How will your lawyer really perform?

The Genesis of Scorecards in the Claims Industry!

Have you heard of “The Mitchell Metrics?”

Alright, we don’t actually call them that—I wanted to (tongue in cheek), but my team laughed off that suggestion. What I’m really talking about is “Scorecards,” a system used to measure how lawyers are performing.

One of my favorite functions is the CLM Alliance annual conference, a forward-thinking event that has given my law firm a great platform to discuss Cruser Mitchell’s litigation philosophy, our book on litigation management, and our negotiating series. Cruser Mitchell has long used certain vernacular and promoted carriers requiring Scorecards from law firms on Key Performance Metrics.

At the conference this year, it became clear that our CLM Alliance colleagues had fully adopted the Scorecard approach. A panel of industry experts were discussing key litigation management tools and liberally injected the term “Scorecards” as if they were talking about any other commonly accepted industry term! Later that day, as I sat down to lunch at a random table where I joined a long-time client, he introduced me to the table as “the creator of Scorecards,” explaining that Cruser Mitchell had been using the term for over 20 years.

This made me think (which I don’t always like to do). Was he right???

Back in the office the following week, I had my legal assistant do a search in our IT system for the oldest dated Scorecard. Voila! In a letter to The Hartford dated February 5, 2001, the second paragraph read, “Evidence of results speak louder than words and so, attached is our Scorecard showing results of handling your cases over the past 12 months.” Attached was a chart entitled “Scorecard” showing claims received in 2000 from The Hartford along with data on metrics such as Life of Case, Legal Fees, Demand, and Indemnity (if any), along with averages at the bottom of the chart. (Frankly, I think we did Scorecards in 1999, but our system only goes back to 2000.)

So, that client could be right. Cruser Mitchell may have been the originator of this novel concept in the legal industry!

I will say that my metrics are more sophisticated now than they were in 1999. For what I believe are the 2 key metrics that no one tracks, as well as other gems, we’re going to dive into it further down in this newsletter. It’s time you’re using Scorecards too.

Finally, if you are aware of another law firm or carrier using the term Scorecard prior to February 5, 2001, please do share!

Bill

MASTERS OF NEGOTIATION

92% of all cases settle—but when?

Join me for Cruser Mitchell’s Masters of Negotiation series and come away with the skills you need to save legal fees and indemnity by creatively and efficiently resolving cases.

See upcoming webinar dates below.

May 18 — The Leverage Point of Educating Plaintiff’s Counsel
June 1 — Soft Skills of a Master Negotiator
June 8 — Tools to Resolve the Super-Complicated Multi-Party Mess
June 15 — How to Negotiate Claims Valued Under $50,000
June 22 — Identifying the 1% that will Go to Trial as Early as Possible

Or join us in September for the Fall Series

September 6 — Playing Chess Instead of Checkers: A Strategic Approach to Negotiation
September 20 — Soft Skills of a Master Negotiator
October 4 — The Leverage Point of Plaintiff’s Needs
October 18 — The Leverage Point of Collectability
November 1 — The Theatre of Mediation
November 15 — Identifying the 1% that will Go to Trial as Early as Possible

The Mitchell Metrics

Have you noticed that most lawyers don’t keep report cards with key metrics that track their actual performance? Or if they do, they don’t share that information with you?

If your lawyers could objectively show you how effective, efficient, and completely awesome they are, don’t you think they would?

Of course, this all begins with: are you retaining law firms with (1) the right mindset AND (2) the right skill set? In effect, if a law firm does not care or have the right mindset to focus on delivering economy or efficiency, then they will certainly never deliver it. Further, even if they have the mindset, if they do not have the right skill set to deliver economy or efficiency (e.g. Master Negotiation skills), it is all moot.

The legal industry is much like another industry where there was, at one time, an underappreciation in measuring performance while acquiring professional talent—Major League Baseball.

Baseball is a pretty simple game. If you have the right players, you will win most of the time. Therefore, acquiring the right players is the key to success. Baseball has always been good at measuring individual player performance, but not so skilled at measuring the effectiveness of the traditional methods of player acquisition. However, even baseball has moved into the modern era of metrics and report cards.

It is well publicized how the Oakland Athletics changed baseball by the use of analytical, evidence-based metrics now known as “sabermetrics.” The story of the A’s and their brilliant general manager, Billy Beane, has even been made into a movie—Moneyball, starring Brad Pitt. In Moneyball, the A’s, as a small-market team, could not recruit big-time players because they could not afford the salaries the big-market teams like the Dodgers, Angels, and Yankees paid. To compete, they had to do things differently.

Billy Beane was a disrupter in the baseball industry. He gained an edge by using new analytics to find value in players who, based on traditional baseball analysis, were undervalued in the salary market.

Traditional baseball evaluation was based heavily on subjective, and many times flawed, analysis from scouts and other baseball executives. The traditionalists also relied on statistics, but mainly those that had been collected for over a century. Beane and the A’s, through “sabermetric analysis,” learned that on-base percentage and slugging percentage were better indicators of offensive success than traditional statistics. The A’s then went out and signed players who had better statistics based on the “sabermetrics analysis.”

In 2002 and 2003, the A’s made the playoffs with a minuscule $25 million payroll—$100 million less than the Yankees—all thanks to their new sabermetric analysis. This success revolutionized the game, with MIT-types now analyzing sabermetrics on over a dozen major league payrolls.

Lawyers need to be disrupters, join the Moneyball era, and prepare Scorecards that contain the key metrics sought by the Litigation Defense Industry (LDI).

Generally speaking, the LDI organizations are ahead of their lawyers in data collection, but are they doing enough with the data? In my experience, too many are “traditionalists,” making decisions based on subjective (and sometimes flawed) anecdotal information.

As we do in our Litigation Management book, compare for a moment a Trial Lawyer, an MSJ Lawyer, and a Master Negotiator. The Trial Lawyer tries the case to a defense verdict and bills $100,000 after 18 months in suit. The indemnity payout is zero. Now that is a great metric and a great result, right? With no other comparator, it looks that way, and the LDI would be telling the world about how great the Trial Lawyer is.

Now, a second lawyer reviews the case and recommends that the case can be disposed of by a motion for summary judgment (MSJ). The client agrees, the MSJ Lawyer files and prevails on MSJ, and bills $50,000 after eight months in suit. How does the Trial Lawyer’s result of $100,000 in legal costs look now?

And, what happens if a 3rd lawyer, the Master Negotiator who has the right mindset and skill set, reviews the case and gets it voluntarily dismissed and bills only $5,000?

Sounds like fiction, eh? Well, that was my first case with The Hartford back in 1996 or so. The MSJ Lawyer was conflicted out of the case after submitting a resolution strategy of discovery, depositions, and an MSJ with a $70,000 budget! We got hired and forced a voluntary dismissal, billing only $5,000. Think about it. If there was no conflict, how do we go about proving a “negative” and a savings of $65,000 in fees?

If appropriate data were collected and assessed against defined metrics, there would be one of two results: (1) confirmation of your perception of panel counsel’s solid performance (and champagne for everyone); or (2) evidence showing a reality gap and the need for change among certain panel counsel who aren’t meeting the defined metrics. Future cases could be evaluated against these metrics, ensuring that you’re able to keep your costs cheaper from the beginning.

This data may reveal that the Trial Lawyer’s firm in Chicago is actually the firm with whom every case turns into a “complicated” $100,000 war. Meanwhile, you may learn that the Master Negotiator’s firm in Atlanta, which gets a few cases a year, actually has consistent metric-beating results. Through computerized billing, you probably already have the ability to collect data regarding legal spending, average case age, and indemnity payout.

If you aren’t gathering this data, you should give your key metrics to your lawyers and have them submit an annual scorecard of results and then simply audit those results. No doubt a Disruptive Lawyer has the Scorecard ready to go, as he is already using it internally to assess his team’s performance.

When lawyers tell you about their latest defense verdict (which is a good thing) and regale you with how qualified they are to continue to do your work, you can often elicit a blank stare from them by asking any of the following questions:

• What is your average case age?

• What is your average defense cost per case?

• When is the last time you settled a case within 90 days of receipt?

• When is the last time you got a voluntary dismissal?

And, after doing this for 33 years, here are the 2 that I think are the most important by far:

• What percentage of your cases do you resolve WITHOUT depositions?

• What percentage of cases do you resolve WITHOUT filing an MSJ? If you DO file an MSJ, what percentage of cases do you win?

Why are they so important? The “deposition bleed” is when the real legal costs/expenses occur. Every deposition leads to identifying more witnesses (and thus more depositions), as well as more documents (and more legal fees reviewing same).

In our 2000 Scorecard to The Hartford, we did not have these metrics, but I am certain that we took depositions in well over 60% of our cases. Today, we take depositions in under 25% of our cases, which is a HUGE savings. How? It’s very straightforward—mindset AND skill set.

In sum, many previously chatty lawyers will not have the answers and will steer the conversation back to the old “war stories.” War stories are fun and should be celebrated for a time, but they are anecdotal information and tell little of how well the lawyer is handling the entire case portfolio.

Lawyers who measure themselves are the ones who require less monitoring by data collection systems and are more likely to accomplish performance goals measured by metrics.

Maybe it’s time to ditch the war stories and start asking for report cards.

The Disruptive Lawyer’s Tequila Corner

Since I assume a lot of you may have gagged just seeing the word tequila (harkening back to your own Jose Cuervo and upside-down margarita days) and summer is around the corner, let’s talk about two great refreshing summer tequila drinks.

The first is the Paloma. Very easy to make, very refreshing, low in calories, and very low alcohol taste. To make this, mix together:

• 1 shot of tequila (any silver will work; I like Patron Silver)

• 12 oz of either:

  • Fresca (my #1 and zero calories)

  • Squirt (if you want sweeter and don’t mind the calories)

  • Soda Water

• A splash of fresh grapefruit juice

• A squeeze of fresh lime juice

• If you want sweeter, add some agave

• Ice

The second is a Ranch Water which is equally easy to make. Mix together:

• 1 shot of tequila (any silver will work; I like Patron Silver)

• 1 ounce of fresh lime juice

• 12 oz of Topo Chico or sparkling mineral water (Topo Chico is lemon-flavored!)

• Ice

Cheers!

Ready to get a little disruptive?

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Did you catch my LinkedIn Series?

Over the last few weeks, I’ve been sharing stories from my very first trial, comparing some of my buffoonery to that of Vincent Gambino from My Cousin Vinny.

The final post went up recently on LinkedIn, and you can catch up on the whole series below!

Part 1 | Part 2 | Part 3 | Part 4