The top law department metrics that financial services companies are tracking [survey]
One of the key findings of our recent report – The Legal Spend Landscape for 2022 – was that most financial services organizations value their legal departments more today because of the pandemic.
This makes sense given the uncertainty the pandemic created – and continues to create. Uncertainty brings risk and the law department’s primary function is to manage risk. The question that remains is this: how are these law departments measuring the value they deliver?
We posed this question to the 300 decision-makers that took the survey on which the report is based.
According to the responses, the “outcome of legal matters” (66%) was at the top of the list. That was one of only two such law department metrics, out of a list of 12 options, to garner a majority of votes. Below is how the whole list stacked up:
- 66% said the volume/outcome of legal matters;
- 60% said the hourly cost per lawyer;
- 46% said spend forecast vs. actual spend;
- 43% said risk exposure;
- 40% said overall spend by law firm/matter type/business unit;
- 37% said legal spend as a percentage of company revenue;
- 34% said external fee earner team composition;
- 31% said matters kept within budget;
- 28% said the mix of fees (e.g. billable hour, AFAs);
- 25% said the total spend per in-house lawyer/law department employee;
- 21% said the diversity of outside counsel; and
- 19% said the proportion of legal spend internal/external.
Some respondents indicated they also track metrics that weren’t on the list and identified these in the open-ended comments:
- Cases won. “By showing the amount of cases they win.” ~ senior legal counsel at a hedge fund.
- Volume. “We monitor and assess the transactions that the legal department handles.” ~ principal legal officer in asset management.
- Revenue-generated by the legal department. “By defining the revenue it brings in.” ~ finance director in asset management.
- Discussion. “We have several meetings each month to discuss and manage the value it contributes.” ~ GC at a venture capital firm.
- Time tracking. “We keep track of the hours and the projects we work on and categorize their success.” ~ finance director in asset management.
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If there’s a metric to keep an eye on its diversity. A previous study we commissioned that was focused exclusively on private equity found diversity was a top factor in selecting outside counsel.
Download the full report here: The legal spend landscape for 2022.
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Image credit: Unsplash