Dive Brief:
- General counsel are called upon to be value-adding members of their companies and harnessing data on their department’s work has become a critical part of the role, according to two GCs in the legal tech industry.
- Legal executives need operational data – showing the velocity of workflows and team members’ workloads – to help illustrate their contributions against revenue and other financial metrics, according to the GC of contract management firm Ironclad and the GC of risk-tracking software company UpGuard.
- Just as marketing and sales teams mark success via their internal metrics, in-house lawyers should also celebrate milestones integral to an organization’s success. “The metrics are a good thing because it shows just how valuable (legal staff) are,” Vincent Chuang, UpGuard’s GC, said in a recent webinar discussion with Ironclad GC Chris Young.
Dive Insight:
Traditionally, GCs have struggled to apply standard business metrics such as productivity, revenue-per-full-time-equivalent, and value-add to their departments.
“So much of what we do is hard to track, it’s hard to assign value to what we do,” said Young, GC at San Francisco-based Ironclad, which sells contract lifecycle management software. “But it turns out that we have access to a lot of data and it’s rich data.”
Chuang recalled a job interview for an in-house role where a senior executive asked which metrics he measures in his role as a manager.
“Implicitly, the question was about how do I know if it’s worth it to have a legal department internally as opposed to me just farming it out to outside counsel?” Chuang said.
Chuang and Young offered four areas for legal executives to consider as they seek efficiencies and to demonstrate their teams’ value to senior management.
What are the basic numbers?
Count the teams’ various work items, such as the quantity of master service agreements or nondisclosure agreements. Track these on a weekly, monthly and quarterly basis and then count them over time on a per-person basis over a number of rolling-day periods, Chuang suggested.
“It’s kind of a building block you can use to layer on a lot of the other metrics,” he said.
These metrics also provide the basis for managers’ personal check-ins with staff. “These can pair up with the ‘How are you feeling this week and how does the workload feel this week?” discussions to help manage individual workloads, he said.
What Does Legal Touch?
Every company is eager to move new business from the intake to the close stage as quickly as possible. The GC can help to determine if the legal department must be involved in a deal and, if so, how much.
Managers must also see if a particular clause or topic in a sales agreement is causing routine friction in talks with customers.
“Maybe a buyer is unhappy with an automatic renewal clause in your sales agreement,” Chuang said. “If that keeps coming up, and you are willing to give on that 100% of the time, maybe that’s something you can say I’ll just change that language and then never have to deal with that particular red line again.”
Young said he looks for opportunities to reduce legal staff involvement in company deals by a certain percentage each year, and then tracks progress on the effort. “The reality is when legal moves fast the business moves fast,” he said.
How Much Work is Each Deal?
How many drafts are needed to close each deal? How many versions of an MSA did a particular deal require? Examining workflows across a quarter of work will show patterns a manager can leverage for efficiency gains.
“Look at the buckets of drafts and see what is slowing us down,” Chuang said. “Is there something I can do to reduce the negotiations?”
Tie Your Work to Revenue
A legal team’s most visible work to senior leaders is typically around sales-side contracts, where revenue is generated. But “contracting is the tip of the iceberg for legal teams,” Young said.
“There’s so much more that teams are doing. We’ve got to be marketing our team internally … and share with stakeholders that we’re creating value that they may never see or may never realize.”
It’s also “difficult to prove a negative” in the sense of quantifying how much value a legal team contributed by helping the company avoid risk, litigation or other negative outcomes in a particular quarter or year, Young noted.
He said one area managers need to track is the abundance of questions that legal fields from across a company. “Everyone thinks their question is the only question but everyone is 20-30 people a month, right?” Young said. “And that’s significant time.”
