Showing the value of the legal department – more than just numbers
In-house lawyers struggle with this question: how do I show the value of the legal department? Unfortunately, many do not know where to start - or worse - focus exclusively on numbers and metrics. A metric-centric plan misses the fundamental notion of “value”, as “value” also has a subjective component. ! Trying to solve the qualitative part of the equation with a quantitative approach is a mistake, for several reasons:
- Perception matters; it, too, is a factor.
- Value is earned over time. You cannot simply point to a chart and say “Look at all the value we’re providing!”
- Demonstrating value requires a multi-prong and multi-year plan. It is part marketing, part charm, and part numbers.
Here is your three-part plan to demonstrate the value of the law department:
Part 1: Show them
As value is largely subjective, a top priority is marketing the legal department to the business. It’s a long-term effort to build your brand as a team of helpful, hard-working value creators and value protectors:
- Focus on “soft skills.” Some charm, a bit of deference, and a pinch of “P.T. Barnum” can go a long way in how the legal department is perceived by the business. Bring skills to the table like listening, empathy, and a burning desire to be helpful. Everyone matters, but focus on who matters most — CEO, CFO, etc. — and make sure they are happy with the legal department.
- A “service first” attitude will lead to satisfied customers. Understand it is unlikely that anyone in the business has any idea, technically speaking, how good of a lawyer anyone in the legal department actually is. As far as they know, you’re the greatest legal team in the country; take advantage of that and get them to love the legal team. This requires a lot of “getting things done” results and client service, but also a bit of deft salesmanship on your part. Your aim is for everyone in the company to have a positive experience when they interact with the legal team.
- The legal department’s value is also based upon its attorneys understanding how the business operates, including knowing the company’s products and services, its business model, and its top customers, competitors, and vendors. It means reading the company’s strategy and business plans and staying up to date on the marketplace. Your knowledge of the business will show through at key times and the business will ultimately know they have a legal team that does more than just push paper around. To the business, there are few things more valuable than having a legal team that is engaged and invested in the success of the business because it understands the issues, threats, and opportunities the business faces.
- A legal department that demonstrates value is one that makes things happen — consistently and with urgency. No one hired you to tell them “no, you can’t do that.” They hired you to exhaust all your creativity to find ways to get things done. Everyone on the team needs to buy into this reality.
Part 2: Tell them
- If you wait on the business to spontaneously recognize the value generated by the modern law department, you may be waiting a while. Sometimes you just have to tell them what value the team is delivering. For example, prepare a report of significant achievements of the legal team and distribute it monthly to senior leaders. If something really good has happened, make sure the right people in the business know about it immediately. Use leadership staff meetings to report on big contracts, litigation, acquisitions, problems avoided, compliance matters resolved, regulatory issues solved, etc. And, leverage crises to your benefit by running to the fire — a sure way to demonstrate value. Eventually, it all sinks in with the business, and, no surprise, the perception of the department grows more positive the more the business learns what the law department is up to.
Part 3: Measure it
Numbers do have a role in showing value because the language of business is numbers. Smart, in-house lawyers speak it fluently. If you can show value with numbers, you are ahead of the curve with the business:
- Key performance indicators (KPIs), while difficult to create, can show “value” generated by the legal team. If the business is asking for KPIs, give them what they are asking for. However, you are not limited to generating only and exactly what they are asking for; often, the business wants you to generate some type of KPI so they can cross it off their list. What you actually come up with can be less important than just getting them something that looks like a KPI. Bottom line: you are often free to create whatever KPIs you want so long as they provide information the business is interested in, like legal spending and contracts. Take this opportunity to tell the story of the legal team the way you want to tell it. For example, the best KPIs focus on value generators like legal spending discipline, contract completion, litigation success, compliance, and intellectual property generation.
- The business loves benchmarking data. This data can be internal (such as year-over-year) or external (something you find or purchase). The latter is challenging because finding other legal departments with characteristics similar to your department, your company’s business and complexity, and the exact types of legal work expected from you is hard. But if you don’t come up with benchmarks someone else will — and it may not be helpful. So, make it a priority to locate or create benchmarking data. When used properly, benchmarks tell you if you are “at market” and can help you target things that need fixing. Importantly, use the data to show the business that the department is taking action to fix something or improve.
- Internal client satisfaction is critical to numerically showing the value of the legal department. This is done by regularly measuring satisfaction levels to ensure the department is focused on what matters to the business. Do this via a client satisfaction survey and, for purposes of “value,” ask several core questions, such as:
- Does the law department add values
- Is the law department focused on the right things?
- What should the law department focus on next year?
- Is the law department easy to work with?
- Rate key “value” attributes on a scale, like speed, helping with business terms, practical solutions, etc.
You can use the results to figure out what concerns the business and to develop a plan to address that. And, more importantly, you can report the results back to the business along with your plan to improve the delivery of legal services based on the feedback. That’s what the business wants to hear — constant improvement based on numbers.
There is no magic bullet when it comes to showing the value of the legal department; it’s the accumulation of many different steps taken persistently over time. You must be patient and work at enhancing the value perception every day. Everyone on the legal team needs to understand that value is dynamic and constantly changing and why proving value is so important to the success of the department. One bad experience can undo months of effort.
You add the most value to the business when you serve as a trusted advisor. Practical Law can help. Find out how by starting your free trial today.