New metric inspired by baseball stats aims to measure real value of lawyers' work
The Thomson Reuters Institute is introducing a new metric that measures how well lawyers are generating fees and collecting them by comparing them to their peers. (Image from Shutterstock)
The Thomson Reuters Institute is introducing a new metric that measures how well lawyers are generating fees and collecting them by comparing them to their peers.
The “relative performance measure,” abbreviated as RPM, can be used to measure a lawyer’s performance compared to other lawyers in the same segment, practice group, office location or lawyer title, according to an Aug. 14 press release.
The relative performance measure can help law firms “diagnose and address the root causes of low-performing lawyers, such as poor collections, low billing rates or inefficient work processes,” the press release says.
Baseball teams use a similar method to make relative comparisons, Law.com reports.
In baseball, productivity is often measured by player performance as compared to a standard “replacement-level” player in the position, Marcus Belanger, an analyst at the Thomson Reuters Institute, told Law.com.
“We thought: ‘What is the equivalent of that for lawyers? What could we do to level the playing field?’ Because [hours] is a fundamentally flawed metric, susceptible to macroeconomic factors and other things outside of an attorney’s control,” said Belanger, who co-wrote a report for the Thomson Reuters Institute (available here) on the new metric.
Average lawyer productivity, a measure of hours billed, has been declining, according to the Thomson Reuters Institute report. The peak was 138 hours per month, reached in the second quarter of 2007. By the fourth quarter of 2023, the monthly average was 115 hours.
But firm profitability is becoming less tied to productivity, a trend that will likely accelerate as a result of generative artificial intelligence. A better measure is the relative performance measure, the report concludes.
“RPM is based on an average, or replacement-level, score of 1.00,” the report explains. “Any score above 1.00 means the timekeeper, group, office or firm being compared produces an above-average output relative to peers. For example, an attorney with an RPM score of 1.32 is 32% better at producing relative to peers, while an RPM score of 0.87 would mean the attorney’s production is 13% lower, relative to peers.”
The exact calculation is proprietary, according to Law.com.
But the report outlines three general steps. The first involves finding each individual lawyer’s fees worked, which is a lawyer’s performance in the firm’s time and billing system, and comparing it to the average of peer lawyers.
The second step is to find each lawyer’s fees collected and compare the number to the average of their peer lawyers.
The third step is to compute the score by adjusting the value found in the first step by the value found in the second step.
“This paper is not a prediction of the death of the billable hour,” the report says. “Rather, it is an argument that the legal market must prepare for a future in which it must account for financial performance and contribution far beyond just how many hours an individual lawyer may put into the firm’s time and billing system.”
