Attorney Nathan Vitan knows business executives often measure legal department success, like performance in other company functions, according to the company’s bottom line.
Vitan is vice president & chief counsel–litigation & operations at Public Storage, the largest owner and operator of self-storage facilities in the United States. Working at a company with thousands of locations across the country, Vitan’s team handles complex and potentially costly litigation and, on any given day, may be asked to provide advice on a variety of other operational issues, from marketing standards to privacy regulations.
Of course, not all of those efforts are reflected well in reports to business executives that focus on legal spend. So, Vitan and general counsel Lily Hughes began to think about better ways to measure what the legal department does and demonstrate its productivity and value to the company.
Although important, legal spend on outside counsel is just one data point. Dollars don’t provide a full picture of how well in-house lawyers manage legal risk, Vitan said. In-house legal teams should give their internal clients the information they need to understand the return on the company’s investment in legal resources.
“We have to provide the business more nuanced metrics that demonstrate our value,” Vitan said. “We really pushed our team to show that we are husbanding the company’s resources responsibly and managing legal risk effectively—for example, that we’re settling cases that should be settled, and spending money on cases we should fight because we didn’t do anything wrong and we need to send a message that no one can just sue us and expect us to roll over.”
In other words, Vitan knows that showing the legal department’s value can’t simply be reduced to dollars and cents, and business executives shouldn’t simply see legal department dollars in isolation.
“My sense is that many legal departments are focused on one thing—legal spend,” Vitan said. “But, viewed in isolation, legal spend can’t tell you whether the money was well spent or what you got for your money.” The challenge, according to Vitan, is in showing how legal department spend helps the company’s bottom line.
The first step for Vitan and Hughes was to track a more robust set of metrics on the matters their team handled. Even though it took some time for other attorneys to understand why collecting more data on their matters was important, things have gotten a bit easier as it has become a more natural part of the process. “Over time they’ve seen how valuable this information is and we have full buy in,” Vitan said.
“The goal is to show your value as opposed to your profitability.”
The approach is paying off, with Vitan now able to show his business clients how the legal department helps the company avoid legal exposure, saving company dollars. “Now, for instance, instead of just saying we spent $1,000 on legal fees, we can show how spending $1,000 saved the company $10,000.” “It’s showing that we spend money when we need to spend money and don’t spend money when we don’t have to,” Vitan added.
Better metrics have also helped the company improve its practices and identify where it could be vulnerable. “It really opened our eyes to our ability to influence how we manage risk at the company,” Vitan said. “When we have deeper insight into our matters—for example, the types of cases are we seeing and when and where are occurring—we can start thinking about potential causes and whether we need to change our processes. That then facilitates legal’s partnership with the business, where operational decisions are made with a full understanding of their effect on legal exposure.”
The new approach clicked with the business. “I think it’s an imperative in a corporate environment,” Vitan said. “I do believe in the adage, ‘if you can’t measure it, you can’t improve it.’”
The department’s new emphasis on metrics has had another added benefit: highlighting team members’ accomplishments. “We can say, ‘this team member handled X number of cases, resolved Y number of disputes, and avoided Z dollars of risk,” Vitan said. “That quantifies how productive and valuable our team members are to the company.”
Now, when Hughes and Vitan present on legal department performance, the picture they painted is a more complex one than number of cases and dollars on the ledger line. When it comes to in house legal departments, “the goal is to show your value as opposed to your profitability,” Vitan said.
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