Save Me Money AND Reduce My Risk

“Save me money and reduce my risk.” Is our industry’s mandate an oxymoron, a stalemate? The legal industry traditionally manages the “risk” by paying too much attention to “who” delivers the legal work, criticized Mark Harris, Axiom’s CEO: “Under this ‘who’ logic, one dominated by pedigree, the industry splits hairs only lawyers would consider meaningful—as if where a law firm partner attended school 20 years ago is somehow relevant to a pitch for a client’s new business today. Pedigree isn’t random—there’s certainly something under there that has meaning—but the attention ‘the who’ receives is out of proportion to its actual value. Especially given that there’s only one thing we can prove with certainty about pedigree: it’s expensive.”

Harris argued that if a general counsel has less money to spend, it naturally follows that she will be hiring less pedigreed lawyers and, hence, in the traditional mindset, less qualified ones. “And since quality is synonymous with reducing risk, the in-house lawyer who seeks to save money does so, presumably, at his or her own peril. Of course, no GC is against cost savings in the abstract, but you’re not going to find one who feels good about increasing the company’s risk profile in the interests of austerity.”

Instead, the ‘how’ is important, having a well-engineered work process populated with a mix of lawyers that can be tested and measured on its ability to deliver on all of those dimensions and more. The concept of a process-led approach to delivering work has been embedded in many other industries, including finance, IT, and HR. To do so, process innovation, technology, and the creation of tools are needed that drive standardization, consistency of risk positions, faster cycle times, and increased efficiency. New playbooks have to be created, better forms, and re-engineered workflows. Teams need to be (re)built and a set of service, quality, and productivity metrics identified and implemented. Metrics play an important role since “what gets measured gets done.” (And what get measured and rewarded, gets done even more, some say.) In this paradigm, the same behaviors that improve risk compliance also reduce cost.

The challenge is to identify the metrics that are critical to the success, whether it is defined in terms of making progress toward strategic goals, or the repeated achievement of some level of operational goal and then focus on these metrics: Key performance indicators or “KPI.” A combination of well-chosen KPI must be viewed collectively to ensure the organization’s decisions are made on an informed basis.

 

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