How Leading In-house Organizations Manage Quality S.M.A.R.T.ly

By Nathan Cemenska

Note: This article was originally published in Legaltech News on June 13, 2019. You can find it here: https://www.law.com/legaltechnews/2019/06/13/how-leading-in-house-organizations-manage-quality-s-m-a-r-t-ly/

How Leading In-House Organizations Manage Quality

??????????????As I wrote in a recent post, in-house organizations need to manage the quality of legal work just as rigorously as they manage outside counsel spend.?Few organizations do.?This raises concerns both because quality matters and because putting downward pressure on cost (as most legal ops organizations are already doing) without any system for detecting any corresponding impact on quality creates risks so obvious they don’t need to be explained.

??????????????Here are some things that real-world corporate law departments and insurance claims departments are doing to help manage quality.????

1.?????They define quality as a S.M.A.R.T. goal

Leading organizations define quality in ways that are specific, measurable, attainable, relevant to organizational priorities and time-bound.?This can be as simple as capturing a subjective net promoter score from a relevant audience at the conclusion of a legal matter to more elaborate systems like the one at a leading insurance carrier I recently interviewed, where they capture 18 metrics that feed into 3 different categories (file management, knowledge/skills, and service).?They also provide written definitions of those categories and reach out to “easy graders” who tend to consistently provide 4- or 5-star ratings to make sure those graders really understand the definitions provided.

2.?????They have an automated system for capturing impressions of quality

A duct-tape quality rating system (think: Excel and email) is going to be a high-maintenance headache with a low ROI that eventually gets abandoned because everybody hates it.?High-performing organizations, in contrast, let technology do the heavy lifting.?For instance, Wolters Kluwer’s T360 eBilling system requires claims examiners at the aforementioned insurance carrier to enter quality impressions at matter close and sends them repeated email reminders if they fail to do so.?The result is the impressions actually get captured and nobody has to waste time keeping track of who has responded and who hasn’t.

3.?????They recognize that excellence is in the eye of the beholder

Even when law departments have a system for capturing impressions of quality, they typically are capturing impressions from inside counsel about how well outside counsel handled the matter.?That is fine, but they should also capture impressions from the people who really matter—the clients in the business unit of the corporation they are supposedly trying to help.??As legal industry consultant Tim Corcoran recently wrote in this scathing article, the client mostly defines quality as “business velocity”—basically fixing the problem with minimal fuss and getting out of the way so the corporation can proceed with its plans.?Gathering impressions of quality from in-house counsel, though valuable, is likely to reflect a definition of quality that is much more academic and centered around the extent to which outside counsel has demonstrated encyclopedic knowledge and technical artistry in their area of expertise.?Trouble is—the client doesn’t care.?They just want the thorn pulled out of their side and for you to disappear.

4.?????They investigate incidents of poor quality and take remedial measures

Another large organization I interviewed that collects quality impressions on thousands and thousands of legal matters every year makes a point to immediately investigate any matter that is closed with a low quality rating.?The quality rating is captured in WK T360 side-by-side with a free text field that allows the rater to explain the reasons behind the rating.?When a low rating occurs, the quality team goes even further by speaking directly to the rater and evaluating what really happened.?Importantly, the quality team does not wait until some arbitrary future time period to review reports of poor quality, but pounces on them when the incident is still in the rater’s mind.?In some instances, the team determines that the low rating was more of a reflection of the rater than the quality of counsel’s work.?In other instances, the team may conclude that while the matter went poorly, the root cause of that lay not in the performance of counsel but in poor internal business processes that stymied counsel in providing otherwise excellent work.?The bottom line is that ratings are not always taken at face value, but evaluated critically to see whether the problem lies a little closer to home than appearances would suggest.?When that is the case, broken internal business processes like failure to timely provide access to witnesses or case documents to counsel, lack of feedback on counsel’s proposed case strategy, failure of internal folks to respond to settlement offers, etc., are uncovered and can be remedied.

5.?????They train firms to view quality ratings as real by having real conversations about quality and real consequences when it is found lacking

Leading corporate law departments know that if quality ratings are never communicated or do not have any consequences behind them, that sends the message to law firms that those ratings are not “real” and can be ignored.?At the very minimum, quality ratings are shared with law firms so that they have the opportunity to review them and ask if there are ways they could improve their offerings.?That gives firms a chance to distinguish themselves by proposing better ways to do business in the future—and firms who respond in this way telegraph sincere commitment to the relationship.?Firms that don’t, don’t.

Quality ratings are also woven into QBR’s, requests for hourly rate increases, panel management, and other programs that can affect firms’ bottom line.?For instance, if panel firms do not achieve a certain threshold quality rating, they may be put on probation or removed from the panel altogether.?Low ratings might also make firms ineligible for hourly rate increase requests.?Some corporate law departments also withhold a certain percentage of what law firms invoice and release those funds only when certain conditions occur, which could include a quality component.?Others might pay bonuses when certain quality thresholds are crossed on certain types of matters.

Conclusion

To date legal work has largely escaped systematic quality control, partly because quality seemed hard to define.?However, administrators at some of the world’s leading law departments and insurance claims organizations have proven that quality can be defined, measured and managed.??Organizations that do not take this systematic approach to quality may be paying a huge price without even knowing it.?By adopting some of the methods outlined above, you can make sure your organization is not one of them.