Performance Measurement – What to Expect from Legal Procurement Professionals
Companies are becoming more sophisticated when it comes to measuring their outside legal counsel’s performance. It always amazes me that law firms do not ask their clients for their Key Performance Indicators (KPIs). They spend a lot of time coming up with their Client Satisfaction Survey but don’t take into consideration what they themselves will be judged on — i.e., the KPIs that are important to the client — and then add this information into their satisfaction survey/review.
How are you measuring up?
In a recent forum with Marco Perez, Senior Director, Head of Procurement USA & Legal Global Category for the Royal Bank of Canada (RBC); Vincent J. Cordo, Global Sourcing Officer at Shell; and, Justin Ergler, Director of Alternative Fee Intelligence and Analytics (Global) at GlaxoSmithKline (GSK) that they have between 65 to 100 KPIs on their scorecards to measure the performance of their legal services suppliers.
As a consultant to law firms, I admonish my clients to start thinking like a procurement professional right from the beginning of the relationship. For example, when responding to a Request for Proposal (RFP) you need to provide answers that will show up on your client’s “KPI radar”. Some questions may seem to be intrusive or even superfluous; however, you need to think about the question behind the question. For instance, if you are asked about your hardware/software they really don’t care if you are using a ThinkPad P70 laptop or the brand of document management software you use; the real question is whether you are using obsolete hardware or software that will make it hard for your timekeepers to do their job.
Clients care about a seamless mobile work environment where their files can be accessed immediately in response to a question, especially when the attorney is not in the office. You should also include information on how your legal services team, at all levels, is trained on the software they are using. That will demonstrate to the client that you understand that having current technology is good but knowing how to use it effectively is vitally important. To procurement professionals, it all adds up to better service and ultimately cost savings.
Another example of analyzing the RFP questions is the typical query about using electronic signatures. You may think “who really cares?” However, what the client really wants to know is how much time and resources you spend to i) sign a document; ii) scan the document (particularly if it is a large file); and iii) then email it back to the client (when an electronic signature is considered to be a legal signature in the first place). Once again, saving precious and costly time and money.
Embracing Good Process
Many companies employ Six Sigma methodologies to manage their processes. (Both Cordo and Perez have earned Six Sigma black belts.) Therefore, when it comes to process and project management, it is very important to ensure that the right people are doing the right thing the right way. All law firms say that they do this in their proposals. However, questions about processes should not to be taken lightly. Clients are looking for proof that you have embraced good processes that enhance the kind of efficiency they are looking for, whether it is through utilizing technology or improving work flow processes. You need to provide assurances of high-quality work product at a lower cost, available in less time.
When submitting proposals that require diversity as part of the criteria for servicing a company, law firms often submit diversified teams but later change out the players. This is does not go unobserved by procurement. It is all part of tracking the performance of legal suppliers. You need to live up to what you promise in your proposal; after all, it is regarded as a legal contract.
“Performance measurement really kicks in once work commences,” Ergler observed, adding that measurement is about comparing the proposal to the results. “If there are gaps, they need to be addressed.”
In my next blog on procurement measurement, I will discuss the qualitative and subjective measures procurement professionals use to analyse when compiling a firm’s performance scorecard. This information will help you gauge your firm’s performance and allow you to enhance the position of your firm vs. the competition.