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A Message From the Executive Committee

June 1, 2016

By Christopher E. Dougherty, Esquire* & Chairman of the Board of Directors

Metrics & Analytics: The Good, the Bad and the Ugly

Everywhere one turns these days, “analytics” is the buzz word. We see metrics and analytics used in science, business, military operations, politics and sports. The fact that metrics and analytics have crept into the insurance defense industry should not surprise anyone. The pace of their development and capability has outpaced generally-accepted methodologies for their deployment—in part because no consensus exists as to the value of “Big Data.”

On one end of the acceptability spectrum, analytics advocates herald their ability to enhance innovation; to evaluate return on investment; to gauge an organization’s capabilities; to appraise personnel performance; and to address and evaluate leadership performance. These advocates believe in “input metrics,” “output metrics” and everything measureable in-between. To them, metrics are the driving force behind planning, operations and periodic evaluations.

On the other end of the extreme, critics complain of a “metrics overload.” A Business Week article recently noted that many organizations complain about too many metrics interfering with what they are trying to accomplish. Everything is being measured, but the measurement criteria differs. The overload causes leaders to view a metrics-centric approach as missing “the heart of the matter.” A heavy emphasis on metrics can lead to excessive activities that provide little or no value. Often, this approach creates confusion and conflicting behaviors within an organization.

In sports, NBA Hall of Famer Charles Barkley and MLB Hall of Famer Goose Gossage have become voices for this group critical of the perceived over-reliance on sports analytics.

Goose Gossage lamented:

The game is becoming a freaking joke because of the nerds who are running it. I’ll tell you what has happened, these guys played rotisserie baseball at Harvard or wherever the *!#! they went and they thought they figured the *#!#*!# game out. They don’t know *#*!

Charles Barkley put it in his own indomitable style:

I’ve always believed analytics was crap, and you know I never mention the Rockets as a legitimate contender, because they’re not. Analytics don’t work at all. It’s all just some crap some people who are really smart made up to try to get in the game because they had no talent. Analytics don’t work. What analytics did the Miami Heat have? What analytics did the Bulls have? What analytics do the Spurs have? They just have the best players . . . Give me a break!

Somewhere in between the complete absorption of metrics and analytics into an organization’s DNA and abject rejection of their value lies an appropriate middle ground. How we use metrics could be “good,” “bad” or “ugly,” depending on when and how we modulate its usage at Marshall Dennehey. We must take care to ensure the modulation is just right. We will.

We fully appreciate that insurers and sophisticated self-insureds use analytics to measure the performance of their panel law firms. They also compare that performance against other firms. That we elevated our Chief Operating Officer, Liz Brown, from her position as the IT Director underscores our commitment to keeping pace with how technology and analytics are used in our firm.

It makes no sense denying, however, that metrics and analytics aren’t useful. Take, for example, what UPS does with analytics. It sees them as a crucial differentiator in its operations. E-commerce is engaged 24/7/365. UPS has over 55,000 delivery trucks and 106,000 drivers delivering 20 million packages a day. A reduction of one mile per driver, per day yields huge savings in fuel costs alone. By optimizing delivery routes with analytics, UPS reduced 85 million miles driven last year—more than 8 million gallons of fuel saved. By reducing idling time by a few minutes per day, per driver, it reduced fuel consumption by over 650,000 gallons and reduced carbon emissions by over 6,500 tons.

In our firm, we have impressive technological and data capabilities resident in our IT department and in our other administrative departments that support our attorneys’ delivery of legal services. Roger Bonine, our IT Director, annually outlines a comprehensive IT budget for hardware, software and services that gives our attorneys state-of-the-art technology support to effectively defend civil litigation in the 21st century. This budget also gives us systems to acquire, manage, use and protect data—all factors that are increasingly important to our competitiveness and growth.

Why is data important to Marshall Dennehey? Data enables us to:

  • Predict our clients’ costs to litigate a certain type of case in a particular venue and to evaluate our own performance with certain law types in these locales;
  • Assess attorney performance in the way that our insurers measure our firm’s performance—i.e., which attorneys grasp our insurers’ and clients’ early resolution litigation objectives by evaluating and resolving cases early and inexpensively; which attorneys budget a case appropriately and stay within the budget;
  • Provide accurate information about a case’s exposure in a certain jurisdiction, before a certain judge and against a certain plaintiff’s counsel;
  • Predict more critically what an appellate court (or particular panel) will do with a certain appellate issue or for a particular party;
  • Price alternative fee agreements appropriately (we have over 50 in place);
  • Identify which insurers are the most aggressive in write-offs and write-downs to help us understand why they are reducing our revenue;
  • Identify which insurers and clients are slow pay, no pay, or generally contribute to our accounts receivable and to understand why this occurs;
  • Prepare our firm’s fiscal goals and objectives in order to monitor our fiscal performance on a near real-time basis;
  • Evaluate our return on investment for marketing initiatives; and;
  • Manage our professional, para-professional and administrative manpower for training, performance, promotion, retention, and retirement planning, and more.

 

Where we have to be careful, however, is in becoming over-reliant on metrics and allowing an analytics tail to wag the dog. There will always be room in this law firm’s leadership for the consideration of intangibles such as experience, work ethic, attitude, determination and character. Like an athlete whose efforts don’t always show up in a box score—but whose efforts make a difference in the game’s outcome—the contributions of individuals to our firm and for our clients don’t always translate onto a spreadsheet.

Shane Battier, a championship basketball performer at the high school, collegiate and professional levels, remarked that as he got older in the NBA, it became more difficult to guard a gifted player like Lebron James or Kevin Durant. Analytics, however, gave him the opportunity to appreciate certain tendencies of star players, and “what I found, drilling down into the analytics, the numbers, the data . . . [it] . . . gave me every advantage possible to survive against the best players in the world.”

Every business, including ours, can benefit by becoming more analytical—understanding our clients and our operations and in making our decisions. Analytics will give us keener insight into the business tendencies that exist in our competitive defense litigation environment. As an example, by understanding and anticipating those tendencies, our attorneys and paralegals will better capture and record time. Our clients will appreciate our efforts to diminish our write-off “error rate,” and our firm will benefit from fewer write-offs and write-downs. A “Win-Win.”

Metrics and analytics could turn “ugly” for us if we become too fixated on Big Data. I fear we could erode the heart and the soul of our firm—both critically-prized attributes that genuinely define us and make us distinguishable from our competition.

Over the last several years, and out of necessity, more data has been needed to make informed decisions—hire a lateral or group of laterals; expand to a new geographical locale; eliminate or enlarge a practice group; develop a new law type practice; move an attorney to a different office or to a new practice group; bid on an alternative fee agreement; respond to an RFP; move, close or improve an office; embark on certain training initiatives; etc.

We need to be mindful, however, that data collection, organization, synthesis and the process to translate that information into intelligence puts strain on people and operational segments of the firm. Even more time is needed to critically analyze that information once it has been collected.

The time spent poring over charts, spreadsheets, graphs and dashboards is time we spent 15 to 20 years ago counseling our clients or teaching, mentoring and guiding others—genuine human interaction. We can’t lose sight that we are truly a “people-oriented” law firm, providing services to real people with real human problems. Investment in meaningful human relations must continue. Not only does it enhance our client relationships, but it fosters camaraderie, respect, trust and teamwork internally. These are valuable qualities that our clients perceive. These intangibles have combined over six decades to define the culture of our firm. We must be careful to not allow that culture to be compromised by an over-emphasis on analytics.

Shane Battier remarked that if he were evaluated solely on analytics, he never would have survived “the cut.” He wasn’t fast. He failed all the visual acuity tests. He did not have great leaping ability. He did not have a quick release on his jump shot. Many fans were puzzled by the great success he enjoyed.

What wasn’t measured, of course, was his confidence, fortitude, unselfishness, calmness under pressure and his feel for the game—they all added up to his always being a “winner.”

The intangibles that each employee has brought to Marshall Dennehey over the past six decades have made Marshall Dennehey an enviable law firm. We recognize that we are in an era of data-driven processes. Yet, we remain committed to being mindful of those human factors that cannot be measured. They make a difference to judges, juries, mediators and others involved in the litigation process. They permit a work environment to flourish so employees choose to stay at Marshall Dennehey for their careers. We pledge to not become the “nerds” that Goose Gossage talks about.

Big Data is necessary, but not sufficient to succeed in this digital age. Immeasurable human intangibles, combined with the right measure of data, will drive our long-term success.

*Chris, who works in our Philadelphia, Pennsylvania office, can be reached at 215.575.2733 or cedougherty@mdwcg.com.

 

Defense Digest, Vol 22, No. 2, June 2016

Defense Digest is prepared by Marshall Dennehey Warner Coleman & Goggin to provide information on recent legal developments of interest to our readers. This publication is not intended to provide legal advice for a specific situation or to create an attorney-client relationship. ATTORNEY ADVERTISING pursuant to New York RPC 7.1. © 2016 Marshall Dennehey Warner Coleman & Goggin. All Rights Reserved. This article may not be reprinted without the express written permission of our firm. For reprints, contact tamontemuro@mdwcg.com.

Affiliated Attorney

Christopher E. Dougherty
Chairman of the Board of Directors; Director, Professional Liability Department
(215) 575-2733
cedougherty@mdwcg.com

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