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Counting What Counts

Litigation metrics and how to build them

September 11, 2017 Photo

Those of us who actively participate in the CLM are no strangers to the importance of litigation metrics. In a community of more than 40,000 industry claims, risk, and legal professionals, it seems you cannot turn around without engaging in or overhearing a conversation about litigation metrics.

For purchasers of legal services, discussions about metrics focus on how to make smarter, better decisions about legal partners to use or how to more accurately predict and control litigation costs. Ultimately, the goal is about achieving optimal litigation resolutions.

But the metrics conversation is no longer being held by just one side of the industry. Legal services providers are under increasing pressure to use, and demonstrate their use of, metrics that improve the practice of law as well. If buyers are doing it, law firms should be as well.

Like any other broad concept, the term “litigation metrics” means different things to different people. And, like in any other industry, organizations and law firms find themselves at very different stages of maturity when it comes to understanding and effectively using litigation metrics. This article provides some conceptual frameworks for our community to consider, both foundationally and functionally, as it examines its litigation metrics programs and explores how to improve them.

In outlining both foundational and functional conceptual frameworks, we must pay tribute to the work of Bill Sowinski, whose ideas are borrowed from liberally throughout this piece. Sowinski has been a pioneer in the litigation metrics arena since the concepts around measuring litigation effectiveness were first introduced, and he remains so today in his role as director of decision support for Wolters Kluwer ELM Solutions.

Building Blocks

Whether an organization is already walking down the metrics path, or just thinking about how to approach the challenge, there are four key building blocks that are critical to achieving a successful metrics program. Although some seem self-evident, we recommend that all organizations continually evaluate and rank their own discipline in each of these areas.

Senior Management Buy-In and Support — Any organization or law firm can proclaim its adherence to using litigation metrics. But like other transformational initiatives, a metrics program is unlikely to get very far without meaningful and real senior management commitment and buy-in. Leaders must be willing to ensure that the right expertise and resources are allocated to the initiative and that the demonstrated and effective use of metrics are incorporated into performance reviews, compensation plans, and other appropriate management tool sets. In addition, management must fully commit to supporting the following three building blocks or the effective use of metrics will suffer.

Access to the Data Itself — Obviously, without access to data, metrics programs are challenged. This discipline goes deeper than that. Organizations must think about where each data element might reside within the organization’s databases and technologies, how best to retrieve those data elements, and how automated and easy it is to secure and use them. The broader the data sets, the better. For example, information about the type of litigated matter can be just as important as the raw expense information because it allows for wider segmentation and better apples-to-apples comparisons.

A Commitment to Data Integrity — Every claims executive who has suffered through the use of a data category called “999-Other” knows the importance of data integrity. In order to be useful, each data element and the definition for its use must be well defined and consistently entered. The more pre-defined the data entry user experience is (drop-downs, multiple choice, pop-up definitions, feeds from original sources), the better. The data being used must be accurate and trusted.

Robust, Effective Data Segmentation — Capturing as many claim- or matter-related (as opposed to invoice- or cost-related) data elements as possible significantly enhances the ability to use metrics effectively. For example, the ability to compare attorney performance in low-value auto cases is nullified if workers compensation cases cannot be excluded from the results. Reports can only be segmented by the data elements that exist.

Functional Perspective

With the strong foundation blocks in place, organizations can drive maximum value from their litigation metrics initiative by keeping the types of information they want to work with clearly in mind.

Most organizations strive to understand their litigation information around five core metrics. These metrics, of course, can be segmented by many different factors (line of business, firm, claims professional, etc.) to drive deeper analysis.

Spend: In other words, how much is being spent, in total and on average, on litigation. This can be fees only, or all related expenditures. This helps to answer the “How much do we spend?” question.

Rate: This helps to answer the question of how expensive required resources are. Rate can be analyzed by average rate, blended rate, “real” rate, or in other ways.

Inventory and Turnover: This metric helps to understand frequency, open and close rates, churn, and other factors that help to answer the question, “What is our litigation?” Related to this category, but sometimes examined independently, is the metric of case cycle time. Obviously, cycle time helps to identify the duration of litigated cases.

Budget Compliance: This metric answers a core question, very important to all organizations: “How reliable is our prediction of costs?”

Total Case Cost: Perhaps one of the most important (and elusive) metrics, total case cost combines both cost and outcome data on similar cases in order to generate a complete picture of overall litigation management performance.

What’s Needed for World-Class Metrics

In today’s highly complex computing environments, it is important to analyze carefully where each litigation data element sits within the organization. Most likely, these data elements reside in multiple locations and on multiple platforms, many of which may not be “speaking” with one another already.

An organization’s e-billing or spend management platform may contain comprehensive attorney-focused financial information, while the claims system may contain the majority of case or matter type information. Data related to litigation support services such as e-discovery, court reporting, and others, if not being driven directly through an e-billing platform, may reside only in accounting databases. Even more information may be contained within the systems used by a staff counsel organization or corporate law department.

The ability to pull these data elements together so that they can be used in concert with one another is critical to fully realizing the value of the five metrics previously described and the five litigation report types described below. Most commonly, litigation metrics are driven by an e-billing or spend management system, so executives must ensure that the platform selected is extensible. That is, the core architecture of the selected platform must be able to accommodate multiple data exchanges with all of the relevant data sources across the organization, and be able to reflect the unique way in which each organization stores its litigation data.

Five Key Litigation Reports

Bill Sowinski, whose innovative work on litigation metrics has already been mentioned, identifies five report types into which most metrics should be presented. His approach is a superb way of thinking about report development and structure because each report type answers different questions. The report types include the following:

Outcome Reports — These reports provide information at a higher level, with less specific segmentation. Frequently, they might be classified as “senior management” reports, with a focus on big picture, aggregate results. Examples might include total legal spend or costs over a period of time, or total costs versus total budget or average rates paid to firms over a period of time.

Performance Reports — Performance reports provide more segmentation of the information found in outcome reports. They often are used to compare the performance of claims professionals, law firms, or individual attorneys. They also can compare performance to pre-established goals or benchmarks. Examples might include average case cycle times across claims professionals or law firms, or average or blended rates across specific law firms.

Exception Reports — Exception reports are designed specifically to identify trends, cases, or activities that are likely to create problems. They can be helpful in avoiding undesirable surprises or unanticipated events. Generally, the data within them is immediately actionable. Some examples might include cases in which legal expenses exceed or are nearing budget, or a list of cases that have been open for a certain number of months.

Combined Reports — Combined reports draw in varied metrics from multiple data sets. For example, you might have a view of a law firm or attorney with data about inventory, budget performance, cycle time, reporting timeliness, and quality survey results—all on the same report or dashboard. These reports offer a larger perspective that can be used to facilitate broad performance discussions.

Analytic Reports — The objective of a strong analytic report is to identify and prioritize operational changes that are likely to have the greatest impact on achieving effective improvement, either to cost or outcome or some other management goal. These often are the most complex reports. Some examples might include the identification of the 20 percent of cases driving 80 percent of costs, or how does timekeeper-level staffing compare between “high-performance” law firms and a “low-performance” firm?

Most litigation management practitioners, whether as a client or law firm, seek to manage the delicate balance of reducing costs, improving outcomes, and eliminating litigation inventories. With the right foundational building blocks in place, and by understanding the purpose and meaning of the five key litigation report types we’ve outlined, these professionals can use these five key metrics to maximum advantage.

Additional Information

CLM Advisors, the consulting arm of the CLM, is launching an industry study designed to capture the “State of the Union” on how litigation metrics are being used effectively. Readers who would like to make sure they are included in the study should write to taylor.smith@clmadvisors.org. Additionally, these topics are covered in greater length in the litigation metrics course taking place at CLM’s 2017 Litigation Management Institute in October. Hosted at Loyola Law School in Chicago, the LMI is the first certification program specifically designed to provide a comprehensive understanding of the business of litigation management.


About The Authors
Multiple Contributors
Taylor Smith

Taylor Smith is president of Suite 200 Solutions. taylor.smith@suite200solutions.com

Paul Roberts

Paul Roberts is a member of CLM’s advisory board. He can be reached at paul.g.roberts@icloud.com

Robert Bowers

Robert Bowers, MBA, CPCU, is national claims and customer service leader at Westfield Insurance. He can be reached at  robertbowers@westfieldgrp.com

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