Deryl Earson, Vice President Legal Services of Environmental Management Corp., part of the BOC Group, spoke at the ACC 2005 Annual Meeting about legal department benchmarks. One of his examples came from his department’s practice of tracking how many days it takes to negotiate and execute each major customer contract (“major’ excludes letters of intent, contract amendments, confidentiality agreements and other minor documents).
“Each month we determine the average for that month (the current average) and we determine a rolling average for all the contracts during the last 12 months.”
An excellent statistic, the rolling average. Every month, the rolling average is calculated from the most recent 12 months, which captures a moving picture of baseline performance. This method avoids having wide variations at the start of the year, when only one or a few months’ data is available. It gives a constant baseline to compare current performance. Graphing the moving average brings out underlying trends.