June 5, 2019
Five Key Steps to Strengthen Data Analytics for Value-Based Fees and Savings
By Fred Paulmann, Founder, The Counsel Management Group, LLC
Excellent Legal Operations Managers are using data in powerful ways to help their teams achieve savings (often 15-20%), increase cost predictability, and show how Legal is aligned with the rest of the business in terms of continuous improvement. Your team can achieve these benefits, too, if you lay out a sound approach according to the five key steps below. And now is the perfect time to focus on this. Whether it be matters trending over budget halfway through the year, or law firms fresh in mind from closing out last year with questionable efficiency practices – you have a great chance to show real improvement in areas that matter. 
 
So what are the steps? 
  

 
1) Understand context. You know your Department and its Legal Operations needs better than anyone. So the first key step is to determine, in context, what type of success here will make the greatest impact. Is the goal;
    • Savings? 
    • Cost predictability? 
    • Improved processes to relieve administrative burdens? 
    • Better use of technology and data to increase productivity? 
    • Better score-carding of law firm performance to assign future work more effectively? 
Ideally, the goals and benefits you select will address not just high-profile Law Department goals, but also broader company-wide initiatives as well. From there, think about the best audience and practice groups for your initial efforts. Who “gets it” and would be a willing partner for a pilot project? Or who has significant pain points with certain law firms or matters, and would benefit greatly? These are important real-world considerations that drive momentum.  
 
2) Select the right data. Nothing tells a story as powerfully as your own invoice data. While portfolio-wide views of staffing and discounts can be interesting, far more often the greatest success comes from matter-specific and law firm-specific comparisons. Ask your colleagues who are closest to these matters: Which ones would enable good “apples to apples” comparisons? Characteristics include: overall matter type, complexity, law firms assigned, efficiency, cost structure, and outcomes. 
 
Beyond historical data, you’ll want to look at the current year budget projections to see if similar phases and components of work are priced similarly. (This should be pretty straight forward if you have uniform, component-based budget templates to enable these comparisons. If you don’t, then implementing these would be another quick win going forward.) 
 
3) Analyze skillfully. The goal here is to identify the right cost structure from the client’s perspective, based on value. Not hourly rates or discounts, per se, but rather, which law firms produce the right quality work at the optimal “all in” cost structure, factoring in staffing, efficiency, costs, etc? What should we expect to pay by phase or by key component, recognizing that more specialized work should cost more, and vice-versa? Dive in to answer the following questions:
  1. How accurately do our law firms code entries within invoices? How do we adjust for this?
  2. Generally, what is our cost per phase? What is our cost per key deliverable? Examples include: cost per summary judgment motion (in Litigation), cost per witness interview (in Compliance) and cost per license agreement (in Transactions).
  3. How wide are the disparities in our cost per phase and cost per key deliverable? What drives those? How do we account for unforeseen, material changes going forward?
  4. To what extent is there slack in the invoices? That is, inefficiencies that we would seek to trim because they don’t add value? Examples include: inefficient staffing, paying for administrative work, and untrimmed violations of billing guidelines. 
  5. What is the slack factor by law firm? Which law firms are producing quality work at a lower all-in cost? (Slack factor by firm is an extremely powerful metric.)
4) Present findings cogently. In your report, you are seeking to tell a persuasive story to solve a specific problem. It is important to pick the right level of detail. Too much information loses the audience, and too little might be dismissed as a “coincidence” or non-issue because “this is a unique matter.” You are looking for the patterns that will compel action. So leverage the power of the unexpected (“Look at how this firm with higher rates produces the work at a 15% lower all-in cost because it is more efficient,”) and the practical (“If we use this data to price out our Summary Judgment and Motion to Dismiss work, we can reduce fees by 17% while increasing cost predictability.”).
 
5) Follow-up and expand effectively. Share your findings and team successes with your various stakeholders. This includes the practice groups who own the matters in the pilot, Law Department Leadership, and related groups like Finance and/or Procurement who may also work with Legal and benefit from this work. There is also a data slice, often blinded or aggregated, to share back with the law firms involved to help them see where they stand and how they can improve. This is often a powerful incentive to improve going forward.
 
Following these five steps not only aligns the law department with the rest of your business in the ongoing quest for efficiency and cost-savings, but also demonstrates the power of careful evaluation of data and harnessing it as the engine of continuous improvement at all levels. 
 






Frederick Paulmann (JD/MBA) is the founder of The Counsel Management Group, LLC, a data analytics firm that helps companies reduce legal fees, improve budget predictability and better manage legal costs. He specializes in value-based and alternative fee arrangements, data analytics to quantify superior outcomes, Legal Department Operations, Preferred Law Firm Program Governance, and financial metrics / processes to improve performance. Prior to launching CMG, Fred served as the full-time Director of Law Firm Management at Pfizer Inc, where he helped devise and launch the company's first-ever partnering program for outside counsel. He has experience as an in-house litigator, commercial / products attorney, and law firm attorney (Kaye Scholer, NY).  
 
 
Fred is the author of the ACC Guide to Value Based Fees and has served as an instructor at ACC’s Legal Services Management Workshops. The Counsel Management Group was named a 2018 ACC Value Champion for its work in helping Andeavor use data analytics and alternative fees to save 28%. He can be reached at fpaulmann@counselmgmtgroup.com
 

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Upcoming Events

View all upcoming ACC events here
 
Health Care Manufacturing Industry Group Cadence Call
Date: June 6 at 3:00 p.m. (EDT)
Topic: Benchmarking Survey – What and How (Virtual Roundtable)
Interest Group: Health Care Manufacturing IG
 
Process, Project and Knowledge Management Cadence Call
Date: June 11 at 3:00 p.m. (EDT)
Topic: Project & Change Management (Presented by Sarah Lovequist of Thomson Hine)
Interest Group: Process, Project and Knowledge Management
 
New England Regional Group Meeting
Date: June 13 from 11:30 - 2:30 p.m. (EDT)
 
External Resource Management Interest Group Cadence Call
Date: June 13 at 2:00 p.m. (EDT)
Topic: The Role of Procurement in Outside Counsel (Presented by David White & Rick Nagamitsu)
 
Silicon Valley Regional Group Meeting
Date: June 19 from 11:00 - 1:00 p.m. (PDT)
 
Information Governance & Discovery Interest Group Cadence Call
Date: June 19 at 3:00 p.m. (EDT)
Topic: TBD

Internal Resource Management Interest Group Cadence Call
June 19 @ 10:00 a.m. (EDT)
Topic: Keeping Staff Engaged and Morale High

San Francisco Regional Group Meeting
Date: June 20 @ 2:00 - 5:00 p.m. (PDT)
Topic: Bringing a Large eDiscovery Program In-house
To register click here.

Tools & Technology Interest Group Cadence Call
Date: June 25 at 3:00 p.m. (EDT)
Topic: Who Uses What Survey 2.0

MidAtlantic Regional Group Meeting
Date: June 25 @ 11:00 - 2:00 p.m. (EDT)
Topic: How to Use Artificial Intelligence Within a Corporate Legal Dept. & Diversity and Inclusion
To register click here

Toronto-Buffalo Regional Group Meeting
Date: June 27 from 10:00 a.m. - 1:30 p.m. (EDT)
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Meet Interest Group Chairs Dan Young and Chris Kopeck
We are starting a new series of articles to introduce the chairs of the various Interest & Regional Groups within ACC Legal Operations. This month we are pleased to introduce Dan Young, Legal Operations Director at Boston Scientific, 2019 ACC Legal Operations Member of the Year, and the Chair of the Metrics and Analytics Interest Group. 

Q: Tell us thing most people don’t know about you.
A: I play Dungeon and Dragons (D&D) for fun. D&D is a fantasy role-playing game set in an imaginary world. As a hobby, my husband, has created and D&D community that includes over 100 people, globally. I have five different characters and groups that I play in. It is great opportunity to get together with friends and set off on an adventure and see what happens. One of the best reasons for playing is the number of new friends I have made. 
 
Q: Why did you volunteer to chair the Metrics and Analytics IG?
A: It is the opportunity to facilitate a platform to share knowledge, best practices and learn from one another throughout the year so that we can maturity in our Legal Ops journey. From when I joined three years ago, the ACC Legal Ops community has helped me drive the growth of my legal ops initiatives and team and by helping to lead an interest group I hope that I can do the same for others. 
 
Q: Name one of the Group’s past accomplishments that you’re most excited about. 
A: Vendor Demos on Metrics and Analytics – not only did the vendors demo their tools but we also asked them to incorporate what metrics their clients started out with and were found valuable. We got attendee feedback on the value of the demos and M&A insight. The demoing showed those specific metrics and how the information is displayed.
 

 
We are also happy to introduce Chris Kopeck, Senior Manager of Legal Administration at Walgreens, and chair of the Technology & Tools Interest Group. 
 
Q: One thing most people don’t know about you.
A: I’m a huge fan of dog rescue! My wife and I share our lives, home, sanity and disposable income with three rescue dogs, currently ages 8-11. We’ve volunteered for two local breed-specific rescues and at a large national sanctuary in the past. I miss volunteering and need to get back to helping soon. 
 
Q: Why did you volunteer to chair the Technology & Tools IG?
A: I’m excited to carry on the tradition of the great IG chairs that came before me. I started by helping Nick Bunin (Hi Nick, hope everything’s well!) with the original Technology survey a few years back and have been hanging around ever since. I’m so grateful to Nick, Kedric Chamberlin, and Lisa Ripley for teaching me so much about technology and the interest group. 
 
Q: Name one of the Group’s past accomplishments that you’re most excited about. 
A: The past (and ongoing) IG accomplishment that excites me the most are the discussions and help and advice that the group has generated amongst its members through the years. Technology moves so fast that no matter the size of your company, legal ops department or budget, we’re all behind the latest and greatest, and hoping to catch up the best we can. The connections made between the users of certain legal technologies, and those looking for legal technologies via the report, presentations, calls and meetings, is our proudest accomplishment. 
 
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Highlights from the News & Announcements Page
The ACC Legal Ops News & Announcements tab tracks the best items to keep you well informed. Following are some highlights:
 
Mies van der Rohe, the noted architect, remarked: “Architecture depends on its time.” The same can be said about business structures. The last decade has seen a profound change in business architecture. Facebook, Amazon, Apple, and other tech-enabled, consumer-centric companies have built new business models that have transformed the customer experience and, in the process, recast industry landscapes...A handful of providers have emerged as legal delivery’s new architects. Their foundations differ, yet they share a similar vision: to provide a new delivery paradigm, capability, and impact responding to unmet consumer needs and delivering unimagined possibilities. Here is the first wave of enterprise legal service providers. Mark Cohen, Legal Mosaic 
 
If you believe all of the hype surrounding legal tech, you might think that improved efficiency is mere days away if you can just purchase the latest, greatest piece of corporate legal technology. However, in the real world, digital transformation and successfully embedding legal operations technology into your department is much more nuanced and complex. ALM 
 
Many have predicted that blockchain technology will disrupt traditional commerce across the globe. From global financial and supply chain systems to national healthcare and insurance industries and on to selling renewable energy from one’s roof to their neighbors, this new technology creates a digital, reliable source of truth. ALM 
 
Just as there is a model code of conduct for lawyers, there is a corollary model code of conduct for judges. That code, however, contains no parallel duty of technology competence for judges. Most states also have codes of judicial conduct. As far as I can tell, none of those state codes explicitly require technological competence for judges. Bob Ambrogi, Above the Law
 
We are adding more hand-picked items all the time - be sure to bookmark or subscribe to http://www2.acc.com/legalops/news/.
 
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How to Get More Involved in the ACC Legal Ops Community
There are many ways to get involved with and contribute to the ACC Legal Operations community and raise your professional profile. We would love to hear your ideas, learn and collaborate together!
  • Post your queries, requests for referrals, tips for colleagues and share homegrown resources in the Member Forum
  • Join the ACC Legal Operations Maturity Model 2.0 working group. Things are evolving fast and we are excited to take the acclaimed model to the next step. The Interest Groups are already making updates, and we are seeking volunteers to join the team to update Change, IP, Contracts, Financial & Compliance Management.
  • Participate in or start a Regional Group to build relationships through in-person interaction. 
  • Champion the Legal Operations function - the ACC Legal Operations LinkedIn Showcase page offers peers, in-house counsel and others in the legal ecosystem leading practices shared among our members.  Help show off the value of legal ops professionals - follow it to get updates, share and tweet articles (#ACCLegalOps).
  • Let us know if you would like to be featured in or author an article in the ACC Legal Ops Observer, the ACC Docket and the LinkedIn Legal Ops showcase page (a package deal!).  
  • Be an Ambassador – many GCs are curious about the rise of legal ops, and we are communicating best practices at ACC Chapter events. We even have a “Legal Ops 101” deck you can use as a template. 

Email us to get involved - with offers to share your know-how, suggestions or any questions! LawDepartmentOps@ACC.com.

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Not a Member? Join Now!

Join now to get access to resources, participate in any of the Interest Groups, and use the online Member Forum for ad hoc benchmarking and referrals. The ACC Legal Ops section is active throughout the year, adding resources, conducting benchmarking studies, and providing webinars by legal operations professionals, for legal ops professionals. 

For more information, visit www.acc.com/legalops or contact LawDepartmentOps@acc.com

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Contributing Editor:

Five Key Steps to Strengthen Data Analytics for Value-Based Fees and Savings
Upcoming Events
Meet Interest Group Chairs Dan Young and Chris Kopeck
Highlights from the News & Announcements Page
How to Get More Involved in the ACC Legal Ops Community
Not a Member? Join Now!
Our Mission
The Legal Ops Observer is devoted to reporting on issues important to the members of the ACC Legal Ops section— from the challenges they face to best practices that work, to how members effectively implement innovation within their individual companies and define the future of legal ops across the industry. Follow the ACC on Twitter at @ACCinhouse #ACCLegalOps.
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