Useful Metrics & Benchmarking

The path to success in a law firm or law department has changed, yet many continue to rely on outdated metrics to track performance. Both buyers (law departments) and sellers (law firms) rely on billable hours as a proxy for productivity and value. This is silly. Sure, hours are a unit of production and law firm leaders should be aware of what it costs to produce the output of legal work. And yes, law department leaders should be aware of what they're purchasing. But if I visit the grocery store with a list of 47 specific items, I don't necessarily declare victory if I return home with 45 or 35 items, or 47 completely different items that cost less. I've also written previously about the lazy reliance on benchmarks -- relying on dissimilar metrics from dissimilar organizations in dissimilar markets with dissimilar characteristics is a recipe for mediocrity. A general counsel declaring that "We should reduce legal spend to 1.3% of revenues just like our competitors in the same SIC code" is as short-sighted as a managing partner stating that "We need to reduce our secretarial ratio to 4:1 to keep pace with more nimble competitors." There are a hundred factors in play that should be considered. Perhaps an investment in the legal department can improve organizational throughput, e.g., reduce the time negotiating contracts, accelerated IP review increasing our speed to market, so cutting funding harms the business. Perhaps a practice that derives profits from lower-cost paralegals and secretaries managing large piles of filing will come to a screeching halt when this work is pushed up to associates and junior partners, simultaneously eliminating the benefits of leverage and annoying clients who have come to expect lower rates.

On a recent speaking tour of regional educational conferences hosted by the Association of Legal Administrators, I asked audience members to volunteer the metrics they track. We captured pages and pages of performance metrics and the non-surprising results indicated that they vast majority are lagging indicators, e.g., "What happened last year, or last quarter?" and reflect short-term financial performance, e.g., "Was this matter profitable?" We need to evolve as a profession to also incorporate leading indicators and focus on long-term financial performance. As corporate guru Jack Welch once said, “You can’t grow long-term if you can’t eat short-term. Anybody can manage short. Anybody can manage long. Balancing those two things is what management is.”

My friend Silvia Hodges Silverstein, founder of the Buying Legal Council invited me to participate in recent conferences in London and Chicago, where rooms full of legal procurement professionals, in-house counsel, and law firm lawyers and professionals discussed the evolving world of legal metrics so we can find common ground in measuring and delivering value. For the Chicago session, I recorded my remarks, and you can view the session below.

My friend Greg Lambert, a leading information professional and co-founder of the award-winning 3 Geeks and a Law Blog, then riffed on my session to focus on metrics for a sub-set of professionals within law firms. After you view the video, you should read Greg's article. How can you incorporate better metrics in your organization?

Timothy B. Corcoran was the 2014 President of the Legal Marketing Association and is an elected Fellow of the College of Law Practice Management. He delivers keynote presentations, conducts workshops, and advises leaders of law firms, in-house legal departments and legal service providers on how to profit in a time of great change.  For more information, contact him at +1.609.557.7311 or at tim@corcoranconsultinggroup.com.

Random thoughts on the future of law and technology

I have the good fortune of meeting and collaborating with some pretty influential players in this cozy little global profession of law practice. Monica Bay is one of those with whom, and from whom, I've learned a great deal. While it's shocking to comprehend the passage of time, I first worked alongside Monica over 20 years ago when we were colleagues at a spunky little technology startup called Counsel Connect, a division of American Lawyer. You can probably google the history somewhere, but essentially Monica and I were part of an effort to bring social media and technology to the mainstream legal profession long before it was cool to do so. I played a minor role in comparison to the other staff members and volunteer contributors, many of whom continue today as thought leaders in this field. But over time I've gained a few insights of my own, and I've had the luxury of sharing my learnings and wisdom, such as it is, as a leader, manager, mentor, and now consultant, where I regularly offer insights at law firm and law department retreats, at conferences, and, of course, on this blog. I was delighted when Monica, in her role as roving reporter at the recent ILTACON15, asked me to spend a few moments reminiscing on what we've seen transpire in this profession, and what we see coming in the near and long-term. We touch on the role of technology, the demise (?) of the billable hour, project management, process improvement, change management and how incentives influence the pace of change, and what's next. I hope you enjoy watching and listening to our conversation as much as I enjoyed having it.

ILTACON 2015 - ILTA TV - Monica Bay interviews Timothy Corcoran from ILTA on Vimeo.

Upcoming Legal Lean Sigma Certification Course in Project Management and Process Improvement

What is it? The Legal Lean Sigma Institute is hosting another of its popular "open enrollment" white belt certification courses in project management and process improvement. Join us in Chicago on November 11 for an in-depth dive into PM and PI. We combine lecture and interactive exercises to help attendees understand and then apply PM and PI concepts adapted for implementation in the law firm and law department settings. We cover a lot of ground in a short amount of time, but participants will leave with a solid understanding of both the fundamentals and how they can be applied.

Who should attend?

The white belt certification course is ideal for those who are ready, or getting ready, to embark upon a continuous improvement initiative within their organizations. It's also a great refresher for those who have had some exposure but haven't had much opportunity to engage. We held a standing-room only session earlier this year exclusively for in-house counsel, so those who were unable to join us are welcome. We've also held a number of private white belt and yellow belt certification courses for clients in the US and Canada, so this session is ideal for team members who have joined your continuous improvement initiatives but weren't at the initial training. This is also an ideal session for law firm and law department leaders who don't expect to personally dive into the details, but need to know enough about these concepts to establish a vision for continuous improvement and then supervise the effort. Of particular interest to senior leaders are the modules on understanding the economics of continuous improvement. Think PM and PI are bad for law firms, because efficiency doesn't pay as well as inefficiency (even though it's not cool to say that out loud)? We'll show how law firms can generate greater profits from PM and PI while improving client satisfaction. Think your law department is too complex to "routinize" all of your legal matters? We'll show you how to better link upstream your business management's needs with your law department resources and mission.

How do I enroll?

The event is produced by our friends at the Ark Group, so visit their site here to register. As of this writing, there are individual seats available and a few slots for teams.

Working Smarter, Not Harder

As they say, a picture paints a thousand words. Today's Dilbert comic poignantly illustrates the disconnect between lawyers who bill by the hour -- and who believe the quantity of hours is both a measure of quality and a measure of financial success -- and the rest of the business community, in which making money while you sleep is the true measure of success.

Lest this come across as some sort of new age anti-work philosophy, the concept is really quite simple: Successful businesses embrace the learning curve business model, in which efficiency gained from prior experience provides a competitive cost advantage. Business leaders with a continuous improvement mindset don't value workaholics who toil furiously and endlessly at a task and generate high volume as much as they value those who can do more with less, exploiting experience to find more effective ways to generate similar or better results in less time. This excess capacity is then deployed against new projects, in turn generating new financial returns. So the true measure of success is making more profit in less time.

As the legal profession evolves, a necessary outcome is moving away from the silly notion that hours are a measure of anything other than cost. When we decouple hours from compensation, or more accurately when we begin to pay more to those lawyers who can generate comparable revenue and profits in less time, and when clients shift to paying for outcomes rather than for production, then innovation in the legal profession will accelerate.

Think about all of this after you've finished billing your time today. We'll be at the pool with a cold daiquiri waiting for you.

Timothy B. Corcoran is the immediate past President of the Legal Marketing Association and an elected Fellow of the College of Law Practice Management. He delivers keynote presentations, conducts workshops, and advises leaders of law firms, in-house legal departments, and legal service providers on how to profit in a time of great change.  To inquire about his services, contact him at +1.609.557.7311 or at tim@corcoranconsultinggroup.com.