROI and more. It’s especially helpful to examine your smallest matters; there, you may find easy opportunities for improvement:

  • Resourcing. Is your most expensive talent working on the lowest-stakes matters? It’s overkill to have an AmLaw 100 firm hammering on four-figure lawsuits.
  • Diagnosis. A cluster of small-dollar matters within one business unit can indicate a department-specific challenge or policy problem. This work may be mitigated (or eliminated) with training or a self-help tool.
  • Technology solutions. Small, reoccurring matters can be ideal candidates for legal technology tools. There’s a wide universe of software available, from automated contract review to AI-powered litigation documents. Later, this metric can be a major focus of your reports to the C-suite; it will show the Legal Department’s efforts in the company’s material activities.

 

MATTERS BY MONETARY VALUE

 

Matters Monetary Value Chart Xakia

 

In 2018, 39.4 percent of Legal Departments reported modifying their work to better match the risk involved.

Of those who reported making this change, 54.9 percent reported a “significant improvement” in cost control; another 39.2 percent said it was too soon to tell.

Source: Altman Weil’s 2018 Chief Legal Officer Survey

When Xakia

PART THREE

WHEN

There are two key timing elements for Legal Departments: turnaround time and working time.

You can capture meaningful information for both categories without resorting to timesheets (or risking a Legal Department insurrection). You don’t need .1 time entries to answer the two fundamental “when” questions: 

  • Where (or who) is the bottleneck?
  • How long will this take?

TURNAROUND TIME

HOW LONG ARE MATTERS WITH THE LEGAL DEPARTMENT?

 

INPUTS

“How long with Legal” may be better stated as “Where’s the holdup?” Legal data analytics can answer this key question by tracking a matter through its life span and charting where it’s sitting – whether that’s with the Legal Department or an outside firm for execution, with the business unit for information or instruction, or with the C-suite for authorization.

OUTPUTS

This metric will inform:

  • Legal Department reputation. No in-house team wants to appear incompetent or slow. This information can rebut that perception. It may appear that a project takes the Legal Department six weeks to finalize… when five of those weeks were spent waiting on a response from the assigning business unit.
  • Bottleneck repair. What are the reoccurring delays? How can you expedite or eliminate them? Consider self-help tools or policy changes; adjusting your approval protocols for small-dollar matters could significantly accelerate your execution.

    Don’t underestimate the business importance of addressing turnaround time. If your legal data analytics project can help you cut the time needed to approve a major contract from six weeks to four weeks, your company could close nearly 40 percent more deals in a given year.

 

AVERAGE TURNAROUND TIME BY WORK CATEGORY

 

Turn Around Time Work Category Xakia

 

According to The GC350

27% of legal teams have sought formal feedback from business clients. Of those, 70 percent sought direct input on their speed of response – more than those who asked for feedback on their decision-making abilities.

TIME IN HOURS

HOW LONG WITH THAT TAKE?

 

INPUTS

We acknowledge two truths: The time spent working on a matter is not necessarily a reflection of its value, and most in-house lawyers aren’t eager to go back to firm-style timesheets. We certainly won’t encourage you on a futile crusade on the latter. Consider a set of uniform but realistic measurements of time: Will this project take hours, days, weeks or months?

OUTPUTS

Knowing how long a project will take, even in the most basic terms – days or weeks – will inform:

  • Staffing and resourcing. Will this consume five days or five months – or five people for five months? Monitoring your internal bandwidth will show where you need external help or a new hire (or two).
  • Timelines and promises. Accurate estimates for project completion can improve your relationships on all sides… even with your law firms. A 2018 survey by Acritas asked outside counsel how Legal Departments could improve. Twenty-five percent of respondents said their in-house clients failed to respond quickly to inquiries; 42 percent said their clients failed to set realistic timelines.

 

FORWARD PLANNING

 

Forward Planning Chart Xakia

According to the Association of Corporate Counsel, as many as 40 percent of large departments track attorney time. “…Tracking time in hour increments, or only for a quarter a year, or only on certain kinds of matters, gives most of the insights with less of the angst.”

Source: The ACC’s How to Show the Value of Your Department

Why Xakia

PART FOUR

WHY

The loftiest of your legal data analytics, the measurements in this section help you assess the qualitative nature of your work: its risk, complexity and strategic value.

Examining these categories on their own will provide actionable intel that you can apply immediately toward smarter staffing, resourcing and workflow. But when you put this information together with your Who, What and When data, you’ll be ready to take your Legal Department to the next level.

RISK PROFILE

WHAT IS OUR POTENTIAL EXPOSURE?

 

INPUTS

Risk management is a paramount task; in Altman Weil’s Chief Legal Officer Survey, 63 percent of respondents said their CEO or corporate board ranked “managing legal risk” among the top three ways the Legal Department added value to the organization – outranking “controlling legal spend” and even “managing compliance.

For tracking purposes and simplicity, we recommend that you set defined ranges – or, in the context of risk, pain thresholds. We use low, medium, high and critical. Within your business context, consider your own definitions; your small could mean “$1 million or less” or “$10 million or less.” (And don’t forget other types of risk, too, like risks to your reputation, potential regulation, et cetera.)

Define your ranges, then educate your team to ensure consistent classification.

OUTPUTS

Sort your matters by the size of risk – low, medium and so on – and review them by category, looking for areas of improvement:

  • Capacity. Where is the bulk of your work, and how is your work trending? If your team is drowning in small-risk matters, there may be opportunities to engage additional junior staff, a lower-priced firm or even a non-law firm vendor.
  • Capability. Are your resources properly aligned according to risk profile? While you don’t want your most expensive law firms dedicated to small-risk matters, the opposite also is true: You don’t want the highest-exposure problems going to firms that may be ill-equipped to solve them or lack the institutional knowledge to advance the company’s goals.
  • Cost. Are you assigning your lowest-risk matters to your most advanced litigators or your most expensive firms? Get creative in the small- and medium-risk buckets with alternative fees, automation and more.

Over the next five years, what issues do you expect to pose a strong risk to your organization?

  • Regulation – 46%
  • Data security and protection – 40%
  • International compliance – 40%
  • Reputational risk – 38%
  • Risk of failure of the supply chain – 28%
  • Emerging markets – 28%
  • Bribery and corruption – 24%
  • New technology – 24%

Source: KPMG, Beyond the Law

COMPLEXITY

HOW CHALLENGING IS THIS WORK?

 

INPUTS

It’s highly likely the matters streaming into your Legal Department vary widely in complexity. On one hand, the most challenging work seems to be growing even more so; according to KPMG, 46 percent of general counsel see the growing complexity of regulation as a “strong risk” to their organizations, while 61 percent say litigation subject matter is growing trickier.

The hard work is getting harder, but the simple work isn’t going away; according to The GC350, more than half of a Legal Department’s workload goes to low-level legal process and day-to-day work.

When you start monitoring matter complexity, you can start to be proactive with your resourcing, staffing and ROI. For every new matter, rate its complexity; we like a scale of 1 to 10. As long as the members of your Legal Department can classify matters uniformly, the exact system is up to you.

OUTPUTS

Later, we’ll combine various elements of legal data analytics to get next-level insights. For now, look at complexity on its own. Sort your matters into simple, medium and complex categories. Start to examine each:

  • For simple  matters, look to see what could be automated, eliminated or outsourced – the more of these you move off your plate, the more time you will have for the work that truly needs your expertise. Data will inform which business units are generating this work; you can train them or provide self-help tools to resolve these matters.
  • For complex  matters, review your resourcing to ensure it is appropriate for the difficulty level, then consider the most efficient option. For example, a growing volume of highly specific work could call for the hiring of a subject-matter specialist or enlistment of a boutique firm that can provide the relevant expertise without Big Law cost.

81% of chief legal officers use value-based staffing practices – such as assigning work to non-lawyers – based on a matter’s complexity and risk profile.

Source: ACC, Chief Legal Officers 2017 Survey

STRATEGY

WHAT IS THE STRATEGIC VALUE OF THIS WORK?

 

INPUTS

Some legal work will advance your company’s most important objectives; some legal work is done to keep the proverbial lights on. Your most important work deserves your best and brightest, and legal data analytics can help you ensure the right mix of internal and external resources.

Meanwhile, by taking the time to assess the strategic value of your entire portfolio of matters, you can spot ways to better triage the non-critical work. Recall that almost half of in-house counsel say they spend too much time “fighting fires” to address any long-term goals – use your new legal data analytics to automate or eliminate this work so you can concentrate on the matters that are meaningful, challenging and potentially fun.

For every new matter, enter a measurement of its strategic value. We like a scale of 1 to 10, but you can choose a metric that works for your Legal Department and your context.

One important caveat: For this metric to be useful, every member of your Legal Department will need to have a clear understanding of the organization’s strategic objectives. Consider circulating a list of priorities, or better yet, schedule a briefing with the C-suite. One added benefit: Your Legal Department will feel more invested with the company, its mission and their work.

OUTPUTS

Now that your projects have been rated by strategic value, start segmenting them for analysis:

  • For low strategic value matters, look for opportunities for efficiency. Internally, this could mean automation, self-help tools or assigning lower-level personnel; externally, consider lower-priced firms or vendors.
  • For high strategic value matters, check to make sure your best legal talent is on the case. Internal or external, individuals handling this work should have familiarity with the company’s strategic goals and the special expertise to construct creative legal solutions.

    In the next section, we’ll work on combining strategy with other elements – namely complexity and risk – to make a compelling action plan for your Legal Department.

What work is handled internally, and what is outsourced?

  •  Low-level legal process: 84% in-house, 16% outsourced
  • Day-to-day legal: 84% in-house, 16% outsourced
  • High-level strategic: 74% in-house, 26% outsourced

Source: The GC350

Putting It Together

Your Who, What, When and Why data sets are actionable on their own – but when you combine different elements, you will discover a whole new level of insight on your Legal Department. Consider the various combinations you can make across these categories.

For example, to troubleshoot low-importance bottlenecks, look at Turnaround Time and Strategy: Are there matters of low strategic significance with long lag times? Who are the Clients behind them? Once you have this data, you can look for ways to alleviate the congestion, such as self-help tools, training or automation.

Mathematics suggests that among these 11 categories, there are 39,916,800 possible combinations… you can slice and dice your data to answer nearly any question about your Legal Department. However, we recommend first concentrating on the issue most likely to deliver the most impact: How do you ensure your resourcing choices give you the highest return on effort or investment?

  • Resourcing: A Data-Driven Approach

Counterintuitive as it may seem, the best way to assess your resourcing is to strip away budget and spend at the beginning. Instead, focus on two aspects of the work: Complexity and Strategy. Map your matters on a quadrant that shows:

  • Low Complexity + Low Strategic Impact
  • High Complexity + Low Strategic Impact
  • High Complexity + High Strategic Impact
  • Low Complexity + High Strategic Impact

QUADRANT

 

Xakia Quadrant 1

 

Once you understand the profile of the work, you can start to match the resource, whether internal or external. The following infographic provides examples of work types, along with resourcing options and resources to avoid.

As you start to align your work with the ideal resources, the data you collected for Who, What, When and Why will empower informed and sound decision-making, as you will know:

  • Who: Legal Department capacity vs. capability
    Do you have enough of the right people to do the work?
  • Who: External firm cost
    Is your outside spend appropriate with regard to the complexity, strategic importance and risk?
  • What: Work type and work profile
    How is your work trending, and what does this suggest for risk, hiring needs and more?
  • What: Matter value
    What does your organization have at stake?
  • When: Timing considerations
    Will you be able to reasonably complete this work on schedule?
  • Why: Risk profile
    Are you safeguarding the organization as best you can?

    Not coincidentally, taking this approach aligns your resourcing with the value drivers that you ultimately will report to the C-suite and the board: legal spend, matter risk and monetary significance, and strategic importance. Incorporating this quadrant into your reporting will show a proactive, business-minded approach to managing the Legal Department – a far more sophisticated impression than a Word summary.
Xakia Lega Department Resourcing 1

SAMPLE REPORT

 

Xakia Matters Received by Business Unit

Xakia Budget Chart

Xakia Strategic Impact

 

Getting Started

To maximize your success – and minimize resistance – begin your project with:

  • Executive management support. Have a clear leader to champion the rollout and take responsibility for its outcome. This could be the general counsel, chief legal officer, director of legal operations or another position of prominence and respect.
  • User involvement.
    Identify everyone who will touch the new system and outline the project’s potential value to them. If you have a small Legal Department, you can engage the entire team. For larger organizations, consider a focus group that comprises representatives of different job types, locations and technology comfort levels.

Cultivate belonging and ownership:

  • Explain the project. Provide some reassurance you understand users’ needs and concerns. Explain the rationale behind the project and its context in the big picture.
  • Share the process. Explain the “stepping stones” that will take the project to completion. Small but significant deliverables will help users see progress and keep them motivated to continue.
  • Encourage participation. Ask your colleagues to share their pain points or burning questions. They will feel involved – and you may find a new and valuable angle.
  • Recruit an evangelist or two. While executive sponsorship is important, cynics may be more influenced by an enthusiastic peer in the trenches.

Your Legal Data Analytics Checklist

Xakia Legal Analytics Checklist

Continuous Improvement

You’ve done the work. You have a legal data analytics infrastructure in place; you are collecting and analyzing data; you are starting to use data to drive smarter operations and better resourcing. Soon, you will see results – in your Legal Department, on your bottom line and in the C-suite.

How can you keep the momentum going?

Smart Legal Departments use data to fuel continuous improvement across all functions. There are four critical areas where data will support your quest to be a proactive part of the business: You need a plan, and the money, tools and people to deliver on it.

ONE: STRATEGIC PLANNING

 

Nearly half of corporate Legal Departments work without a formal plan, according to Xakia’s Legal Operations Health Check survey. Among those who do plan, quality and execution may be lacking; less than one-third said they plan at least “moderately well.”

By formalizing your Legal Department strategy, you can ensure you tackle the most important initiatives. Without a written plan, you may sacrifice your most ambitious projects for business as usual; recall that according to FindLaw, nearly half of in-house counsel are too busy “fighting fires” to accomplish long-term goals.

The first step in creating your Legal Department strategic plan is to determine where you want to go. How do you want the department to look at the end of the year?

Refer to your data. How is your work trending, and how should you best prepare? Where are the largest risks? What are the company’s strategic initiatives, and how well is the Legal Department supporting them? The information you have collected will guide you toward purposeful, positive change.

Free Tool

Visit xakiatech.com/blog/legal-department-strategic-plans to download our white paper, Nine Steps to a Legal Department Strategic Plan, and a template you can use to create your own plan… on just one page.

TWO: BUDGETING

 

Your budget is where strategy gets done; it’s essential to think beyond “last year plus five percent.” Data will empower you to not only forecast your financials, but refine the operations behind them.

Just by analyzing external spend, you will address what’s likely the largest portion of your budget. Law firms account for 49.3 percent of in-house budgets, with non-law firm vendors taking another 5.2 percent, according to Altman Weil. Is your Legal Department paying premium rates for work that’s of low complexity and low strategic value? Is one business client outsourcing a volume of work that could be more efficiently handled by a dedicated in-house resource? What repeating work could be better managed with an alternative fee arrangement?

Starting the budget process with a well-honed set of data will result in a better financial picture, to be sure: You will align your law firm spend with actual value, and you will demonstrate to the Finance Department that your budget is more than guesswork and rounding. But better yet, you’ll enter each budget cycle with new, informed ways to deliver more value to your business and a commitment to make them happen.

Free Tool

Visit xakiatech.com/blog/the-data-driven-legal-budget to download our white paper, to download our white paper, Ten Steps to a Smarter Legal Budget, and a worksheet for your Legal Department’s next budget.

THREE: LEGAL TECH

 

According to Altman Weil’s Chief Legal Officer Survey, 57.6 percent of Legal Departments report using more technology tools to increase their efficiency. But according to Xakia’s Legal Operations Health Check survey, the extent to which legal teams are actively planning their technology procurements varies widely. No departments of five lawyers or fewer said they had a technology roadmap, while such plans are in place for about one-third of teams of six to 10 lawyers and a staggering 71 percent of departments with more than 50 lawyers.

Taking the time to strategically consider your technology is imperative for your efficiency and effectiveness. Without a plan that accounts for the organizational strategy, department and business needs, timing and budget, you risk making one-off decisions that could lead to tech that doesn’t meet your most pressing needs, cooperate with other software, or most critically, work for your people.

It’s time again to refer to your data. Especially relevant for your technology discussions will be the roundup of that simple, low-stakes, high-volume work that could be automated.

Free Tool

Visit xakiatech.com/blog/white-paper-legaltech-roadmap to download our white paper, Create a Legal Technology Roadmap in Three Steps. This resource provides guidance for the process of technology planning and a template for creating your own roadmap.

FOUR: PROFESSIONAL DEVELOPMENT

 

Data also will help you create and retain a productive and functional team. Of course, data can help you identify bottlenecks, but smart Legal Departments expand its application beyond diagnostics. People work best in environments where they feel supported and challenged; the information you collect can provide factual structure to address important human issues like individual workloads, collaboration and growth opportunities.

As one general counsel explained:

It’s a reality in a small team that you have to allocate work, and there are occasions when people feel like their allocation of work is not fair, et cetera. Having some information at your hands can actually help that conversation … and also when you’re talking to team members about where they want to develop and where they need to develop.


It helps you identify, for example, if particular team members are gravitating to areas of comfort as opposed to getting a broad experience, or going into areas which would perhaps be uncomfortable but a good development opportunity. Just having the data gives you ideas about how to use it.

Richard Conway | Deputy Group General Counsel, Coca-Cola Amatil

Just having the data gives you ideas, indeed. We would love to hear how you apply them in your Legal Department, and we would love to continue our conversation. Follow us on your favorite social network or contact us at info@xakiatech.com.

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