As a legal department leader, are you looking for ways to identify the effectiveness and value of the outside law firms that you retain? Liberty Mutual Insurance has been formally evaluating the performance of the thousands of outside counsel that serve the company during any given year for more than a decade. Several years ago, Liberty Mutual’s legal operations team developed a data-driven process that assesses both objective and subjective value metrics.
In our Value Drivers series, I interview legal industry leaders and innovators that are bringing transparency to legal performance in their own unique way. I recently spoke with Kiran Mallavarapu, senior VP and manager, legal strategic services for Liberty Mutual Insurance, and Bruno Para, AVP and relationship manager for the company’s Central Division. This is the second part of that conversation, which is focused on how Liberty Mutual shares evaluation data with outside counsel. Liberty Mutual Insurance is not a Qualmet customer.
We’ve discussed the collection of key performance metrics, including subjective metrics that speak to your own definition of value. How do you then communicate the results with law firms?
We sit down either face-to-face or virtually. We can share a lot screen-to-screen, and we walk firm management through their metrics in a manner that makes the data actionable for them. Through this type of transparency and knowledge-sharing we are progressively working towards not only a greater understanding of the data but a greater commitment to the relationship, partnering for continuous improvement and encouraging the use of our metrics and analytics in daily operations. We also provide follow-up support, webinars and training for their attorneys, paralegals and staff if necessary.
How often do you review the information with them?
We review metrics frequently. For certain firms it is done on a monthly basis and for other firms on a quarterly basis. It’s a continuous, ongoing process.
Sharing Comparative and Competitive Results
Is there anything you don’t share with the law firms?
We share pretty much everything. For obvious reasons, we don’t compare an individual firm against another firm, but we’ll compare them to the state and industry averages and benchmarks.
It’s important for firms to know where they stand in relation to other firms that are handling similar types of business on a state level. We also compare firms against themselves on a period-by-period basis so they can see how they’re progressing and how their case handling practices impact their performance. Law firms often find this information to be particularly helpful, and they welcome that feedback.
Driving Change to Increase Value Over Time
Over time, what kinds of changes have you seen in behavior?
We’ve seen firms start to keep their own metrics and track their performance internally, so there is a progressive learning aspect to the relationship. The firms that come to the table with metrics they’ve developed on their own tend to elevate the conversation above the norm. Generally, we see firms changing their practices and procedures to positively impact their performance indicators and still others that are highly innovative in terms of their use of data and analytics.
In what areas have the law firms most significantly improved in the last five or six years?
There is much more awareness of the importance of data and analytics in the industry today. Law firms have recognized the inherent value in actively managing their businesses by adapting and applying benchmarking and strategic planning techniques. The heightened use of industry intelligence and the application of internal metrics to assess the performance and financial health of the firm, practice groups and major projects are just a few examples.
How Law Firms React to the Use of Analytics
Have the law firms you work with always been comfortable with this?
There’s been tremendous progress. We see firms at different ends of the spectrum, which is why it’s critical for both firms and clients to endeavor to evolve together and commit to creating well-defined business objectives and unified partnerships that drive solution-oriented plans. Transparent communication and the sharing of performance data and analytics definitely lead to meaningful discussions about common goals that enable attorneys to engage in the relationship at every level.
How Can Others Start Measuring Value?
What advice would you give to someone who is considering measuring outside law firms?
Start by creating a road map of where you are today and where you want to get to, and make sure there are practical, achievable milestones in between. Don’t let perfection be the enemy of progress. Start somewhere, and over time slowly increase. Liberty Mutual’s journey involved continuous improvement. Yesterday we probably had a breakthrough, we are probably going to have a breakthrough the day after tomorrow, and every day we are improving, but you have to start somewhere. Come up with some basic metrics, start collecting them, analyzing them, and more important, start using them in your day-to-day decision-making processes.
In case you missed it, see Part 1 of our conversation with Liberty Mutual here.
See other posts from our Value Driver Series:
“Google’s Patent Counsel, Sylvia Chen, Fosters Transparent Law Firm Relationships to Improve Performance” available to read here.
“Google’s Outside Counsel, Michelle Knight, Describes How Openness to Change Improved Client Relationships” for viewing here.
Know a Value Driver or would like to be included in the series?
Please recommend an executive for my next interview: email@example.com.
Rolf Provan is VP of Marketing and Operations at Qualmet.
Follow Qualmet on Twitter: @qualmetlegal