United States: The Legal Weather Forecast

Last Updated: July 9 2015
Article by Richard Stock

A company's demand for legal and related advisory services is variable. Like a weather forecast, it is predictable for a few days. But for the long range view, more depends on simulations and historical patterns and averages. Compared to just a few years ago, legal forecasts have evolved from pure guesswork. They can influence the deployment of legal resources, the allocation of time, and preparedness for significant developments.

Yet rarely do law departments reduce to writing their forecasts of the demand for internal and external counsel. Aside from the annual budget and headcount data required of any department in the company, they do not document the type, volume and relative complexity of the work that will occupy the law department and its external counsel for the year to come.

Consider the following. 50% of the operational support work done for business lines by many law departments can be standardized. Moreover, with proper training, this work can remain within the business units. Twenty per cent of work done by in-house counsel can be delegated to qualified paralegals. Poor practice management habits in the law department, including time and document management, consume 10% of the department's time. Otherwise put, up to half of the time of in-house counsel is spent doing the work of business lines and of paralegals, or is wasted due in part to the poor management of priorities and service levels.

Law departments have become well-established as a corporate presence over the last 20 years. Aside from large departments in the government and financial/utilities/insurance sectors, most law departments number five or fewer lawyers plus technical staff. Still, that amounts to 15000 hours of professional and technical expertise. Demand for service is relentless. No marketing is required to get more work. But is it the right work? And is it possible to influence the legal forecast? Or are legal departments destined to handle routine, usually last minute, work requests from business lines? Is the law department just a collection of solo practitioners, highly responsive to the full gamut of requests from the business lines they serve?

Perhaps this is an extreme characterization of the beleaguered law department that is diminishing in its value to the company every year. But this state of affairs is too common in both small and large legal departments. What to do? The difference between a reactive department and one that adds measurable value to the company is leadership and management.

The business plan - read the legal weather forecast for the law department - should be produced each year, reduced to writing and endorsed by the company's executive leadership. This requires preparation, engagement, and execution. Five steps are enough – but they are not simple, especially in cases where the law department is regarded primarily as a captive law firm.

The first step is alignment with corporate and business unit priorities. Every organization has written goals and annual targets. The law department should be able to select specific goals and targets for itself from this list. At least half of the department's resources should be dedicated to achieving specific corporate and business unit goals and targets.

Second, the legal leadership team should be able to accurately quantify each of these priorities for special projects, strategic work and operational support expressed as the number of matters, the type of legal work, complexity levels, and hours needed for in-house and external counsel for the next 12 months. A law firm is not in a position to do this, but a law department is perfectly positioned to do plan for at least one year. The estimates then serve as building blocks for resource allocation by the law department.

The third step is a work allocation plan with proper distribution to the department's lawyers and paralegals and to external counsel. Allocation depends on a good understanding of the work and the optimal turnaround times by type and complexity of work. For instance, a file needing three hours of work might have to meet a 2-day turnaround standard. More complex work will lend itself to legal project management with phased deadlines agreed by business units.

Fourth, poor practice management habits by in-house counsel should be mitigated. This step entails more discipline when triaging last minute and unplanned requests for service; discouraging internal clients from making incomplete and poorly documented service requests; adhering to the list of individuals entitled to call on the law department for service; and managing e-mail traffic and other interruptions rigorously. Workflows affect efficiency and efficiency is a significant factor in accurate forecasting and service delivery.

Finally, the law department should measure how effective its forecast – the business plan – is. Metrics should track activity levels. However, performance indicators go a step further because they include targets. As a minimum, targets should cover work intake and allocation, the ratio of strategic to operational work, efficiency with the related productivity improvements, effectiveness, and the advancement of each member of the legal department.

There is no such thing as bad weather –only vague forecasts.

Originally published in Lexpert, May 2015

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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