Kris Satkunas of LexisNexis CounselLink talks about the increasing prevalence of “maturity models,” and how companies can take full advantage of the insights and efficiencies they provide.
CCJB: There is a good deal of talk these days about “maturity models,” and there seems to be a number of them out there in the legal ecosystem right now. How would you describe an operationally mature legal department?
Kris Satkunas: You’re right, there are quite a number of them. The unique angle that ours takes relates to achieving excellence in decision-making. We look at all of the different types of decisions that have to be made in a legal department, and we help categorize those decisions into five different levels of maturity – based on how the department goes about making them.
Most of the other maturity models that I can think of organize around core competencies, or areas of proficiency, the types of things that legal departments really should have a high degree of competency around. Our model isn’t intended to be a substitute for those models. Ours at LexisNexis CounselLink is specifically about decision-making, which makes it a bit more focused and, I think, complementary to the broader types of models. Every legal department makes the types of decisions that we lay out in our maturity model.
Let’s talk about why it’s important for law departments to measure where they stand within a maturity model.
Maturity models are a particularly nice tool for anybody who is looking to demonstrate that the legal department is a valuable part of the organization – one that is continually striving to improve and add more value to the business. It’s not just an intellectual exercise, “Oh, here’s where we are in our maturity.” It’s about building a plan to get better and making advancements in the areas that are most important to the legal department and the company overall.
It all ties back to helping legal departments achieve their goals – the main one being, of course, to achieve better legal outcomes. They are trying to manage and reduce risk, while managing costs as effectively as possible. Optimizing decision-making helps to improve those results. So it helps to build a framework to achieve those goals and to prioritize what’s important.
One of the things that using a maturity model is useful for is helping the managers of legal departments articulate what their objectives are and how to prioritize them. Until you start talking in tangible terms, it’s hard to clearly state areas that need to improve. Perhaps the department could achieve better legal outcomes if certain processes were managed better. For example, many legal departments are very analytical already about their decision-making around vendor management, but they still make ad hoc, one-off decisions for other, more basic things.
There are actually multiple goals employing a maturity model can help achieve. I talked before about lowering risks and managing costs as being important. Those are always the overarching objectives of the legal department. Generally, as we talk about the next level of importance, the conversation turns toward having more visibility into information itself, and having greater efficiency and more predictability around what’s going to happen. All of those things feed into the maturity model framework.
Making more data-informed decisions is talked about a great deal in our industry, and having more visibility is the starting point. People know that they want to see more data, although they’re not always sure why. We help them articulate that. Usually what we hear is that they want to be as efficient as possible. So they know, intuitively, that they’re inefficient in the ways that they’re making some of the decisions we’ve been talking about. CounselLink, or maturity models more generally, can help legal departments translate this commonly stated goal of wanting more data and more efficiency into tangible benefits – and then, ultimately, quantify some sort of value associated with change.
Please talk to us in more detail about the CounselLink maturity model specifically.
We have 10 different types of decisions that we believe every legal department has to make, divided into two categories: the day-to-day decisions and the strategic ones. There are five of each. And there are also five different levels of maturity that a legal department can potentially pass through. Some legal departments might not care if they get to the highest maturity level within some of these areas, but some do – and have.
Let’s take matter pricing as an example. That’s a day-to-day decision that gets made often. You find out about a legal issue that’s come in to the department, and you know that outside counsel is going to be used on it. Perhaps you’ve already decided which firm you’re going to use, which of course is another one of the day-to-day decisions that gets made. But you have to decide what you’re willing to pay for it. Here’s where the maturity model comes in.
At the lowest level of maturity, level one, decisions are made in an ad hoc way. Essentially every decision is handled as a one-off. It may be that whichever in-house lawyer owns the matter makes a pricing decision based on his connection or relationship with the law firm he decides to engage. He may just decide to pay whatever rates they charge. He’ll make a decision as the bill comes and pay or negotiate the rate at that time.
Level two is making consistent decisions. Generally, that means you have some sort of a process in place around those decisions. Oftentimes, those processes are enabled by technology. In our case, CounselLink helps to build consistent processes because they are in large part in an automated workflow. In the case of pricing, CounselLink allows law firms to enter their rates into a system and consistently go through the same process of the rates being routed to the right people for approval. The technology removes the ad hoc aspect of decision-making, because now you’ve built consistency into the process.
At the third level of maturity, which we call “data informed,” there’s some data coming into play to help you decide what sort of fees you’re willing to pay for this particular matter. Maybe it involves using some benchmarking data to compare a given law firm’s rates to other law firms. That data could be benchmark data that you already have about the firms that you work with, or it could be a broader set of benchmark data like what we provide through CounselLink Insight. What’s important is that you’re using some kind of data to help inform your decision at this level.
Level four is making decisions in an analytical way. This involves drawing upon a more comprehensive set of data sources to inform your decision. At this level, legal departments may build pricing strategies based on different types of matters, their degree of complexity or the degree to which the matter’s outcome critically affects the business. Those data points are combined with benchmark data, historical pricing, things of that nature, in order to drive an appropriate price.
At the fifth level, decision-making is made in an optimized way, which likely means it’s largely automated. In other words, there’s an automated process that decides what the optimal price should be, based on a given set of characteristics about the matter. The goal of optimization via automation is to achieve the best results for the lowest cost. There is plenty of buzz about the possibilities in this area, about starting to use artificial intelligence to make truly data-driven decisions. In many cases, the technology doesn’t exist yet to be able to get to the fifth level, but we can at least take steps to move in that direction – toward that optimal place, even if it’s not fully automated yet. I think that is where the industry is heading.
One of the services that my group provides specifically is to take this framework that we’ve been discussing and work with our customers to do an actual assessment: “Here’s where you fall in these 10 areas today.” But we don’t stop there. We also give them a road map, usually a three-year road map. If they tell us it’s important to improve in certain areas, we lay out things they can do in order to get there. And since we know you can’t do everything at once, we stagger those activities for them to help them prioritize.
You characterized matter pricing, which you just described, as a day-to-day decision. Please tell us more about the differences between day-to-day decisions and strategic ones.
There are five of each: five day-to-day decisions and five strategic decisions. Day-to-day decisions, as the name implies, are decisions that a legal department makes every day, whether they have a defined process around them or not. I’ve already talked about matter pricing. The other four are matter intake (which actually happens first in the process), vendor selection, matter work and matter payment.
Strategic decisions are more comprehensive in nature. These decisions don’t happen every day, nor are they resolved in a single day. They involve more people and are generally part of a program that is in place within the legal department. The five categories of strategic decisions in the CounselLink model are vendor management, business outcomes, financial oversight, staffing and sourcing, and key performance indicator (KPI) programs. These are five key strategic planning areas that every legal department makes decisions about in some way. But they haven’t necessarily spent a whole lot of time defining what their decision-making looks like in each of those areas. That’s where the maturity model comes in.
What kinds of tools or technologies can help law departments design these stronger decision-making processes?
Well, obviously, I’m biased toward the CounselLink platform. But, more broadly, any enterprise legal management (ELM) software system, any matter management system, electronic billing system – these are all going to help legal departments build more processes and, hopefully, use data to better inform their decisions. As more legal departments use ELM systems, there is more and more data that gets captured over time. The best technology solutions are moving toward automating and optimizing decision making, an area where CounselLink is investing significantly.
And there are many stand-alone technology solutions that we’re hearing more and more about, focusing on specific use cases for machine learning and artificial intelligence. All of this innovation is leading the way in terms of helping legal departments truly move to level five – making automated, optimal decisions. It’s exciting to see the advances that are being made in these areas.