Putting Your Data to Work with the Legal Performance Management Continuum

04
Apr
2011

Craig Raeburn Jr.

An organization’s data can be among its chief assets, providing the intelligence to improve performance across the organization. Legal departments are at the beginning stages of thinking about data as a business asset – but there is a huge, untapped opportunity for them to harness their data to strengthen their businesses in ways they could have never imagined

Putting data to work in an organization is an evolution which progresses as it achieves greater success and increased learning. Data usage may range from introducing data mining in new departments or practice areas to leveraging new BI tools to better understand the data that drives better results.

The good news is that all organizations started at stage one in their data analysis. Many are still there but can move forward rapidly with minimal effort. The technology and expertise is readily available to support progress through the stages. The organization simply needs to move one step at a time.

The Legal Performance Management Continuum is a cyclical adoption framework for putting data to work managing the business of law. It reflects the evolutionary steps an organization experiences as they utilize data with a performance management program.

In the center of the Continuum is Strategy. All information gathered and analyzed should track and support activities related to current strategies and tactics or influence future ones.

THE CORE
Step 1 - Report: Organizations query internal systems and generate reports that provide a historical view of their data. Reports may be presented as simple spreadsheets or similar off-line formats. They begin to use the reporting tools embedded in existing applications or to push data into systems designed specifically for report generation or integrate multiple data sources into their applications.

Step 2 - Analyze:  Users drill into the data to gain insights into key drivers of cost and performance to identify the top matters or projects that drive legal expense to then focus on strategies that minimize legal expense and overall case costs while boosting performance.

Step 3 - Visualize: Users want to see regular reports that provide a quick view of overall performance. These may start as a simple chart and evolve to a dashboard that summarizes multiple reports or more sophisticated graphic formats, such as heat maps to understand which regions are driving the heaviest workload of cases, or mining tools that isolate key categories of matters or projects.

DECISIONS & OPERATIONS
As organizations evolve, they begin to use the data directly in their operations, providing it to the “front lines” at key points in their decision-making. They also become hungrier to understand how others are performing and how they measure up against these others.

Step 4 - Operationalize: The organization considers how to deliver content that enriches decision making and streamlines operations. The resulting performance improvements further reinforce “data pushing” as integral to day-to-day activities and fundamental to decision-making. They may push reports to users based on performance indicators or provide tools for users to conduct their own analysis. An indicator of maturity is the ability to drive information to users at the point they are taking action. For example, having the system provide details about case loads for better and more informed decisions when making internal case assignments.

Step 5 - Compare: Organizations then recognize a need to track and benchmark performance results. This can occur in a variety of forms:

Key Performance Indicators (KPIs) can be developed based on the organization’s goals and strategies and incorporated into reports or dashboards that enable management and staff to gauge their performance.

Benchmarks to compare one’s performance against competitors or industry standards can be very helpful in communicating with parties who may not fully understand the challenges and issues of managing a law department. For example, a firm may demonstrate that its profit-to-revenue ratio is higher than the industry average due to its cost-saving and process improvements, even though the firm’s rates may be dropping.

Law firm performance may also be a key area of interest for organizations as they ask “How do law firms stack up against one another?” Organizations may compare a number of different attributes (rates, staffing profiles, etc.) to get a better sense of how each is doing. Legal departments may conduct in-depth analyses to better understand which firms generate the best results and how they do it.

AUTOMATE & SYSTEMATIZE
The remaining three steps entail embedding the use of data to help guide decisions and improve performance.

Step 6 - Mine: Key individuals recognize the power of putting data to work. They are eager to understand more about drivers within the data and the correlations between data. The organization is mining their vast data, often bringing multiple systems together, to understand what drives cost up or down and the influence of each variable.

Fully understanding these drivers and their impact on costs and outcomes allows organizations to better predict, prepare and plan. As organizations progress, they often introduce additional data elements, including external data. For example, is there a link between the percentage of growth in the Consumer Price Index (CPI) and the number of labor and employment cases occurring in that year? If yes, is there a predictable impact?

Step 7 - Predict: Organizations are positioned to minimize unnecessary legal spending, maximize outcomes and prepare for the future by building predictive models based on what they learned from data mining. The models are adjusted for specific case types, capturing key data points that can predict future results. Ultimately, the organization may apply these models at the start of cases to help predict costs and plan strategies.

Step 8 - Monitor: The organization may start to implement more sophisticated tools to evaluate options, provide insight into risks, predict cost or revenue and more. They are proactive in seeking recommendations or “what if” analyses from their system or will make decisions without staff involvement in some cases, such as determining the appropriate workflow for a case.

The Continuum is a never-ending cycle, with organizations constantly maturing at each step and cycling back down to continue their evolution and reach new heights in performance improvement.