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Leveraging Benchmark Data in the Evolving New Normal

Jaime Woltjen | August 25, 2020

During these unprecedent times, in-house legal teams are facing increasing pressure to be agile, nimble and responsive to the changing market dynamics. Whether the company is experiencing a hard hit to the bottom line or a sudden boom in demand, it is inevitable that nearly all law departments will be challenged to defend budget and staffing plans or do more with less to keep up with the evolving new normal.

In a webinar hosted earlier this year by HBR on “Gaining Visibility into Spend and Staffing Data During Periods of Uncertainty,” it was apparent that many in-house leaders and operations professionals are thinking about how to best leverage data to drive key decisions during this time.

One specific area of interest was the value of industry benchmarking during periods of such rapid change. While there is no exact blueprint to dictate a path forward, there are lessons learned and reference points in-house teams can use as they rethink the new normal for their departments. Even in a state of constant change, benchmarking will continue to be among one of the more compelling tools legal departments can use to highlight their strengths and identify opportunities for improvement.

In this blog post, we discuss three common challenges in-house teams are currently facing, and how benchmarking information can be used to address them:

  • How do we defend our resources, including our legal staffing and budget plans?
  • How can we rethink our legal service delivery model to be more agile and cost conscious?
  • How can we justify investments to support our remote workforce?


 

Defend Your Resources 

Now more than ever, benchmarking data can be one of the most powerful tools in defending your resources and budget plans. Benchmarking against a similar peer group in terms of industry, revenue band and number of employees will ensure defensibility of your business case when presented to executive sponsors. The most valuable benchmarks are normalized against revenue or number of employees. allowing you to determine your right-sized numbers regardless of fluctuations in company performance. Additionally, seek out benchmarking sources that provide a high-low range of what is considered normal rather than a single median/average to help you better tell your story and define where exactly you sit on the benchmarking curve.

 

Rethink Your Legal Service Delivery Model

Depending on how your organization has been impacted by the pandemic, you may be challenged as part of a broader enterprise initiative to rethink your legal service delivery model. Many law departments are being asked to make budget cuts and do more with less. A combination of quantitative and qualitative benchmarking insights can help you begin to surface potential ways to strategically rethink your model without making arbitrary cutbacks. Some key questions to examine when looking at benchmarking data include the following:

  • How do your ratios of internal and external spending compare to peers? What are your main budget drivers?
  • How do your ratios of support staff and paraprofessionals (e.g., paralegals, contract specialists, IP agents) compare to your peers?
  • Are there certain functions your department is handling (e.g., environmental health and safety, corporate compliance) that other organizations handle outside of the law department?
  • Are others engaging lower cost alternative service providers in areas where you are not?
  • What outside counsel cost savings initiatives have others undertaken and which tend to yield the highest return?

In addition to serving as a starting point for potential adjustments to your model, these benchmarking insights will also identify areas that justify a deeper dive analysis to help quantify your savings potential and define a detailed roadmap for change.

 

Support Investments in Your Remote Workforce 

Benchmarking data can also help justify technology expenses to support your remote workforce. With the mass move to a work-from-home environment, legal technology is essential to keeping employees connected with their colleagues and business clients. Transparency into department workload and ensuring sufficient knowledge management tools are in place to carry the business through personnel transitions are paramount. An understanding of which tools are leading in market adoption and their customer satisfaction ratings can help you either defend your existing technology stack against budget cuts or build your business case for investing in technology even during the downturn. A comparison of your tech spending with your peers can help justify your 2021 budget to ensure you are keeping up with tech investments.

 


 

During times of great uncertainty and change, law department should turn to tried and tested tools like benchmarking as a compass to navigate the challenges. A variety of benchmarking sources are available to in-house teams via industry groups such as CLOC and ACC. Additionally, HBR continues to provide benchmarking services through its annual Law Department Survey, now in its 16th cycle. HBR’s annual Law Department Survey includes data from 200+ corporations. HBR also offers bespoke, individualized studies to address unique topics or tailored to specific peer groups.

To further discuss how to use benchmarking data to help address your team’s current challenges, please feel free to contact me. To learn more about HBR Law Department Benchmarking or participate in our 2020 Survey, click here.

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