“Just because it’s obvious doesn’t mean it’s easy. A lot of legal operations are complex, for sure. But a lot of what we do is putting common sense into motion.”
These resonant words from Mary O’Carroll were the perfect way to close out this year’s CLOC conference, and they got us thinking about where data fits into the bigger picture for legal operations professionals. In-house legal has used data to better understand internal and external spend, make headcount decisions, and budget for both the short and long-term. But what about using data to select outside counsel? To measure their performance? To ensure you’re getting the most value for each dollar spent with every vendor you engage with?
It makes perfect sense, but doesn’t mean it’s easy.
Overcoming the Traditional Way of Selecting Outside Law Firms
While there are practical things to consider like the timezone potential law firms are in, the country and regions they’re legally allowed to practice law, and estimated internal headcount, to name a few, outside counsel selection has historically been reputation or relationship-based. Legal departments look to law firms that their company has successfully engaged in the past, or lean on trusted colleagues and peers for quality references.
Choosing a law firm based on reputation or reliable recommendations gives you some peace of mind in return – you have more confidence that you’ll be able to work well with firm and that they’ll understand your current legal process. But, what worked in the past for one case or one company may not work again. This is where we’re starting to see a shift.
Expertise is Displacing Reputation as a Driver in Outside Counsel Selection
At the CLOC Institute, we heard many in-house legal teams share their insights on the importance of keeping law firm reputation in mind, but also incorporating reliable metrics to make the outside counsel selection process more transparent and predictable.
Earlier this year, the Coalition of Technology Resources for Lawyers (CTRL) published a report reinforcing the value of data for legal operations professionals, stating that an overwhelming majority of respondents, 99 percent, agreed that data analytics will be “indispensable” to the legal profession over the next ten years. While this statistic wasn’t unexpected, what surprised us was, of those who plan to use analytics, 60 percent will use it to gauge outside law firm performance.
Data-Based Criteria for Evaluating Law Firms
These statistics and the buzz around the topic at CLOC show that expertise is displacing reputation as a driver in outside counsel selection. Hard data is being used to inform decision making and provide a quantitative way to essentially rank outside law firms and their ability to handle the job at hand.
Organizations and legal departments may also be interested in the following when selecting outside counsel:
- Number of alternative fee arrangements being offered
- Extent of the law firm’s experience with alternative fee arrangements
- Nature of value-added services
- Firm’s overall diversity profile
- Profile for the team working with the particular client
- How well the firm conforms to and communicates budget
- Ability to adhere to legal billing guidelines
Let Your Data Work for You
Making decisions based on data is not a new concept. And while it may take time before legal departments are able to utilize data for ALL their operational decisions, leveraging legal data to measure performance and other actionable metrics is no longer just advice, it’s an increasingly important business necessity.
This brings us back to Mary O’Carroll’s wise words. Just because it’s obvious, doesn’t mean it’s easy. And that’s why SimpleLegal’s here to help. Reach out to us and see how our modern e-Billing and matter management platform gives you the data you need to not only evaluate your internal legal operations process, but to identify trends related to outside counsel performance so you’re engaging with the best possible vendors and law firms.