"Know Thyself”: Self-Diagnosis, Monitoring and Management
The management guru, Peter Drucker, is often quoted for having said: “If you can’t measure it, you can’t manage it.” Whatever opinion we may have of this famous business maxim, we should recognize that GCs, as well as legal teams themselves, need to access data which provide an answer to the following basic questions: “Who are we?”, “How have we become who we are?” and “Where do we want to be in the future”? Measured data offer an overview of the current state of play and a clear picture—through some sort of “mirror effect”—of the in-house legal function: staff, activity, productivity, budget, etc.
Most importantly, the data collected in a reporting system allow for proper monitoring of changes, progress and improvements over time. Metrics also help to identify trends for the future and issues to be addressed by the LD. Finally, metrics should allow for benchmarking between LDs of comparable companies against a set of common references (as soon as implementing meaningful metrics within LDs will become a standard practice among the broadest number of companies).Data collected through KPIs basically provide information about the effective contribution of each member of the legal team, including the GC. In that sense, legal KPIs should not be automatically seen as monitoring tools: it is not the tool itself that is relevant, but what the GC decides to do with it! Regarding management of the legal function and its workload, metrics make for better staffing and optimal legal coverage of the business over time by identifying the following:
• the right profiles, competences and skills at the right cost for each of the company's legal tasks (attorneys vs. paralegals, specialists vs. generalists);
• the right proportion of internal resources and the right allocation of work to external counsels (law firms) and other service providers (legal process outsourcing vs. insourcing) at the right cost to reflect the value ascribed to each task.
By using metrics, a language that top management understands, the general counsel may be able to more objectively support and justify the existence of the LD as an essential corporate function, as well as defend current headcounts, budget and structure, or change them as required. Last but not least, promoting the value they bring to the business is probably the most efficient way to motivate members of LDs and therefore increase their commitment to succeed.
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