Lexpert magazine features articles and columns on developments in legal practice management, deals and lawsuits of interest in Canada, the law and business issues of interest to legal professionals and businesses that purchase legal services.
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60 LEXPERT MAGAZINE | APRIL 2016 confused with performance evaluations. e company measured "wins" by com- bining settlement costs with legal costs on similar high-volume matters. It dis- covered that the results combined with the legal costs varied markedly among external counsel. Consequently, it has started moving business to the firms with the best "win" record. Big Data fluency, it appears, is making its mark. It may not be long, it seems, before metrically challenged firms find that met- rics are barriers to entry with lucrative cli- ents. Clearly, Drinker Biddle is betting that the firm's jumpstart in this arena will prove to be a major market differentiator. "Establishing the chief data scientist po- sition is an internal and external signal that we're a firm that is going to take advantage of analytics and data," Borden says. "Many companies have called us out of the blue simply because of this and the way that we're using it. My bet is that data officers will eventually become a component of ev- ery law firm's DNA." SEVERAL YEARS AGO, TD embarked on a significant RFP. With the support of TD's internal procurement teams, Milo- jevic and her team figured out a way to analyze hourly pricing, get baselines, assess a qualitative score and then compare that score against qualitative metrics. "On the qualitative side, we measured things to which we could assign a number, like the extent of our previous experience with a firm, the geographic coverage a firm provided, and the depth of staffing in cer- tain areas and at various levels of seniority," she says. TD then quartiled the firms based on price as well as their quantitative and quali- tative scores. "We generally dropped the firms in the bottom quartile of each prac- tice area," she says. "And when we found firms that were high on quality and high on price, we asked ourselves whether that combination was appropriate for the kind of work we were seeking." Although the metrics were significant in choosing TD's panels, lawyers in charge of individual matters were free to choose the approved firm that they want to use on any given matter. "We are now looking at ways to leverage metrics to assist our lawyers in selecting from the approved panels," Milo- jevic says. But too much granularity can have its disadvantages. "It's easy to miss the big pic- ture," says Rick Kathuria, National Direc- tor, Project Management and Legal Logis- tics at Gowling WLG in Toronto. "When you examine time metrics, for example, you can see how many hours a firm has spent on internal meetings, which clients don't like to pay for, but what is really significant is the overall cost." Too many clients, Kathuria adds, focus on minutiae rather than examining average transactional or case costs. "e best value from metrics is the overview they can provide." METRICS ARE ALSO turning up as tools for in-house departments to manage exist- ing relationships. TD has designed a relationship man- agement framework that has a qualitative scorecard at its core. At the end of each matter, the in-house lawyers score the firm they used for responsiveness, substantive knowledge, strategic advice, accurate bud- get-setting and proactive budget updating, innovativeness, meeting deadlines, proac- tive communication and value delivered for costs. TD also designates some six firms in Canada and eight firms in the US as "stra- tegic" firms. ese firms are drawn from within each panel and across the entire enterprise and are subject to a more robust performance review. "We meet with the strategic firms semi- annually, we go over the spend and how it translates across practice areas, then com- pare that to the value-added services we've received and how we've leveraged them," Milojevic says. "All of that helps the con- versation about how and where the firms can do more for us." But it's not just about doing more for the client. e process benefits the external firms because it can create opportunities for new and better work. "Let's say a firm wants to break into com- mercial lending," Milojevic says. "With the data we've collected, we may be able to tell them that they have to do more in certain areas, like the value-added services space, before they can get that work." FOR THE MOST PART, however, the data that's being used by legal departments is generated internally by the departments themselves or by law firms retained by in- house counsel. What's been missing is the general availability of external data to fuel counsel selection. But that's changing. Lex Machina has so far made the biggest splash. e firm uses an extensive database of information derived from regulators, court rulings and other data sources to inform a statistical analysis, including strength, weakness and performance assessments of all the lawyers, parties and judges involved in federal intel- lectual property litigation. In other words, in-house counsel involved in this kind of litigation now have access to external data about a law firm's experience with specific types of disputes and a data-based account of how they fared with various judges, op- posing parties and opposing counsel. Owen Byrd, General Counsel at Lex Machina in Menlo Park, California, cites the case of a deputy GC for IP at a large tech company who wanted alternatives to the large law firms that had previously handled the company's litigation. Using | IN-HOUSE ADVISOR: DATA METRICS | JUDITH MCKAY > MCCARTHY TÉTRAULT LLP Clients are definitely starting to use metrics to select counsel and manage our performance. What they measure is what matters to them, but we use that information for our own benefit as well.