financial-data

 

Law firms and corporate legal departments are not immune from the rush to attach metrics to performance. In a legal business environment, where there is high pressure to drive performance while consistently reducing costs, the ability to accurately measure and tell the story of success is becoming as important as achieving it.

Relatively recently, general counsel and C-level executives might have left technology decisions to the “IT guys.” However, legal practitioners are realizing that they need to participate in making informed decisions about legal operations, from e-billing—and especially complying with global e-billing regulations—to enterprise legal management systems.

Data was once something for “processers” or something to be “input” by staff. However, attorneys are finding that a quality data stream and audience-specific data models are essential to coping with the realities of the modern legal marketplace. They also require appropriate business intelligence visualizations—or dashboards—to provide meaningful, actionable intelligence, stripped of tech jargon.

Democratizing Data for Outcomes

In a recent survey, Hyperion Global Partners found that the ability to both analyze data and assess its impact is becoming essential to a growing diversity of business stakeholders. It is not just the general counsel and senior attorneys consuming analytics, which were the traditional reporting lines. More than half of legal operations managers are now analyzing data for impact, as well as C-level executives, outside counsel and finance management/procurement.

What began as buzz is now exploding into a near-universal demand. At the heart of the surge in the use of analytics are key performance indicators (KPIs), which are how staff, attorneys, management and executives gain real time insight into current activities, guide course correction, suggest areas for process improvement and offer internal indices to manage strategy.

Performance analysis, insight, stakeholder visibility and operational efficiency are the fundamental components that drive excellence. Performance management analytics comprise the tools, capture methods, data models and visualization technologies that help legal organizations focus on the operational performance metrics they need, to help them understand both the business effect of their activities—causality, impacting processes and behavior—and the corrective steps, nee actionable intelligence, they need to optimize performance and outcomes.

In legal, six categories of KPIs comprise the cornerstones for an operational decision support program; they measure:

  • Legal Spend;
  • Caseload;
  • Outcomes;
  • Value;
  • Efficiency; and
  • Quality.

The process of planning for the use of metrics and KPIs as operational tools can be arduous. Many performance management programs fail to launch over the hurdle of defining what you want to measure, why you want to measure it, and how best to create the models to measure what you seek.

The obstacles to reporting strike right at the heart of operational excellence—you can't master what you don't know how to measure.

We have seen an increasing number of organizations begin to roll out KPI programs, with two in five legal organizations having defined and measuring at least few KPIs. Though spend analytics are, arguably, a very mature and sophisticated discipline in legal analytics, bolstered by over 20 years of e-billing data (the original “big data”), we have also observed a deliberate shift of focus from traditional spend metrics to more operational categories: 44 percent of legal organizations rate internal process metrics as the most important metric they track.

However, as a profession we are still a long way from analytics-based practice management. Though more than half of legal ops executives express confidence in their ability to manage the entire matter lifecycle, fewer than a third feel they have the tools to effectively use data for improved outcomes. We have found in our research that this is a common cognitive dissonance—“confidence” it seems, is less grounded in actualized operational capabilities than generalized sentiments about the company's overall abilities to succeed and its confidence in the strength of its people and resources. Confidence is an esoteric benchmark. Generally speaking, operational performance management is far less mature in legal than in many other business disciplines.

Dashboarding for Operational Excellence

Dashboarding is a growing area of focus for legal technologists, precisely because of the strength of dashboards for reach and actionability. In fact, 35 percent of legal operations managers identify data democratization (15%) and increased efficiency (20%) as their leading value drivers for dashboarding, emphasizing the simplicity and velocity of data analysis that it delivers.

Careful planning of an inviting dashboard allows stakeholders to analyze data quickly with better focus and with more confidence. By delivering easily accessible and easy-to-digest visualizations (of complex and voluminous raw data), more actors—management, administrators, general counsel, business managers, billing analysts and others—can easily be looped into common information paradigms and collaborative operational coordination.

Dashboards deliver transparency and analytical richness. With dashboarding, the background complexities of data ownership can be rolled up effectively into an at-a-glance index. Further, while departmental financial data itself can be compelling, metrics that cut across departments and databases—12-month client revenue vs. annualized billable hours, or outside legal spend vs internal headcount, for instance—make dashboards a potentially powerful operational analysis tool. This is the key differentiator between reviewing “reporting” and using dynamic data for informed decision-making.

 

As President and CEO of Hyperion Global Partners, Eyal Iffergan leads the premier global consultancy for legal business strategy and operations. With over 20 years of leadership in advising the legal and intellectual property business communities, Iffergan brings broad-based legal process and technology experience to managing influential global practices and companies, including founding and building several market-revolutionizing enterprises.