SimpleLegal CEO Nathan Wenzel.

“Data-driven” is the new buzzword. According to a Coalition of Technology Resources for Lawyers Survey, in-house legal teams are increasingly using data analytics for a variety of tasks, and nearly all surveyed agreed that analytics will play a crucial role in the future of the services they provide to their organizations. But what does this really mean? What data needs to be collected in order to achieve departmental and business outcomes? More importantly, what does it take to be a truly data-driven legal department?

A Timely Opportunity for Legal Tech

Legal teams have the opportunity to embrace the data-driven mentality by leveraging legal technology such as e-Billing and matter management software. This technology provides insights that legal teams can leverage to more accurately make key expense predictions, grow teams in the right ways at the right times, and drive rate negotiations with outside counsel. Such insights can also help legal teams communicate more effectively with other department leaders, such as heads of marketing, sales or engineering.

With the 2017 CLOC State of the Industry Survey reporting that over 80 percent of the consortium members surveyed already use an e-billing solution, it’s encouraging that legal departments are proactively looking to be more quantitative and are positioning themselves for success. To better understand how this data can be used to positively impact business objectives, here are three best practices for using metrics to foster an effective, data-driven culture:

1. Determine Your Primary Goals

The truth is, technology (and the data it collects and analyzes) is only helpful when organizations have a thorough understanding of the goals the technology is going to help achieve. One of the more common problems that today’s legal leaders are trying to solve for is “the scarcity of attention.” Corporate attorneys have a lot on their plate which spreads their attention across multiple projects. Technology can automate tasks and other administrative activities that vie for their attention, allowing them to focus on high-quality, high-impact legal work.

With that in mind, it’s important not to get caught up in the widespread data-driven momentum and identify your primary goals. For some, reducing and controlling spend might be the main objective. Others may need to focus on improving the efficiency and quality of their work, boosting outside counsel productivity or driving in-house team growth. If you’re having difficulty identifying your primary goals, ask your General Counsel for their primary objectives, and then follow up by reviewing the goals of the broader organization. If you’re able to define your true north, you can then measure all other goals against that broader context.

A good first step once you’ve determined your primary goal(s) is to build a ‘current state’ picture. For instance, you can categorize spend by matter, practice area or company to get a quantitative look at spend today.

2. Select Key Metrics

Once you’ve organized your data and have goals in place, the next step is to select the key metrics related to your goals. Be sure to focus only on what is most important to your team and incorporate metrics you can actually measure. For example, if your main objective is to reduce legal expenses, only tracking the efficiency of your outside counsel isn’t going to be very helpful. Instead, you’ll need to zero in on metrics such as:

  • Total legal spend year over year
  • Top 10 matter types by spend
  • Timekeeper rate comparisons
  • Monthly spend by matter type
  • Department spend vs. budget

3. Visualize the Data

Data is only valuable if it’s actionable. It’s essential that data isn’t just a slew of numbers and words, half-heartedly organized in a static spreadsheet. Focus on the data that’s most important to you, organize it, and maintain that organization in a way that makes the most sense for your team. This way, it will be easier to spot trends over time which will influence how you manage budgets and allow you to more accurately forecast for future litigation and high-impact projects.

Again, this is where e-Billing and matter management technology can come into play. By giving you access to valuable reports in just a few clicks, you can avoid weeks pulling together PDF and paper files and keying numbers into Excel—a time-consuming process that is highly-error prone. With access to immediately actionable and visual insights, legal teams can make more informed business decisions that allow the department to be proactive instead of simply reacting to business needs after the fact.

Capitalize on Data

Technology offers the potential to collect a wide spectrum of data points, but that doesn’t mean each of those data points is of equal importance. Apply a strategic approach to data collection and ensure you have a clear understanding of why certain technologies have been adopted and how they stand to facilitate improved outcomes. There’s no reason to wait. Capitalize on the wealth of data you have at your fingertips.

Nathan Wenzel co-founded SimpleLegal as an eBilling and matter management software to bring a data-driven approach to how legal operations departments manage budgets and outside legal counsel. At SimpleLegal, Nathan leads company strategy, product direction and adoption. He manages client relationships with companies ranging in size from new startups to global, public, multi-billion dollar corporations.