Why Business Intelligence Matters

Does your team struggle to use data and clear legal key performance indicators to make decisions using legal support? Like many businesses, yours may be doing none of those things. If that’s true, you may be struggling to access–or even identify–the right data to track. Your business probably also lacks the necessary tools to consistently make good, data-driven decisions about how to use legal support.

Wouldn’t it be better if you could manage and guide your business with the confidence that comes with making clear, analytical choices based on hard data, rather than the fuzzy math of intuition? Using data well allows your team to uncover trends, discover better ways of doing things, and get focused on aligning legal support with your business goals.

For years, we’ve been developing innovative ways to help our business clients overcome the hurdles to having a profitable relationship with a preventive lawyer. In the last year, that has led us to create Profit from Legal™, a legal operations function setup service. In case you’re not familiar with legal operations, in the next section, I’ll unpack what this function does.

Diving Deeper: Legal Operations

Legal Ops is: “a set of business processes activities and professionals who enable legal departments to serve their clients more effectively, by applying business and technical practices to the delivery of legal services. Legal operations (or “legal ops”) provides the strategic planning, financial management, project management and technology expertise that enables legal professionals to focus on providing legal advice.” (CLOC)

Profit from Legal™, ExecutiveLP’s legal operations setup service, takes business clients from zero to one, in terms of having a legal operations function. Initially, we provide three of the Core 12 functional areas of a mature legal operations function. When a client hires us to provide our Profit from Legal™ service, we are setting them up with the tools they need to make better decisions through data analytics, to maximize their resources, their use of their resources through sound financial management in the legal arena, and to develop firm and vendor relationships that deliver more value.

Special Note: For the reasons why we’re not trying to set out to install a completely mature legal operations function at the outset, listen to this episode of the Profit from Legal Podcast.

In the beginning, we’re not necessarily trying to do all of the other core 12 things, which include: information governance, knowledge management, organization optimization and health practice operations, project and program management service delivery models, strategic planning, technology, and training and development. There may be elements of those things that necessarily to relate to the work we do with Profit from Legal™. Our focus, however, is firmly on business intelligence, financial management, and firm and vendor management.

A legal operations function needs to be set up with the basics, first, and then mature into a function that encompasses all 12 of the Core 12 functional areas. When going from zero to one, we’ve found it’s more cost-effective and less operationally challenging to focus the legal ops setup work on delivering business intelligence, financial management, and firm and vendor management, functions, and later add the other nine functional areas to that foundation.

Business Intelligence and Legal Operations

This article is all about business intelligence. Let’s begin by answering a basic question. What does it mean to improve business intelligence? If you’ve ever read, Thinking, Fast and Slow by Daniel Kahneman, you may be familiar with what he calls System One and System Two of the human mind.

For those unfamiliar with these ideas, let me briefly introduce you to these systems.

System One is the fast thinking system of our brain. It uses heuristics to quickly and efficiently answer questions. The speed and efficiency gains of System One come at the cost of accuracy. So System One is pretty easily fooled when it comes to complex reasoning tasks.

System Two, on the other hand, sacrifices, speed and efficiency to gain clarity, effectiveness and accuracy in human thinking. Our brains prefer efficiency over effectiveness. In other words, it’s difficult to engage System Two, and do deliberative critical thinking work, because our brains favor quick thinking over slow thinking.

Whenever we’re making strategic decisions, it’s very important that we take an intentional, deliberative, thoughtful approach and engage System Two in our brain in order to achieve a more effective, more accurate outcome. Unfortunately, in business, this happens less than it should. Consequently, even smart, well-educated people fall into the heuristic trap, and use System One to make long-term strategic decisions.

Let’s recall the question we’re answering. What does it mean to improve business intelligence. For me, a significant measure of improved business intelligence is achieving a state of business development in which decisions depend less on intuition and heuristic thinking, and more on data, critical analysis, algorithmic thinking.

Using data and critical thinking tools, rather than intuition, to make decisions, makes more effective important strategic work, such as spotting hidden trends, discovering new efficiencies, and orienting our teams more closely and clearly towards our goals that matter most.

Improving Business Intelligence in the Legal Operations Function

If you want to profit from having legal support — that is, if you want to have a profitable relationship with your lawyer, your in-house legal department, or your outside General Counsel — you need to invest in the development of improved business intelligence. You need to be able to look at the data that relates to how you use legal services — or how you should use legal services — and critically analyze the data about trends over time, about efficiencies.

To do that, you’ll need specific performance metrics for legal support. We call these metrics, legal key performance indicators. The data that we get from selecting the right legal key performance indicators, and then tracking them as we use legal support services, assists decision makers in the legal department, your outside general counsel’s firm, or strategic leadership team in determining whether your legal support is efficiently deployed.

• When is your legal support actually focusing its energy on high complexity and high strategic impact work?

• When are they appropriately providing your resources to doing low complexity, and high strategic impact work?

• How and when they effectively managing external resources for high complexity, low strategic impact work?

• When are they offloading low complexity, low strategic impact work?

There’s an excellent article by Thomson Reuters. that talks about business intelligence from which these questions about the uses of data are taken. In fact, to quote the article:

“Measuring this data and reviewing it regularly will lead to continuous improvement in how the key people within the legal department solve the most important problems for the business.”

And legal operations isn’t just for big companies with legal departments, per se.

Profit from Legal™ Works Even for Smaller Businesses

By the way, I think that’s true even if your business doesn’t have a legal department. Even if you’re leaning entirely on outside General Counsel for your legal support, provided they’re using the right business model and legal ops methodology, they still have the ability to measure and review the data regularly to continuously improve how your business uses legal support, solve its problems, or prevent its risks from becoming problems.

Even businesses that have a legal department, often don’t take full advantage of the data that they have. For example, they don’t mine data from their e-Billing or contract management systems to help them improve the legal department and better serve the business. They don’t analyze that data through the lens of legal key performance indicators to improve the business.

By adding data gathering and analysis to each of these systems, most departments would improve their business intelligence competency right away.

The article I told you about earlier specifically says, with respect to e-Billing, for example:

“[Run] off the shelf reports and dashboards to see how the department’s total spend and partner slash associate ratios compared to industry averages for the work performed. Combining this with the data from that gathered from the department’s enterprise legal management systems will provide actionable insights on how to best allocate resources. It will also allow department leaders to effectively engage with business leadership around the numbers.”

These are the kinds of things that we help our clients do.

Improved Business Intelligence through Profit from Legal

When we deliver Profit from Legal™, we set up systems and processes of reporting to continuously measure and improve the effectiveness of these efforts and the legal department overall. Perhaps different from most other legal operations services, we also deliver Profit from Legal™ for businesses that don’t have an in-house legal department — for those that rely entirely on outside General Counsel.

It’s very rare to see a business that has no in-house legal department with a legal operations function. I think such developmental oversights are costly mistakes. Every business needs to have legal operations function so they will, at least, have the capacity to engage legal support profitably. This is true whether the business in question has an in-house legal department, outside General Counsel, or no ongoing, proactive preventive legal support.

Many businesses that forego legal support do so because they don’t know how to have a proactive, preventive, profitable relationship with their lawyer. If they had a good legal operations function, they would know how to use a lawyer effectively and profitably. They would know how to set up a legal department in a way that is not a drain on the business’s resources, but, instead, adds to the total resource pool available to a business.

That’s the goal for Profit from Legal™. We want businesses to start seeing that legal support is an efficient use of their resources — that, when done in the right way, it can even be profitable for a business to have legal support.

Improving Your Company’s Business Intelligence

Businesses with profitable legal support don’t worry about it being unaffordable, because everything profitable is affordable.

After reading this, maybe you’re asking yourself, “Could ExecutiveLP® help my company improve its business intelligence?” After all, while I admit this might not be the most emotionally compelling material, the difference — the impact — of putting into practice the things I’m talking about is a total game-changer.

The reason that I do what I do is because I genuinely believe putting these ideas into action will improve people’s lives. Better ideas lead to better actions. Better actions lead to better results — like having more of what you want, wasting fewer resources, and being generally more fulfilled in your work. We want to help you get everything in your legal function right, because, as Yvon Chouinard said, “Profit is what happens when you get everything else right.”

With the right legal operations function in place, legal support really can be profitable. This isn’t just some academic theory, or pie-in-the-sky, nerdy ivory tower math on a chalkboard. This is practical. It’s real.

Get a Free Consultation about Profit from Legal™

If you’re tired of feeling like you’re just throwing money into a black hole, whenever you spend money on legal support. It doesn’t have to be that way. We can change that.

Profit from Legal™ really can help your business save money on the things your legal support team already is — or should be — doing. It can help you improve overall profitability, and it can help you discover new opportunities. To me, and others committed to building their business into something investible and lasting, the potential to do all that is exciting.

Profit from Legal™ offers an excellent value proposition. Unlocking that value for your business starts with a free conversation.

If you would like to have a conversation with you about improving your business intelligence, contact me, and mention that you’re interested in improving your business intelligence.