5 Key Ways to Measure Outside Counsel’s Performance

If you surveyed a group of people from corporate legal and risk departments and asked them evaluate their outside counsel, the majority would probably think they were up for the task. However, if asked to outline the criteria they use, fewer would be able to do so.

We all know it is important to have standards that gauge outside counsel’s management of your claims, but do you know why or how to accomplish this?

Using set standards to review your firms and attorneys helps you to:

  • Be well-informed of their proficiencies
  • Measure their performance against other attorneys
  • Hold them accountable to your expectations
  • Develop guidelines for establishing a panel of firms or attorneys

In-house legal departments might have informal discussions about the efficiency of their outside counsel, and they may even have specific criteria to consider when doing so.  However, to ensure a useful review is taking place it is best to select, define, and establish performance standards for outside counsel and then conduct a review accordingly.  There are many ways legal and risk departments can calculate the performance of outside counsel. Here are five key metrics to use when evaluating your outside counsel:

1. Adherence to Budgets

For most internal law departments, a case budget is something to live and die by, which is why an attorney’s ability to dispute a case while staying true to its budget is a principal measure of their effectiveness.  Once a matter is assessed and a budget is assigned, outside counsel agrees to comply with the budget established.  Reviewing their regard to the total cost of the case is a quantifiable way to consider their performance.

2. Case Duration

Analyzing the time it takes for a matter to go from open to closed is a key component to consider. It may seem obvious, but it is worth mentioning – the longer a case remains open, the more it will cost.  Of course there are exceptions to the rule, but in general the longer it takes for an outcome to be reached, the costs and attorney fees incurred continue to increase.

3. Total Case Cost

Each case is unique and will have its own set of facts, but you can still manage to compare the costs of matters against each other.  Gather data such as the legal, medical, indemnity, and other expenses and compare how the attorney managed the total cost of case against other attorneys that handled similar matters in the same jurisdiction.

4. Hourly Billing Rates

What are you paying your attorneys?  When comparing hourly billing rates in the same city and state for work done on the same type of matters, how do your firms compare?  Knowing whether the firm has higher rates (by position) or if an individual attorney is paid more than others in the area can translate into real dollar savings.  There may be a reason you’re willing to pay an attorney more per hour; however, it is still helpful to compare rates to ensure that you are seeing more value returned for the higher rate.  Likewise, if you’re paying a Partner’s rate for work that can be done by an Associate or Paralegal, it may be time to rethink things.

5. Claim Outcomes

Law and risk departments will likely have their own goals pertaining to claim management.  Although attorneys are typically given some liberty over matters, they should develop strategies that are consistent with your goals for resolution.  Assessing the ratio of cases that achieved your desired outcomes with those that did not is a helpful way to enumerate an attorney’s administration of your cases.

These five quantifiable measurements are just a few of the objective tools that can be used to assess outside counsel’s performance.  Along with other objective measurements, they can play a big role in determining the best in class attorneys among your panel firms and will be a great starting point when comparing your outside counsel against each other and other firms that handle the same type of cases.  As good as these resources are, if you neglect to include a subjective component in your review of your attorneys’ performance, you may be setting yourself up for failure.

If you were provided with a report that compared your outside counsel, but did not identify whose results you were looking at, you would probably be able to make an objective conclusion.  We could look at those numbers all day, but the reality is that once you associate the objective criteria with a name, your biases will come into play.  You will explain why one’s numbers are as high as they are (“They get all the easy cases.”) or justify why the numbers are low (“They work at a small firm.”).  To avoid such potential prejudices, it is best to include a review of subjective materials as well.