Archive for Metrics
How Procurement Can Engage Legal Expense
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Justin Fogarty has an intriguing post up at Supply Excellence entitled, “Category vs Procurement Experience: Which matters more?“
I think that using procurement managers without any prior experience in legal services is one of the biggest obstacles to procurement penetrating legal spend. In my experience, procurement departments routinely make the mistake of using a strategic sourcing manager without a strong understanding of the legal field. Legal services are a unique animal, and there are a number of vital issues to keep in mind:
(1) Nature of the Law Firm Beast. You must dispense with the normal approach of treating a law firm as one company, as a law firm is not much more than a group of diverse people, each with a book of business, and the lawyers and staff that support each book. As a result, law firm wide statistics and quality management are often unhelpful and do not drive across the board quality improvement and spend reductions.
(2) No Year Over Year Savings. You cannot set a target of year over year reductions in legal spend. The law department often has no idea, for any given year, what may materialize. A sudden class action lawsuit could be filed, a major construction vendor may walk off the job, or a sexual harassment lawsuit could result. Insisting that the law department spend less money than the previous year without taking this into account alienates the lawyers who are already reticent to support any kind of spend management. The better approach is to compare apples to apples, and try to get year over year reductions in purchasing the same kind of legal service that was previously acquired, as well as looking into whether a particular legal service is needed in the first place.
(3) Legal Background. I’m not saying that the strategic sourcing manager needs a law degree and practice experience at a top Manhattan law firm by any means, but it’s a good idea to get someone who was at least a contract manager or assisted with litigation management in the past, so they can have the ability to properly interface with the naturally resistant legal department and make the most effective decisions to drive cost savings. In particular, I think paralegals would excel as legal category managers.
You can see our free legal documents and free legal forms for procurement agreements here.
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3 True Outcomes: Sabermetrics for Lawyers
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I’ve been kicking around the idea of using sports statistics as a basis to create legal practice metrics for a long time now, and was even more interested after reading Moneyball by Michael Lewis.
I would love to get a discussion going here as to what these metrics might look like. To kick things off, I would suggest we think about the concept of 3 True Outcomes. This concept is used in baseball when evaluating pitchers. Generally, baseball stats experts (often known as “sabermatricians“) start with the idea that once a hitter hits a pitch and puts it into play, the pitcher has little to no control as to whether or not the pitch will be fielded for an out or allowed to drop in for a hit. So, to more accurately evaluate the pitcher’s actual performance, instead of the fielders behind him, sabermatricians often focus on what the pitcher can control:
(1) Home runs.
(2) Strikeouts.
(3) Walks.
While reading Beyond the Boxscore the other day, I realized that the transactional work I’ve spent my entire career performing is quite similar to pitching. There are aspects to negotiating a contract which are completely within my control, and there are other aspects that are not (e.g., obtaining a response from a client, getting a response from the other side, the other side providing revisions).
What can I control? I think there are, for a transactional attorney, at least 3 True Outcomes:
(1) 1st Client Meeting. This is where I gather all essential information from the client necessary to provide a 1st draft of the contract, and formulate a client approved negotiating strategy.
(2) 1st Draft to Other Side. This is where I send a 1st draft to the other side for their review.
(3) Revision Turnaround. This is how long it takes me, once I receive a revised draft from the other side (or the 1st draft if I don’t control the paper), to turn a draft and provide my own revisions for the other side’s review.
How would a legal 3 True Outcomes statistic be formulated? Well, one could create a cycle time (”CT“) stat and check the lawyer’s CT regularly. This would allow one to get a quick snapshot on which lawyers in your organization are turning drafts quickly and which are not. One could also break it down by each outcome, and have:
(1) 1CT: to see how long it takes me to do a 1st draft and formulate a client approved negotiating strategy.
(2) 2CT: to know how long it took me to provide a 1st draft to the other side (for deals where I do the 1st draft).
(3) 3CT: to know how long it took me to turn a draft after receiving a revised version from the other side (or if the other side did the 1st draft).
Of course, like any statistic, it may or may not reflect the attorney’s level of efficiency. For instance, an attorney that has an extremely fast CT might not be following an effective negotiating strategy and may be unnecessarily lengthening the negotiation with endless revisions. But this risk is true of all statistics.
What statistics are effective at is drawing our attention to an issue we may otherwise be unaware of. In a world where people often refer to the law group as the “Sales Prevention Department,” it would be of tremendous value to see who is actually moving the ball and who is not, then analyzing what the efficient lawyers are doing and building their wisdom into the process so we can improve everyone’s performance. Without statistics, such as, perhaps, CT, we cannot do this effectively.
What does everyone think? Thank you for your time.
If you enjoy this content, add me at twitter.com/JasonAnderman, thank you.
