As I’ve written here before, companies are becoming more sophisticated when it comes to measuring their outside legal counsel’s performance, yet law firms do not always ask their clients to detail the Key Performance Indicators (KPIs) their clients are using to measure their performance.
These KPIs form the basis of benchmarking of your services vs. your competitors — both during the proposal process and while you are providing legal services to your client. The Association of Corporate Counsel has a number of KPIs on their website that I would like to comment on as well as some of my own.
In my experience, I have taken note of a few key measurements, and basically they fall into three main buckets: Quantitative, Billing and Subjective. I would like to interpret the buckets and how they relate to law firm performance and proposal content.
Bucket #1: Quantitative
Quantitative measurements are important statistics to track as they can be used during performance reviews with the client as well as internally. The information can also be used in proposals to prove expertise and performance delivery.
Quantitative measurements include:
- Expertise (wins/losses, close the deal, etc.) — Clients track the performance of law firms and individual lawyers; however, what is amazing to me is that many law firms do not track this information themselves. Expertise data is very useful in client retention and bidding for more work.
- Quality of work product (performance measurement score) — The measure of work-product delivered is good value relative to the amount of time spent or the fee amount. Some would argue that this is more subjective; however, quality is measurable and needs to be looked at from the client’s viewpoint. Comparisons that show the same type of work as well as the time and fees should be analyzed. Think how useful this information would be if put into a proposal.
- Service efficiency (project management, on time) — Time management systems and processes usually are asked about in RFPs. Process improvement is more than a buzz word. Be ready to state the systems you use in your proposals and give clear examples of how they help you manage and execute the projects in a timely manner.
- Process (timely completion and submission of reports, early case assessments, and after-action reviews lessons learned) — How do you track your processes to prove that you actually have processes in place to meet deadlines and add value with lessons learned? Without examples of processes or software to prove everything is in place you will have a difficult time demonstrating that in a proposal.
- Efficiency/Process Management (tasks are completed on time; timely response on deadlines; returned inquiries on phone calls and emails; sufficient lead time for client’s legal team to review documents) — Do you have a 1-800 line? Literature shows that it is one of clients’ top needs. Think of how much time a general counsel needs to review documents to determine your delivery timing, allow for follow-up questions, etc.
- Technology (current, effective) — Showcase your technology and the training your team receives. Your clients depend upon technology and they want to have a comfort level that you do too. Take screen captures or make videos of how your technology will benefit your client.
- Deliverables (on time, on budget) — What software do you use to ensure that you track your projects and deliver on time? If you are going to be late for reasons not under your control do you let your client know in advance? Discuss your software and policies to address budgets in detail in your proposal even if it is not directly asked for.
Bucket #2: Billing
Accurate, value-added billing is king. This is where the rubber hits the road. Invoices often determine the depth and longevity of any client relationship.
Billing KPIs include:
- Predictable Cost/Budgeting (disbursements all agreed upon in advance; tasks performed at the most cost effective level; project is managed within budget; variance from budget is immediately communicated to client) — No one likes unpleasant surprises, particularly GCs and procurement professionals. Suffice to say that when disbursements outweigh the time spent, it is time for a law firm to take a second look at its billing practices. You need to prove this in your proposals with facts (e.g.technology), not marketing boilerplate.
- Billing (detailed, accurate, understandable) — Make sure your invoices add up to value for the fees requested. The bills must be easy to understand. Needless to say, accuracy is critical. And when you save a client money, put it on the invoice to remind them — if you don’t, they won’t know. Also, it would be a good practice to send a sample invoice to a prospective client as part of your proposal to prove that you have detailed invoices.
- Alternative Fee Arrangements (number and in-kind) — AFAs are not new. You need to articulate numerous choices for the client so they can select the best options for a particular kind of project. The more alternatives you present in a proposal the better — it shows your creativity and how truly interested you are in gaining the client. This also applies for existing clients.
- Results (number of alternative dispute resolutions [ADRs] vs. court decisions) — You need to know if your client would prefer to settle out of court or go the distance. You can easily track your ADRs and court wins. This is great fodder for proposals, too.
Bucket #3: Subjective
All being said and done, it is still the relationship that lawyers have with their clients that is key. If you are doing good work, are easy to work with, deliver on time and bill with value in mind you will likely still get the work. Subjective KPIs are harder to measure, but it is not impossible. Make sure your client is happy with the following KPIs.
- Expertise (provide good business advice) — You know if your advice was helpful to your client. Track it for performance reviews and proposals.
- Innovation (service delivery, technology, processes, AFAs) — Although these are qualitative KPIs, you need to analyze them in the light of whether they could be considered innovative to your clients. You may need to do some research to see what innovations are evolving in the market.
Many RFPs are now asking for examples of innovation, and you need to be prepared to address this.
In an upcoming blog post, I will discuss performance reviews to help you prepare for your review with your client and avoid unpleasant surprises, or at least, how you can properly deal with negative feedback.