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Made to Measure: Assessing Outside Legal Counsel

Legal departments often work closely with outside legal counsel. According to the 2019 ACC Global Legal Department Benchmarking Report, legal departments outsource to law firms 19 percent of their document review, 70 percent of intellectual property services, 50 percent of due diligence work, and 48 percent of litigation case management, to name a few.

The relationships with law firms are often based on trust and experience, with many in-house counsel relying on their “gut feeling” when choosing external assistance. In fact, research conducted by EY found that 62 percent of general counsels in Germany and Switzerland “select their external legal service providers based on their own experiences.” 

[Related: Outside Counsel Performance Management Through Structured Data And Dialogue: An ACC Legal Operations EMEA Virtual Roundtable (On demand recording)]

In an industry where decisions are increasingly data-driven, selecting a firm based on a gut feeling or the lowest price are not enough. 

So how do you evaluate the legal advice you get? 

Introduce a scorecard 

The quality of legal advice is a highly subjective matter but can be objectified by introducing a regular rating (Scorecard) of the law firms through the legal department.  

These Scorecards are already widespread in the United States and should also be used in the European Union. Purchasing departments have also been using scorecards to rate suppliers. A scorecard including a well-developed dashboard should be processed regularly.  

[Related: Top 10 Takeaways from Outside Counsel Performance Management Through Structured Data and Dialogue Virtual Roundtable (PDF)]

Recurring rating is key as, over time, the legal department acquires a large data set that enables data-driven decision-making. Further, the same objective questions should be asked for every currently engaged law firm to ensure comparability. 

Measure objective metrics 

Legal advice is “peoples´ business” leading to difficulties in assessing objectively. Nevertheless, objective metrics can be derived from different touch points. The measurement should generally follow two rules.  

First, if you can objectively evaluate it, measure it. Secondly, strike a balance between the metrics measured and the reporting workload attached to measuring. A few meaningful metrics have more impact than lots of insignificant data. Below are a few examples. 

Expertise 

The most obvious question is to assess the technical quality of the legal advice. Views on quality vary, but many different views also allow to calculate an average. Another question could reference the analytical skills of the outside legal counsel (e.g., whether they work solution-oriented or “only see difficulties”).  

Personnel 

Law firm invoices usually include an overview of the time spent by the different seniority levels. Such breakdowns allow an analysis of how effectively time is being spent (e.g., how much time is spent on mundane vs. on complex tasks).  

Further, the cost-efficiency of staffing can be analyzed. That is, do the partner restrict themselves to client management and review or are other tasks included? 

[Related: ACC Maturity Model Foundational Toolkits on External Resources Management and Metrics and Analytics

Communication efficiency 

Further data can be derived from the communication itself. For example, are the memos or emails self-explanatory? Are they complete? Or do you need to follow up to understand them? The speed of response can also be a measurable metric.  

Other objective metrics 

Finally, other touch points can be used to assess external legal counsels, such as alignment with the corporate legal strategy, project management skills, or additional services. An interesting metric could also be the know-how the law firm has regarding client specific regulations.  

Act transparent 

Whatever metrics are used, the results should be communicated and discussed with the external legal counsel. Transparency is critical and helps the law firms improve their services. Ultimately, the legal departments benefit from these improvements as the law firms shift to legal advice that can be truly described as “made to measure.” 


The opinions expressed are the views of the author alone and should not be attributed to any other individual or entity.

About the Author

Leonard StuermerLeonard Stuermer is legal process manager at MANN+HUMMEL, responsible for legal operations and legal tech solutions. Prior to joining MANN+HUMMEL, he practiced as a lawyer in an international law firm in Germany. He further holds an MBA from the IE Business School in Spain. In his legal operations role, he blends business with law and especially enjoys the innovation part of his responsibilities. He looks forward to seeing legal operations’ further rise in Europe.

 

If you want to discuss legal operations or legal tech, feel free to contact Leonard Stuermer by email or LinkedIn.



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