A company’s demand for legal advisory services is variable. Like a weather forecast, it is predictable for a few days. But for the long range view, more depends on historical patterns and averages. Compared to just a few years ago, legal forecasts have evolved from pure guesswork. They can influence the deployment of legal resources, the allocation of time and preparedness for significant developments.
Yet rarely do law departments reduce to writing their forecasts of the demand for legal counsel. Aside from the annual budget and headcount data required of any department, they do not document the type, volume and complexity of the work that will occupy the law department and its external counsel for the year to come.
Consider the following. Fifty per cent of the operational support work done for business lines by many law departments can be standardized or, with training, kept within the business units. Twenty per cent of work done by in-house counsel can be delegated to qualified paralegals. Poor practice management habits in the law department, meanwhile, consume 10 per cent of the department’s time. In other words, up to half of the time of in-house counsel is spent doing the work of business lines and paralegals, or is wasted due to the poor management of priorities and service levels.
Most law departments number five or fewer lawyers plus technical staff. Still, that amounts to 15,000 hours of professional and technical expertise. Demand for service is relentless. But is it the right work? And is it possible to influence the legal forecast? Or is the law department just a collection of solo practitioners, highly responsive to the full gamut of requests from the business lines they serve?
Perhaps this is an extreme characterization of the beleaguered law department that is diminishing in its value to the company every year. But this state of affairs is too common in both small and large legal departments. What to do? The difference between a reactive department and one that adds measurable value to the company is leadership and management.
The business plan is a legal weather forecast for the law department. It should be produced each year, reduced to writing and endorsed by the company’s executive leadership. This requires preparation, engagement and execution. Five steps are enough — but they are not simple, especially in cases where the law department is regarded primarily as a captive law firm.
The first step is alignment with corporate and business-unit priorities. Every organization has written goals and annual targets. The law department should be able to select specific goals and targets for itself from this list. At least half of the department’s resources should be dedicated to achieving specific corporate and business-unit goals and targets.
Second, the legal leadership team should be able to accurately quantify each of these priorities for special projects, strategic work and operational support expressed as the number of matters, the type of legal work, complexity levels and hours needed for in-house and external counsel for the next 12 months. A law firm is not able to do this, but a law department is perfectly positioned to do this. The estimates serve as building blocks for resource allocation by the law department.
The third step is a work-allocation plan with proper distribution to the department’s lawyers and paralegals and to external counsel. Allocation depends on a good understanding of the work and the optimal turnaround times by type and complexity of work. For instance, a file needing three hours of work might have to meet a two-day turnaround standard. More complex work will lend itself to legal project management with phased deadlines agreed by business units.
Fourth, poor practice management habits by in-house counsel should be mitigated. This step entails more discipline when triaging last-minute and unplanned requests for service; discouraging internal clients from making incomplete and poorly documented service requests; adhering to the list of individuals entitled to call on the law department for service; and managing e-mail traffic and other interruptions rigorously. Workflows affect efficiency, and efficiency is a significant factor in accurate forecasting and service delivery.
Finally, the law department should measure how effective its forecast – the business plan – is. Metrics should track activity levels. However, performance indicators go a step further because they include targets. At a minimum, targets should cover work intake and allocation, the ratio of strategic to operational work, efficiency with the related productivity improvements, effectiveness and the advancement of each member of the legal department.
There is no such thing as bad weather — only vague forecasts.
Richard G. Stock, MA, FCIS, CMC, is a partner with Catalyst Consulting, the CCCA’s Preferred Provider for Legal Department Consulting. He can be reached at (416) 367-4447 or [email protected].