I have spent many hours traversing the square mile in London on the hunt for legal spend management insight, and I’d liken it to trying to find a fabulous low fat chocolate muffin… I know it’s out there but finding something tasty really takes some effort! I understand that it’s hard to produce something that appeals to everyone’s slightly different tastes, but invariably I’m left slightly disappointed that the things on offer aren’t quite what I wanted – they aren’t fabulous to me.
So where is this going? As a procurement professional I love data – it allows me to understand how an organisation is spending their money, the service it’s received, the performance of one supplier relative to another, but over the years I’ve come to realise that the most detailed data often doesn’t give me the thing that myself and my team really need – insight. It’s almost as elusive as that tasty fat free chocolate muffin.
According to the thesaurus on my laptop, there are multiple synonyms for insight: vision, understanding, awareness, intuition, perception, acumen, comprehension, discernment, perceptiveness… These words define for me what management information should enable for the client: true insight with which to manage a relationship.
When I first began to really analyse legal MI, I was overwhelmed by the sheer quantity of data – line after line of matter based information that whilst interesting (it improved my understanding of what was going on) gave me little insight into whether this was a successful relationship. What I wanted was comprehension, what I had was factual data.
As a procurement professional I wanted answers to the questions I posed for everyone I spent money with, from IT to consultancy:
1. How is the firm performing from a delivery perspective?
2. How are they performing commercially?
3. Where were the challenges and successes over the last year?
4. What does the firm think of me as a client?
5. What makes them unique?
6. How valuable are they to me?
In the absence of this insight from the then available legal spend data, I did what any sensible buyer would and asked the GC team, and was very quickly enlightened! But I really would have liked to have been able to find out more on my own from the information I had.
Looking at MI provision from a legal firm’s perspective, I can see the challenges. Given the different requirements and levels of sophistication across the client base, what data should a firm provide to enable client insight?
There is a bare minimum level of delivery and commercial data needed to manage any supplier/client relationship, relating to performance, expenditure and investment. For legal firms, I believe this translates into some basic information that needs to be provided as standard:
1. Key matter performance feedback for last period
2. Total expenditure broken down by practice area, including taxes if appropriate
3. Relationship investment/value add
The insight for both the firm and the client then comes from the interpretation that goes alongside this data.
· What matters are going well and why? Are there things we can learn from successes that can be applied to the management of other matters?
· What’s not going so well?
· If estimates are being regularly exceeded, are there any trends you can identify as to why (e.g. scoping issues, too low pricing at the outset, matter complexity, matter management)?
· Can you and the client work together proactively to help overcome any negative issues/trends?
· How is revenue trending as a whole/in a particular practice area?
· What does this mean for the client relationship - has the client’s attractiveness changed as a result of the fees trend?
· Is your relationship investment/value add proportionate to fees earned? If not, what should be agreed to maintain a balance that both sides are happy with?
Some clients will of course need much more sophisticated data and analytics, but the key thing is always to provide insight alongside the data, to enable effective relationship management.
As sellers of legal services we can gain some valuable insights from Julius Melnitzer’s article in April’s Lexpert Magazine, where he discusses the challenges and opportunities faced by clients in using data to select external counsel.
He also advises on ‘metrics that matter’ for managing outside counsel performance. It’s an insightful read, so settle down with a fat free chocolate muffin…