As a legal department leader, are you looking for ways to identify the effectiveness and value of the outside law firms that you retain? Liberty Mutual Insurance has been formally evaluating the performance of the thousands of outside counsel that serve the company during any given year for more than a decade. Several years ago, Liberty Mutual’s legal operations team developed a data-driven process that assesses both objective and subjective value metrics.
In our Value Drivers series, I interview legal industry leaders and innovators that are bringing transparency to legal performance in their own unique way. In this interview, I spoke with Kiran Mallavarapu, senior VP and manager, legal strategic services for Liberty Mutual Insurance, and Bruno Para, AVP and relationship manager for the company’s Central Division. This is the first of two parts of that conversation. Liberty Mutual Insurance is not a Qualmet customer.
What led you to start an evaluation feedback process for law firms?
One of the promises we make to our policyholders is to provide high-quality legal services in the most effective manner. To do that, we work with law firms that have a broad variety of skills and expertise. It’s essential that we consistently measure and track how they are performing through data and analytics to deliver on our promise.
How long have you have been measuring your firms’ performance?
We’ve been doing this for at least 15 years, but we started basing it on data for the past five or six years. The insurance industry has always been a very analytical industry. Over the last few years, people started asking for better quality metrics. They started to ask, how do you know which law firm is delivering what kind of service?
Key Metrics and Evaluation Areas
What are some of the key metrics or subject areas you evaluate?
We have a number of analytical tools that help us capture data to measure various aspects of a law firm’s performance characteristics. We also send out surveys to our internal business partners that work with our law firms to assess how they are doing, and we gather that feedback. In addition, we go on-site to conduct one-on-one meetings with our firms to assess their performance and capture additional information regarding their overall legal effectiveness.
We assess medians, averages and total costs. We also look at time from filing to resolution. We evaluate firms against themselves and against other firms that are handling similar types of work on a year-over-year basis. We further evaluate how those metrics are trending over the course of time. We customize our conversations with each law firm, and we explain how they’re being evaluated. We’re transparent with our data because it enables firms to achieve better alignment with us and implement changes within their operations to positively enhance their metrics.
Do you have any more subjective metrics?
We group our analytics and metrics into three broad areas. The first would be related to the value that a law firm brings to the table and the quality of the matters that were handled to see if they’ve been done in a proper fashion. The second is more in terms of financials or expenses in terms of their efficiency. Did you really need to work on this case for 100 hours or could you have done this in 50 hours? Are you billing us properly? The third is adherence to our litigation guidelines based on the type of case and based on the type of customer we work with.
With the third component, we think of that in terms of best practices that all law firms should be providing. For example, timely and meaningful reporting, budgets and standard conflict checks to name a few.
When you send out surveys to your own people in their dealings with their firms, what kind of things do you address?
Timeliness, whether the law firm utilized its best expertise, their availability when we and the policyholder needed them, whether or not they understood the situation at hand, and if they understood the policyholder’s business and what that person wanted to achieve.
Benefits for Liberty Mutual Customers
How does this benefit Liberty Mutual?
We have seen some subjective benefits as well as financial benefits. It’s in our policyholders’ interest to make sure that we are providing the best legal service as possible, so there is a policyholder satisfaction kind of benefit. On the financial side, we have seen anywhere from a 5 to 25 percent difference in the total cost of some of these cases. Our claims handlers use the data to pick firms for cases from a managed panel, so instead of randomly choosing any firm, they’re are able to choose efficiencies and expertise.
When we work with law firm account partners that are highly engaged in sharing our vision and strategy, we tend to see better results. Firms that are not able to meet expectations over time, however, may eventually be deactivated.
Enhancing the Perception of the Legal Department
How has the perception of the legal department changed as a result of these processes?
We have received absolutely positive feedback about the work that we are doing, specifically with metrics. Our CEO and CFO are both knowledgeable about what our legal operations team does and the positive financial and policyholder satisfaction impacts the team has had. A lot of the credit goes to our CEO and CFO for their support. We provide quarterly updates to our GC. They are asking some interesting questions that are helping us set our future strategy.
Our customers also value our ability to provide historical information and quality performance data on law firms that they may be considering. We have the resources to fully vet those firms, capture that information and provide customers with recommendations as to whether any given firm would be a good fit to service their specific legal needs.
Look for Part 2 of our conversation with Liberty Mutual, coming soon.
See other posts from our Value Driver Series:
“Google’s Patent Counsel, Sylvia Chen, Fosters Transparent Law Firm Relationships to Improve Performance” available to read here.
“Google’s Outside Counsel, Michelle Knight, Describes How Openness to Change Improved Client Relationships” for viewing here.
Know a Value Driver or would like to be included in the series? Please recommend an executive for my next interview: firstname.lastname@example.org.
Rolf Provan is VP of marketing and operations at Qualmet.
Follow Qualmet on Twitter: @qualmetlegal