As the market for legal services continues to change and law firms push to increase billings, savvy in-house counsel and legal operations professionals are increasingly turning to data analytics to control costs. As part of our series on key metrics that legal departments should be tracking, our third post will focus on how to monitor individual law firm partner performance.
Due to the immense variation in business pressures and work styles of individual partners in practicing law and running their teams, Bodhala has found that one of the most effective ways to optimize legal spend is having a system and data to measure and act on the variation between the partners handling work. That data is a potent tool to drive partners to adopt more efficient practices or, where that fails, to re-allocate work and reward more efficient partners.
The underlying theory is easy to understand. As experienced in-house counsel and legal operations personnel understand, individual partners within the same law firm often differ greatly in both the level of quality they provide and level of cost-effectiveness. Indeed, as law firm partners change law firms at an increasing rate, law firms are less and less homogenous and quality is increasingly lumpy across firms. As a result, companies can derive tremendous savings by tracking the performance of each individual law firm partner, rather than simply focusing on law firms as a whole, and then using those metrics as benchmarks to assign work between lead partners and as a way to change the behavior of other lead partners.
Although measuring individual partner performance results in tremendous savings, many legal department struggle to manage their data in a way that lets them analyze which partners are providing value and which are lagging. In order to measure individual partner performance, Bodhala recommends: (1) segregating each individual legal matter; (2) using a predetermined formula, such as which partner worked the most hours, to identify the partner who leads each individual matter; and (3) tracking key metrics across all of the matters each individual partner handled. Key metrics include the average blended rate, attorney staffing, the allocation of work between partners and associates, and total matter cost for each individual partner across his or her matters.
Interestingly, Bodhala has used this approach to uncover systematic differences in how individual partners in the same practice area and within the same law firms handle matters. For instance, Bodhala clients frequently find that particular partners within the same firm staff the same types of matters in different ways or resolve matters less efficiently, resulting in higher costs.
In addition, being able to view key metrics for your outside law firm partners allows you to make decisions to reward positive behavior by individual law firm partners. For instance, you may identify younger or diverse partners who are performing at a high level and who you would like to reward with additional work. Having a well-implemented legal analytics platform that allows you to see key metrics without the need for IT help and make such decisions instantaneously.
Similarly, a well-implemented legal analytics platform allows you to correct behavior by individual partners that is increasing legal spending. For instance, legal departments may realize that particular partners are underperforming and the work being allocated to them should be shifted to a different partner.
On the other hand, if an individual partner is providing quality representation but is not acting in a cost-effective manner, legal departments, when supported by accurate data, can have a conversation with that partner that results in behavioral changes that result in cost savings while maintaining quality.