Legal Ops Essentials: What KPIs should your legal team implement?

Key Performance Indicators (KPIs) are metrics that help legal teams measure their performance. They allow teams to track, assess, validate and adjust their performance based on empirical data.  

KPIs are becoming an increasingly important tool for in-house legal teams looking to achieve their strategic goals (and demonstrate that they have in fact done so!).

In-house legal teams must increasingly utlise data in order to demonstrate their performance and as a tool that allows them to continually optimise their performance.

What KPIs a legal team should track is primarily a factor of the maturity of that team (e.g. ability to capture/monitor data), and thereafter the specific goals and objectives of the department.

In this opinion piece we answer one of the most common questions that we get from in-house teams who are not currently capturing KPIs - namely what are the best KPIs for us to initially start tracking.

In formulating our answer, we assume that, like 99% of the in-house teams out there, you do not have a dedicated legal operations function and/or legal operations manager. This means that someone in the legal team will have to take responsibility for your administering KPI program.

If your legal team has “little to no” experience with KPIs, then we recommend that your focus be on a safe and incremental implementation of KPIs.

Day 1 In-House Legal Team KPIs

Specifically, we recommend that you select KPIs that fall within the following profile:

• Baseline: they must offer a baseline against which you can demonstrate improvement.
• Insight: they must offer deep performance insights.
• Ease Prepare: they must be relatively easy KPIs to record, implement and track.
• Validity: they must enable you to to validate the contributions of your legal team to important business matters.
• Credible: they must relate to credible business activities/matters (e.g. matters valued by your business).

By using these "profile guides", you will inevitably select KPIs that tell you what you need to know at the outset of your transformation – some key baselines and clear indications that you are moving the right way.

In our experience the following KPIs present outstanding "data analytics insights" and are an excellent starting point for moving your legal function into a more data validated operating mode:

1.      Legal Spend: This metric measures the cost of using outside legal resources, including law firms and legal service providers. This vendor management spend figure should be regularly tracked against what was budgeted for the year. Burn rates should be noted and unbudgeted events should be flagged up as such in real time.

 2.      No of Matters: This metric looks at the number of specific matters that are briefed into your legal dept. To make this happen – you need to implemented a legal service request protocol. Requests taken in the hallway or via phone can easily be discounted from the workload that your legal team supports – so formal requests should be made and tracked.

3.       Contract Turnaround Time: This metric measures how long it takes for the legal team to review and approve contracts. This can affect the company's ability to close deals and progress business initiatives. It is an excellent indicator of legal team's efficiency in support of your contracting function.

4.      Internal Client Satisfaction: This metric looks at your internal client's levels of satisfaction with the legal team's support. It is easily obtainable data through "one-to-one meetings" or non-invasive "desk top audits". It helps you establish how well aligned (and valued) your legal team is with the internal client. Few need to be convinced of the importance of effectively assessing "Customer Satisfaction" levels.

5.      Legal Team Satisfaction: This metric looks at the levels of satisfaction that exist within the legal team – and is obviously relevant for teams with multiple team members. Team morale is a vital indicator of team performance capabilities and should be tracked. Think of this as the “engine warning” indicator for your legal team.

6.      Hours Worked & On What: whilst controversial for most in-house lawyers – this is a vital metric that allows you to understand and re-shape cost and focus. If you are to shift your focus to more valuable support areas and deliver greater cost efficiency, you need to understand precisely what you are doing and how much it costs. A reminder – there is a big difference between "being busy" and doing things that are valuable.

7.     Legal Disputes: this metric can be many things but from Day 1 your team should be tracking the number of “actual” and “Potential” dispute that you encounter. You should build up some historic baselines that hopefully (in time) you can significantly improve. This data is also important to justify improvements to your legal and risk infrastructure gong forward.

Obviously if you are using some complex CLMS system there will be many more KPIs that you may be able to automatically generate. Nonetheless, the above list is the bare minimum that we think you should immediately implement as a "minimum".

By tracking the above you will have access to powerful data that can help you make better decisions on how your legal team is being utilized, and how you can improve your support offerings and cost efficiency. As an added benefit, you do not need a dedicated legal operations team to track these KPIs, and yet they will substantially aid your strategic planning.

As a reminder, at GLS we recommend “bite size” initiatives that deliver “plenty of punch” and that can be implemented in a “sustainable fashion”. The above 7 KPIs meet these criteria. If you can implement more KPIs, then great - but be careful of adding so many that your team ends up drowning in admin trying to keep track of all the data!.

If you want to learn more about the role of KPIs in the legal department – please check out GLS’s Ultimate Guide to Legal Operations which includes a chapter dedicated to the topic of Legal Team KPIs.

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Please check out the GLS solutions and know-how resources listed on the right side of this page – they might assist your legal team with the issues explored in this Blog. 

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