How do you set legal department KPIs? How do you track them, and what are the right metrics to track? Let's find out how to set legal KPIs.
What are legal KPIs?
Key Performance Indicators are commonly understood in business. They’re the metrics that the company, its individual teams, or individual employees track in order to judge success. Legal teams - particularly in high-growth businesses - have KPIs too, to make sure they’re supporting the company’s objectives.
Legal team KPIs often relate to business enablement, a key part of which is supporting on a fast, efficient contract process in order to enable revenue growth. If this is a KPI your team is concerned with, get in touch to find out how Juro's contract analytics can help you to hit your targets👇 - otherwise, read on.
Why do you need legal KPIs?
For in-house legal, the days of being seen simply as a cost center are over. Just like legal can’t get away with being the department that just says ‘no’, it also can’t get away with being a reactive function that doesn’t have to measure its progress against targets.
In-house lawyers are often some of the coolest, smartest heads in the business - and it’s important that their wisdom and commercial judgement are brought to bear on projects, initiatives and processes that moves the needle. The business wants legal to add value - we know, because we asked them.
If every other team is proving its value by moving numbers - whether that’s revenue closed, leads generated, or NPS - then legal needs to prove its value too. So how do you define and track KPIs that measure legal’s success?
Working with legal data
Law school doesn’t always prepare in-house counsel to work with data, of course. Other functions, like finance or product, arrive at the company ready to work with numbers every day, but it can be a steeper learning curve for lawyers.
There are a few key things to remember when it comes to working with data:
- Data is essential but it’s not enough: you need to know what problems you’re looking to solve, rather than just being satisfied with gathering data in isolation.
- Not all data is useful: it’s important to filter in the early stages, to make sure you’re measuring things that are actually useful and relevant
- Getting data doesn’t always mean new tech: you can use many of the systems and solutions you already have in place. Microsoft Excel is possibly the most under-used piece of legal technology in existence.
- There’s a difference between having data and being data-driven: colleagues might need training to handle data, run experiments, visualize results, and so on. You also need to instill that culture in the organization going forward.
Keep these points front-of-mind when you get started with creating and tracking legal KPIs.
How to set legal department KPIs
To get to a point where you can set legal KPIs, you need to understand two things:
1. What does the business want to achieve?
Your goals need to be aligned with the business’ goals. This should be obvious but it often needs repeating. If the business has a particular revenue target, for example, your KPIs should be metrics that you believe will influence that revenue target.
2. What does the business want YOU to achieve?
This is a subtler point. Lawyers have a great understanding of what they believe their responsibilities are, when it comes to managing risk and supporting the company on legal matters.
But it’s less common for legal teams to actually do the obvious thing and directly ask their colleagues about what they want. Where do your commercial colleagues value your input the most? When and how would they like that service to be delivered?
Interested in what the business actually wants from legal? We asked them.
A simple customer satisfaction survey is a good place to start. Use this, together with the business’ objectives, to clarify your thinking on which numbers you should be trying to move.
It’s less common for legal teams to actually do the obvious thing and directly ask their colleagues about what they want. Where do your commercial colleagues value your input the most?
The most common legal KPIs to track
Having done all this important groundwork, you’re now ready to start tracking and moving numbers, in order to report KPIs to the business.
We’ve worked with dozens of legal teams who were looking to be more data-driven, and the same metrics tend to crop up again and again. These are by no means the right metrics for your particular company, but they’re definitely common to a majority of legal teams at high-growth businesses.
- Incoming work: this should be classified by date/time and type of project. This gives both the legal team and their budget controllers a clear view of what’s actually in their pipeline each month.
- Time and cost per matter: these can be rough calculations rather than minute-by-minute increments, but this kind of data highlights bottlenecks and can help make the case for additional resource.
- Outside spend: reducing this is often a key objective for pretty much any in-house lawyer, and this is easy to track in a dashboard. You can take it a step further and categorize spend by the risk and complexity attached to the project.
- Contract review time: often, moving this number is the main motivator for legal teams investing in contract automation software. It helps legal prove they’re not blocking contracts.
- Other contract metrics: common metrics to track include monthly volumes, percentage negotiated, average contract value (sales will track this but it’s useful to know the level at which legal gets involved) - plus a range of other metrics, which you can explore here.
To get started, you’ll need at least some rudimentary level of tooling in place. That might be a free Juro account, as it will give you a ready-made analytics stack for your contracts:
Click the image above to create a free account and try out Juro's analytics stack.
As with many legal operations projects, the most important thing when it comes to legal KPIs is simply to start. Start somewhere! Once you have numbers in front of you, it becomes much easier to work out which you’d like to move and which aren’t relevant.
Read more about legal metrics and data in this article from Liberis GC, Alexis Alexander: How can tech scaleups get started with legal data?
If you’re looking to create a data-driven legal department, and would like to start with your contracts, hit the button below to find out more.