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Balanced Scorecard for Legal Departments

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During my morning Google Alerts check, I came across a study that looks at the application of the Balanced Scorecard measurement system to legal departments. The article is titled Balancing Legal Scorecard - A Performance Management Tool for Corporate Excellence and is authored by Dr. R.Srinivasan, an associate professor at the Bharathidasan Government College for Women (Muthialpet, Puducherry, India).[1]

The article defines a "Balanced Scorecard" as follows:

The Balanced Scorecard (introduced by Kaplan and Norton) is a set of financial and non-financial measures relating to a company's critical success factors. It is an attempt to capture the essence of the organization's critical value-creating activities. It has integrative components that reinforce one another in indicating what the current and future prospects of a company will be. Its purpose is to concentrate corporate focus on performance measurement innovation since traditional reporting systems aren't able to measure performance in the new manufacturing environments and are not helpful in increasing market share and profits.[2]

After discussing the advantages and major components of a Balanced Scorecard and how it fits into an organization in general, the author discussed four perspectives on the Balanced Scorecard: financial, organizational, legal, and innovation & learning. On the legal perspective she writes that:

Through the Balanced Scorecard framework organizational focused measures can be supported by measures of the legal management processes that are most critical in meeting the organizations [sic] expectations. The objectives and measures for this perspective thus enable a focus on maintaining and improving the performance of those processes that deliver the objectives established as key to satisfying the organizations [sic] financial objectives, which in turn satisfy stakeholders.

With this approach, the Balanced Scorecard offers a vehicle to focus on a complete value chain of integrated business processes. It is this that represents one of the major opportunities for the benefits that the Balanced Scorecard can provide over traditional departmental performance measurement systems.

This top-down value-chain process can reveal entirely new areas, within the legal department's business processes, where an organization can gain additional advantage.

The effect can be phenomenal; a reduction in process costs of 1% when combined with an identical reduction in wastage can typically deliver an increase in profits of over 15%.[3]

After discussing how the Balanced Scorecard relates to corporate strategy, the requirements for information systems that support the Balanced Scorecard, and suggestions for implementing a Balanced Scorecard, she concludes her article with the following:

To meet the challenges ahead, legal departments need to develop a perspective on the role of the legal function in both qualitative and quantitative business terms. They may use a Balanced Scorecard of metrics that integrates the law department's short-term actions with long-term organizational objectives. Six Sigma, [sic] process review and benchmarking systems are specifically designed to support the implementation and ongoing evolution of a Balanced Scorecard measurement system, alone or integrated with other performance management approaches and initiatives.[4]

The author makes some interesting claims, but I would like to know more about the data it is based upon, especially the profits she claims are "typical" when implementing the Balanced Scorecard tool in legal departments. She relies on secondary sources, which are listed in the bibliography. I would have appreciated inline citations, however, so that I could go directly to the original source, rather than having to search through all sources cited in the bibliography. This is an especially important consideration given that this article was self-published via an on-line repository and not in a peer-reviewed publication.



[1] Srinivasan Raghvan, Balancing Legal Scorecard - A Performance Management Tool for Corporate Excellence, SubmitFreeArticles.com, Dec. 13, 2009, available at http://submitfreearticles.com/balancing-legal-scorecard-a-performance-management-tool-for-corporate-excellence/ (last visited on Dec. 14, 2009); for information on the author, see her biography on the Submit Fee Articles Web site, http://submitfreearticles.com/author/drrsrinivasan66/ (last visited Dec. 14, 2009).

[2] Id. See also Wikipedia: Balanced Scorecard, http://en.wikipedia.org/wiki/Balanced_scorecard (last visited Dec. 14, 2009).

[3] Raghvan, supra, note 1.

[4] Id.

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This page contains a single entry by Paul C. Easton published on December 14, 2009 5:53 AM.

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