Tracking key metrics across the matter lifecycle is crucial for high-performing in-house legal teams to optimise productivity and resource use. However, two essential process efficiency metrics are often overlooked. Understanding and embracing these metrics can provide actionable insights and the basis for a strong business case for new legal software.
This article explores these metrics and how they can highlight opportunities and also translate into the financial impact and return on investment (ROI) that the CFO is seeking.
1. Time Spent on Legal vs. Administrative Tasks
Overview: This metric breaks down the time in-house legal staff spend on core legal tasks compared to administrative or non-legal tasks. It helps identify potential inefficiencies and areas where processes can be streamlined.
Importance: Optimising the balance between legal and administrative tasks ensures lawyers focus on high-value work, improving the department’s overall productivity and value to the organisation.
How to Track It:
- Legal teams are typically reluctant to track time, so present a compelling reason for them to do so. For example: “We want to build a business case for buying technology to streamline matter intake and document management, and so we need to understand how much time we’re spending on these manual tasks to inform the return on investment analysis.”
- Ask your team to monitor and track the time spent on administrative tasks over a specified period of time (e.g. two weeks), using a daily log on a spreadsheet or a more sophisticated tool.
How to Calculate the Financial Impact:
- Aggregate the time spent on administrative tasks across the team on a weekly basis, then multiply by 52 weeks to get an annual estimate in hours.
- Multiply this by the estimated average hourly rate of an in-house legal resource. Your finance team can assist with accurate figures if this is required.
- This calculation will give you the value of the time spent on these tasks, representing the potential savings opportunity if these tasks are reduced.
Translating to the Business Case:
- Focus the business case on how the identified solution will reduce time spent on administrative tasks. Understand what is practically achievable, as no solution will eliminate these tasks entirely.
- Software vendors can provide estimates, such as an 80% reduction in the time spent looking for emails and documents.
- Use these estimates to calculate the realistic savings opportunity and then generate the return on investment (ROI).
Use this resource to assist you in calculating the ROI: How To Calculate ROI For Legal Technology Solutions
2. Time Spent per Month Processing Outside Counsel Invoices
Overview: This metric tracks the time lawyers or legal operations staff spend reviewing, processing, and approving law firm invoices each month. It highlights the efficiency (or inefficiencies) of the invoice management process.
Importance: Monitoring this metric can help identify opportunities to automate or streamline invoice processing, reduce manual effort, and free up time for more strategic tasks.
How to Track It:
- Ask your team to estimate the time spent reviewing and approving invoices, identifying the average time spent per invoice.
- If uncertain, have them track their time at the end of the month when invoices are received to start with accurate data.
How to Calculate the Financial Impact:
- Calculate the average time spent per invoice across the department, then identify the number of invoices received annually. Multiply these to get the total time spent per year on invoice review and administration.
- Multiply this by the average hourly rate of an in-house legal resource to determine the total resources dedicated to invoice management, representing the potential savings from more efficient processes.
Translating to the Business Case:
- As above, estimate the time that could be saved through more efficient review and management, and calculate the potential financial savings.
- Use this potential savings to calculate the return on investment (ROI).
Track Metrics Before and After
When preparing the business case, impress the CFO with detailed metrics and assumptions. Ask your team to track these metrics again after implementing software or process improvements to measure success and identify further areas for improvement.
Savings Calculator
If you like the approach described in this article and are considering software solutions for your in-house legal team, explore Lawcadia’s Savings Calculator. Tried and tested with many legal teams, it can be a great starting point.
Conclusion
Tracking and optimising process efficiency metrics is vital for in-house legal teams aiming to enhance productivity and justify investments in new technology. By focusing on the time spent on legal versus administrative tasks and the time spent processing outside counsel invoices, legal teams can identify inefficiencies, calculate financial impacts, and build compelling business cases for solutions that drive significant ROI. Implementing these strategies and using tools like Lawcadia’s Savings Calculator can lead to substantial time and cost savings, ultimately boosting the legal department’s value to the organisation.
This article was originally published on our sister site lawcadia.com.
