| Corporations are continuously looking for ways to | | | | the market place. |
| become more efficient. Process improvement | | | | Specialization can improve productivity and efficiency. |
| programs once only utilized in the manufacturing | | | | When a firm chooses to specialize and to limit their |
| sector are now a dominant presence in all industries. | | | | client base they are able to gain concentrated |
| The goal is to improve efficiency and as a result | | | | experience. They develop an extensive knowledge |
| improve the bottom line. There are performance | | | | base around a specific area of law and achieve |
| metrics for the organization, employees, suppliers and | | | | expediency in dealing with issues in this expertise. |
| even customers. Thus, it is a natural outcome that | | | | The firm that chooses to specialize is also able to |
| legal management would also be scrutinized for | | | | achieve a competitive advantage by offering |
| efficiency. | | | | consistency of results in their chosen niche. |
| During the summer of 2005, Bottomline Technologies, | | | | Specialty firms are able to achieve greater |
| the provider of eXchange, conducted a survey of | | | | efficiencies as they do one thing and strive to do it |
| the Fortune 1000 companies and AM Best 200 | | | | better and faster than the general practice firm. |
| insurers regarding legal performance. E-mail invitations | | | | Clients will gain specific expertise, time and cost |
| were sent to approximately 1,892 individuals and | | | | savings. |
| more than 10 percent responded. The results were | | | | It may be tempting to choose the low cost provider |
| reported at the ACC 2005 Annual Meeting. | | | | when it comes to legal spending but doing so could |
| The results of the survey indicated that the | | | | cost more money. While it is important to negotiate |
| respondent law departments use law-firm | | | | fees and fee structures, it is unwise to give too |
| performance data mostly to "award new work to | | | | much weight to the hourly fee. The cheapest firm |
| high performers" (59% selected this response) and | | | | may not be the most efficient and as such will cost |
| to "reduce the number of outside counsel" (47%). | | | | you more money. You may hire a firm that bills $200 |
| The least important uses of the performance data | | | | per hour but because of lack of expertise, operating |
| were to "help firms become more efficient (26%), | | | | inefficiencies or poor management that $200 per |
| "internal analysis only" (22%) and to "tie firm | | | | hour can cost you more money in the long term than |
| compensation to performance." These results validate | | | | paying a higher hourly fee with the specific expertise |
| that companies are paying attention to their legal | | | | and performance management that you need. In |
| spend and allocating work to the most efficient firms. | | | | example, the $200 per hour firm may spend 40 |
| The first step in maximizing legal efficiency is to align | | | | billable hours in managing a particular legal matter. |
| the organizational goals and objectives with those of | | | | Another firm that charges $350 per hour may have |
| legal counsel. Much of legal management is risk | | | | handled the same legal matter in 10 billable hours. |
| management. To be truly effective risk management | | | | There are a number of questions that can be asked |
| programs must identify what is strategically important | | | | to assess a firm's efficiency. Does the firm |
| to the organization. In this way legal activities are | | | | appropriately outsource? Is the time spent |
| focused on strategic objectives and higher | | | | appropriate to the task? Are task being handled at |
| organizational priorities. It also empowers the | | | | the most efficient level, i.e. is each member of the |
| executive management team to confidently make | | | | firm operating within their area of expertise and |
| business decisions because there will be a clear | | | | responsibility? How does the firm select its clients? Is |
| understanding the risk-reward propositions and | | | | the firm able to readily access historical knowledge? |
| operating level decisions will be evaluated within the | | | | A law firm must have the expertise you need, the |
| context of the company's overall strategies for | | | | ability to readily access that expertise and must be |
| undertaking and bearing risk. | | | | able to apply that expertise in a time and cost |
| Counsel should be provided with the organization's | | | | efficient manner. |
| strategic plan. Conversely the law firm should provide | | | | Finally, legal efficiencies can only be gained by applying |
| the organization with a written legal strategy. The | | | | rigor to the review process. Just as workflows are |
| legal services must satisfy the business purposes not | | | | evaluated to maximize efficiency and productivity, so |
| the other way around. | | | | can legal management evaluate, analyze and compare |
| Legal efficiency is also gained through specialization. | | | | costs, process, outcomes and best practices. Identify |
| More midsize firms are making the decision to | | | | areas where operating efficiency and quality can be |
| specialize their practices in an effort to compete in a | | | | maximized. In reviewing, measuring and aggressively |
| market filled with mega law firms. While this is a | | | | pursuing quality, you will develop a knowledge base |
| strategic decision that serves to differentiate the | | | | that can be leveraged in future legal matters as well |
| small firm and position them as an alternative to their | | | | as improve your bottom line. |
| behemoth competitors, it is a strategy that benefits | | | | |