(This article was contributed by Domenick C. DiCicco Jr., JD, MBA, head of legal strategy at AIG.)
The legal audit team (LAT) is critical to the competence of any litigation management and corporate legal function. The LAT function breathes meaning into litigation management guidelines (LMG), service level agreements (SLAs), and best practices (BPs). Too many litigation management programs amount to nothing more than the creation of LM guidelines, SLA, or best practices that have little or no meaning in practice. The LAT serves to make sure the company’s litigation management program has real world impact.
A properly run LAT will pay for itself year-after-year by assuring that:
- The company’s legal policy is followed.
- The company’s legal billing guidelines are followed.
- There is alignment between counsel and the company’s legal goals.
- The company is paying for legal services equal to the value received.
It is critical to the effectiveness of the LAT and the corresponding LMG, BP, and SLAs that the LAT have good metrics to assess their own performance. Here, the maxim of Ductus Exemple1 is a must in order to give the LAT credibility as well as being good management.
Measuring the Team’s Effectiveness Initially, a good LAT and accompanying process will yield findings heavy on non-compliance and of questionable value of the files it audits. “It’s not enough to do your best; you must know what to do, then do your best.”2 Stated another way, “Management by objectives works if you know the objectives.”3 Once you figured out the correct objectives, (i.e. you know what to do), you must then create the appropriate metrics. As the oft stated truism provides, “What get’s measured, gets done.”4 This is to be expected as it is human nature to conduct their business in a manner consistent with what is being measured. However, assuming a homogeneous portfolio of legal cases, the scores should level off after the third year.