Your In-House Score Card Will Boost Accountability to ‘Customers’

The new year is a good time to develop a legal department scorecard to share with business leaders and other stakeholders in your company.

Why do I need a scorecard, you say? I’m a lawyer, not a businessperson. What we do can’t be measured; it’s too subjective. We’re too big. We’re too small. Besides, what could we possibly put on this scorecard?

Here’s the thing. You’re not just an in-house legal team—you’re a part of a business that lives on numbers. If that business doesn’t understand what you do, and thinks of legal as an expense black hole, it’s on you to bring transparency to your work, using the language that your business does understand—numbers.

There is no magic template for how a legal scorecard should look. Each legal department is as unique as the business it supports. Designing one that works for you requires careful thought, but if done well, it’s a management and marketing tool that can make you a more effective leader.

There are a lot of possibilities. First, you should know how many contracts your team produces, even broken down by type. If you use contracts software, it’s easy to produce these numbers, and you can even track timeliness throughout the process (time to first edit, time to completion).

Patents? Deals supported? Tracking these numbers is helpful to demonstrate the value your team provides, and to understand how your workload fluctuates from quarter to quarter, and year to year.

Ratios are also powerful. If you have a contracts team, you can easily calculate how many contracts an average member of your team produces. This data is critical when it comes to justifying headcount requests. Instead of saying, “I need more lawyers, we’re swamped with contracts,” you can use your scorecard to demonstrate how many contracts each lawyer can support, and how many lawyers will be needed to handle the rise in contracts generated by the business.

For product teams, what is the ratio of product managers or product engineers to lawyers? If one lawyer can support three product managers, and the company plans to add three more product managers in the coming year, the data shows an additional lawyer is needed.

The same sort of calculation works for deal lawyers (lawyers per deal supported), litigation lawyers (lawyers per litigation matters), regulatory lawyers, and so on. Understanding ratios also helps you justify and understand legal tech expenditures—specifically how technology spends pay off in more efficient ratios.

You can also track whether legal expenses as a percentage of your company’s revenues are tracking up or down. If it’s up, that might be fine, but it’s hard to understand if you don’t measure it. Numerous data sources online can help you benchmark your legal spending against other companies in your industry, but you can’t benchmark if you don’t track the data yourself.

A good scorecard can help you keep track of how your department is trending on outside counsel expenses. Do you understand your percentage of legal spend on in-house versus outside counsel? Is it trending in one direction, and if so, do you understand why? Calculate the true full cost of an attorney and an estimate of the hours each produces, and compare it to the hourly rate your outside firm charges. Is it time to cut your outside counsel budget and hire another lawyer in-house?

Your scorecard is also a good place to show internal satisfaction metrics. Does your company survey employee satisfaction by department? If so, show how your team’s employee satisfaction scores stack up here.

I also believe the legal department has to think of its internal clients as customers, and survey them regularly on issues like timeliness of legal’s work, their view of the legal department’s risk tolerance, and their confidence in the quality of the work. Your customer’s views on timeliness might be unreasonable, and their views on risk tolerance might reflect a misunderstanding of the issues, but right or wrong, it’s important to understand what your customers are thinking, and address dissatisfaction.

In devising your scorecard, it’s important to think carefully about how tracking each line of data might impact behavior negatively. Often, employees do what you measure, even if it’s not the “right” thing. For example, tracking contracts per lawyer might lead to some creative thinking about how to use technology to improve efficiencies. Or it might encourage faster and riskier behavior in contract negotiations, all in the name of improving a number.

Balance efficiency metrics with quality controls. For example, if you track the number of hotline complaints and ethics inquiries, understand that a lower number isn’t necessarily good. It may reflect a hotline that isn’t promoted or hard to use, or an internal cultural issue where employees are afraid to speak up. It might be counter-intuitive, but I view an increase in ethical questions and reports as a positive number, particularly if the issues raised were minor.

You’re never too large or too small to begin tracking what you do—now’s the time of year to start your first legal scorecard, or give your old scorecard a critical examination to ensure that it’s encouraging the right behavior and serving your company’s best interests.

If you can’t measure it, you can’t improve it.

Rob Chesnut consults on legal and ethical issues and was formerly general counsel and chief ethics officer at Airbnb. He spent more than a decade as a Justice Department prosecutor.

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