sponsored section tymetrix.com | [email protected] ENTERPRISE LEGAL MANAGEMENT: HOW TO HARNESS THE POWER OF DATA In 1597, Sir Francis Bacon—a one-time lawyer—laid claim to being the world’s first data geek. His famous statement that “Knowledge is power” clearly presaged today’s absolute recognition of data as the primary asset and power source for business. Ever since, legal professionals have been scrambling to make sense of and stay atop the changing demands created by data. As Sir Francis knew only too well through his service of king and country, today’s corporate legal departments are expected to deliver a continuous stream of high-quality information that enables executives, boards of directors, and business units to make informed decisions. Legal departments are expected to optimize their processes and reduce costs while still mitigating risk and delivering results. To achieve these objectives, legal departments need to gather insights from their data that help them to learn from their history, discern trends, and make informed predictions about the future. Typically, the data required to accomplish these tasks is siloed in various departments, databases, and software. When legal departments can merge this data into a unified system, they can begin to harness the value in their data, gaining visibility into the entire legal enterprise that yields useful insights. Figure 1. TyMetrix Legal Performance Management Continuum view of their data, enabling them to understand what has happened. Initially, reports may be presented as simple spreadsheets or similar offline formats. Data is often extracted from a single system. As organizations’ appetites increase, they begin to use the reporting tools embedded in existing applications or to push data into reportgenerating systems. Highly evolved organizations integrate multiple data sources into their applications: they may combine robust data sets including legal spend, compliance, and e-discovery to obtain insights into overall performance. Phase 2: Analyze. At this point, organizations see the benefit of putting data to work and want to understand it better. Organizations drill into data to gain insights into the key drivers of cost and performance with the goal of identifying the top matters or projects that drive legal expense. Armed with this information, organizations can focus on strategies that minimize case costs to boost performance. Important Note: Collaboration and getting buy-in at all levels of the legal department is critical to success in these core phases. To alleviate discomfort, many organizations have implemented change management initiatives similar to Six Sigma. BEYOND BACON, TOWARD LEGAL PERFORMANCE MANAGEMENT But how does today’s legal department evolve from fragmented data to a comprehensive system that empowers it to make the right decisions? The sudden introduction of radical new systems can unsettle a legal department and increase resistance to change. Therefore, the most successful legal departments follow an incremental, phased approach—a structure TyMetrix has formalized into the TyMetrix Legal Performance Management Continuum. The Continuum reflects the ongoing, evolutionary phases legal departments experience as they put their data to work to improve departmental performance and its overall impact on the organization. The first three phases—Report, Analyze, and Visualize— represent the Continuum’s Core phases. Later phases represent the acquisition of skill sets and the ongoing management of knowledge and its translation into high-performance decision making and business intelligence. We’ll review these in order. Phase 1: Report. Organizations have a myriad of internal systems that collect, process, and consume data. In Phase 1, organizations query these systems and generate reports that provide a historical Phase 3: Visualize. Here, users need a quick snapshot of overall performance. The snapshot may begin as a simple chart and evolve to a dashboard summarizing multiple reports. In many cases, this is where business intelligence software stops. However, as organizations mature, they may implement more sophisticated graphic formats for analyzing data and overall performance, such as heat maps to understand which regions drive the heaviest case workload. DECISIONS AND OPERATIONS As organizations move beyond the Core phases, they begin to use data directly in their operations. They provide it to their frontlines at key points in their decision making. They seek to understand not only their own performance but also how they compare to and are benchmarked against competitors. This phase of the Continuum involves two phases: Operationalize and Compare. Phase 4: Operationalize. With a deeper appreciation of the value of data, organizations consider how to deliver content that enriches decision making and streamlines operations. “Data pushing” becomes an integral part of day-to-day activities and decision making that results in measurable performance improvements. An indicator of maturity at this phase is the invaluable ability to drive information to users at the point when they are taking action. For example, the system provides details about caseloads for more informed decisions when making internal case assignments. Phase 5: Compare. As organizations start to see results, they recognize the need to track and compare them. This can occur in a variety of forms, such as key performance indicators (KPI) and benchmarks. sponsored section tymetrix.com | [email protected] • Organizations can develop KPIs based on their goals and strategies and incorporate them into reports or dashboards that enable management and staff to gauge their performance. For instance, if an organization’s objective is to cut legal expense by 10 percent, it may use a KPI to compare the current and prior years’ spend. Or, if its goal is to improve performance cycle time for real estate transactions, a KPI can compare progress year over year. Figure 2. TyMetrix LegalVIEW® At-a-Glance • Organizations can use benchmarks to compare their performance against competitors or industry standards. Both can provide valuable insight to the board of directors or those who otherwise may not fully understand the challenges of managing a legal department or litigation management team. For example, a firm may demonstrate that its profit-to-revenue ratio is higher than the industry average due to its cost-saving and process improvements, even though the firm’s rates may be dropping. However, finding reliable benchmark data can be difficult, as much of what is available is based on survey information rather than data-driven, quantifiable standards. To address this problem, TyMetrix and the Corporate Executive Board produced The 2012 Real Rate Report®. The Report was developed from the TyMetrix LegalVIEW® data warehouse, which contains over $40 billion in aggregate legal performance data generated from actual invoices from over 17,000+ law firms and vendors, 398 million hours of legal services, and 286,000 timekeepers’ records. The Continuum’s remaining three phases entail embedding the use of data to guide decisions and improve performance across the legal department. The Report opens the gates to “Big Data” in law firm performance in a range of key areas. It allows a true data-centric approach to compare different attributes, such as rates, staffing profiles, and firm evaluations. As they mature at this phase, legal departments may conduct in-depth analyses to determine which firms generate the best results within specific matter types and how they do it. Phase 6: Mine. At this milestone, key individuals recognize the power of putting data to work. They are eager to understand more about drivers within the data and the correlations between data, such as what affects costs, cycle times, and outcomes. Legal departments often bring multiple systems together as they mine their data to understand what drives cost up or down and how different variables influence outcomes. The Operationalize and Compare phases simply reinforce the need of legal service, procurement, and business operations professionals for granular analysis and focused insights. Leveraging data for individual and industry-wide comparisons and deeper segmentation around matter areas, matter types, industry segments, and other potential data elements can exponentially accelerate an organization’s achievement of more meaningful matter-based analytics that allow it to be more effective and efficient in the business of law. Understanding the impact of these drivers on costs and outcomes allows organizations to more accurately predict, prepare, and plan. As organizations progress through this phase, they often introduce additional data elements, including external data. For example, is there a link between the percentage of growth in the Consumer Price Index (CPI) and the number of labor and employment cases occurring in that year? If yes, is the impact predictable; that is, does a CPI increase of 0.5 percent increase caseload by 5 or 10 percent? AUTOMATE AND SYSTEMATIZE Going beyond historical performance—toward “what if” analysis— can help organizations prepare for the future. This is also the point sponsored section tymetrix.com | [email protected] at which organizations focus on hiring talent with specific analytical expertise, as either internal staff or external consultants. Phase 7: Predict. With a deep understanding of the drivers of legal spending and outcomes, organizations are positioned to minimize unnecessary legal spending, maximize outcomes, and prepare for the future. To do this, organizations build predictive models based on what they learned from data mining. For optimal impact, the models are adjusted for specific case types, capturing key data points that can predict future results. Ultimately, organizations may apply these models at the start of cases to help predict costs and plan strategies. Phase 8: Monitor. By this stage, organizations are highly fluent in putting their data to work and have the staff and systems in place to manage and analyze it. They have seen the positive impact of using data to enrich decision making and have learned to identify key drivers early in a case to address them properly. Organizations may start to implement more sophisticated tools to evaluate options, provide insight into risks, predict cost or revenue, and more. They are proactive in seeking recommendations or “what if” analyses from their system or may make some decisions without staff involvement, such as determining the appropriate workflow for a case. Once organizations reach the eighth phase, they have not reached the end of the Continuum: it is a never-ending cycle, not a linear process. Next, they cycle back down to continue their evolution and reach new heights in performance improvement. FOLLOWING THE CONTINUUM: ENTERPRISE LEGAL MANAGEMENT (ELM) SOFTWARE Businesses have been following the process outlined in the Continuum for years, and many organizations have sophisticated systems and staff in place that enable them to execute their performance management programs and demonstrate quantifiable results. Executive management and the board now expect the same of those who manage the business of law. Enterprise Legal Management software is the best tool legal departments can use to obtain a holistic picture of their operations that will yield business-centric insights. Software platforms like TyMetrix 360˚ gather and analyze information that spans matter management, legal spend measurement, e-billing, and e-discovery, among other activities. The information sharing that Enterprise Legal Management software promotes can create connections that will drive more informed strategic decisions, offer insight into historic and overall legal spend, and improve communication among corporate and outside counsel. As Enterprise Legal Management software evolves, it is gaining additional functionality. For example, TyMetrix recently launched TyMetrix 360˚ Mobile, the first application providing integrated invoice management on multiple smart devices. The app allows users to approve more invoices more quickly, from anywhere at any time. Not only does this improve productivity, but speedy invoice approval also allows legal and claims departments to leverage fast-pay discounts. In addition, TyMetrix 360˚ links matter management and e-billing with legal hold and e-discovery processes through the Exterro Fusion e-discovery suite, capturing an accurate picture of matter status, scope, risks, and costs and improving compliance with preservation obligations. For instance, clients can tag matters requiring a legal hold in TyMetrix 360˚ and automatically dispatch relevant matter details to Fusion Legal Hold, which automatically sends and manages all legal hold notices from a common software platform. Exterro Fusion then regularly updates TyMetrix 360˚ with the status of e-discovery efforts, such as the number of custodians, collection details, and internal costs associated with the matter. CONCLUSION When legal departments put data to work in an Enterprise Legal Management solution, it can drive intelligence that improves performance. Understanding the data related to legal spend, cost optimization, and staffing strategies can mean the difference between success and failure. And when this data is united in a single, secure, collaborative platform, it can provide greater context to the legal department’s activities, encourage proactive decision making, mitigate risk, and yield savings. Now is the time for legal departments to implement the first phase in the Continuum and start delivering better, faster, and smarter decisions that result in a more cost-efficient bottom line with Enterprise Legal Management. About Us TyMetrix, located in Hartford, CT, is the global market leader in delivering intelligent solutions that empower corporate legal departments, law firms and claims organizations to manage the business of law. It provides clients with quality legal management software, services and solutions, including e-billing, matter management and performance metrics, and the expertise required to manage risk, reduce costs and gain the insight required to meet their strategic objectives.