Why Legal Departments Should Benchmark Against Industry Standards and Historical Data

Benchmarking is a valuable tool for corporate legal teams that want to manage costs and workloads effectively. Legal departments, increasingly pressured to justify budgets and demonstrate the impact they might have on their companies, can benchmark against industry standards and historical data, as reported in a Thomson Reuters blog post. 

Collecting the data. Benchmarking is relatively new to corporate legal departments. Historically, they didn’t need to track such data closely, but legal teams now face increasing workloads and budget scrutiny. They must collect and analyze data on various metrics, such as spend on external legal services and matter types, ratio of internal to external spend, time saved through automation, compliance training, and risks. 

Setting up the benchmarks. Once the data is collected, teams can assess it against industry benchmarks from sources like the State of the Corporate Law Department and Legal Department Operations Index. Insights from benchmarking metrics can be crucial in managing resources and making informed business decisions.

Benefits of Benchmarking. The benefits of benchmarking extend beyond performance assessments. Legal teams can use benchmarks to adjust spending in response to market trends, for example, working with alternative fee arrangements and lower-cost alternative legal service providers as well as outside law firms. Organizations can identify best practices within their departments or across the industry and check whether training or change management is needed for improvement against historical performance. 

By leveraging benchmarking against industry standards and historical data, corporate legal departments can set more accurate expectations and demonstrate to the broader organization that they are effective stewards of company resources.