Metrics measuring attorney and law firm performance have exploded in recent years, and trend watchers say the implications for the industry are only beginning to be felt.
“Corporate legal departments want to make sure they’re getting a fair value, and from a law firm perspective, when they’re being asked to bid on work, they’re going to ask, ‘What are my peers billing?’” said David Moran, senior director of data management and analytics for White Plains, New York-based TyMetrix.
The company since 2010 has published the Real Rate Report, which distills data based on American Bar Association billing codes, by market and by whether billed work was done by associates, partners or paralegals.
TyMetrix’s benchmarks on such measures are culled from more than 50 billion aggregated data entries on electronic invoices submitted through its affiliated billing software. Firms agree to allow TyMetrix to anonymously use the data.
Moran said the data would allow someone working on a real estate matter or an Employee Retirement Income Security Act case, for example, to track benchmarks for phases within the typical life cycle of a case from discovery to settlement or resolution. In short, the data provide a guide for how long certain tasks should take and how much they should be expected to cost in various markets.
Getting to that “granular level,” Moran said, was revolutionary less than five years ago, but it’s become a reality of the legal marketplace. Insurers and corporate legal departments, he said, “are asking more for early case assessments – what is the expected cost and duration based upon the given facts?”
“We always understand not everything can be boiled down to one data element,” he said. Nevertheless, “with a large amount of data, you can see a pattern.”
Veteran defense and plaintiffs attorneys have mixed feelings about the trend but acknowledge it’s here to stay.
“The majority of lawyers still know nothing about this,” said Lewis Wagner LLP partner John Trimble, who has given presentations on behalf of DRI – the Voice of the Defense Bar on how metrics are changing the profession.
Metrics as a buzzword in the legal community seems to have been met largely with shrugs or groans, but it’s “a word I’ve come to hate,” said Kightlinger & Gray LLP partner Richard Young.
“If they had a question, I wish they’d just pick up the phone and call,” Young said of clients’ billing issues. He questions the value of benchmarks for matters that have unique sets of facts and participants.
“It’s not a one-size-fits-all world,” he said. “I don’t know if my client’s going to be wonderful to work with or if it’s going to be like pulling teeth to get information.
“You don’t know everything when you take a case in,” Young said.
But data is the driving force of changes that Trimble warns will only intensify. He said lawyers and firms should know how they stack up in comparison to their peers on measures that they’ll increasingly be rated on. Wise firms will see their
performance on metrics measures as a marketing opportunity, he said.
“Businesses are becoming better con-sumers of legal services, and as they’re becoming better consumers, they’re becoming more selective” about who they retain, Trimble said.
“What’s happened more recently in the business world and the insurance world is they’re using analytical software to harvest information on a firm-by-firm basis,” Trimble said. “The key metrics for law firms and individual lawyers are how long was the case opened from the date of referral to the time it was closed; and second, how long did it take the lawyer or firm to move from opening the file to a decision point” on whether a case should settle or proceed to trial.
Trimble said he’s heard of companies retaining a firm but singling out individual attorneys the companies didn’t want working on its matters based on the company’s internal data analysis.
Thomas Zurek, senior vice president and general counsel for American United Life Insurance Co. in Indianapolis, said many firms are modeling their practices on metrics and he’s explored doing the same, but decided against it.
“I find that it is not all that helpful in our business,” Zurek said. “I have a small cadre of firms around the United States that I use. I’m very familiar with their firms, and in addition to that, I practiced law for 26 years and I have my own sense of the value of things.”
Zurek said value can only be measured in beneficial results. Metrics based on a collection of benchmarks “doesn’t fit with the calculus I have for determining if proper value has been obtained,” he said.
“I could be paying someone the equivalent of $200 an hour, and if I should have been paying $500 an hour to get the proper result, the $500 an hour is cheaper at the end of the day,” Zurek said.
Roy Tabor, founding partner at the Tabor Law Firm LLP in Indianapolis, said from a plaintiff attorney’s perspective, metrics may have some limited value.
“It’s fine if those are benchmarks, but when they become the standard or the rule, that becomes a problem,” he said. Data “is only as good as the input,” he said, and programs can’t make room for variances, such as the deposition scheduled for an hour that drags on for several more when unexpected information comes to light.
Tabor said statistical analysis of legal matters is always going to require exceptions to allow for cases that are outliers and by their nature will take longer to resolve. “I sort of lament the loss of the notion that the practice of law has a bit of art as well as science to it,” he said.
Young has no doubt that metrics will continue to play a larger role in business and insurance litigation. But he said quality firms are already doing most of the things the metrics encourage.
“Our philosophy has always been the earlier you can evaluate a case and tell a client or an insurance carrier where they ought to go with it … the faster you can do that, the happier your client is going to be and the more efficient the handling of the case is going to be,” he said.
Young doesn’t criticize clients who review bills, but he said too much reliance on metrics could have the unintended consequence of adding time reviewing invoices. Most of the time, he said, billing issues are resolved with an explanation of why a matter wasn’t routine.
“I’ve never had them call up and say I didn’t spend enough time on something,” Young said.•