KPIs, or Key Performance Indicators, are specific, measurable metrics teams and organizations use to gauge their progress toward achieving specific objectives. Essentially, KPIs serve as a “north star” for guiding teams to success.
KPIs aren’t just a vanity metric. They can help legal leaders quantify and tell the story of the legal department’s impact on the company. Furthermore, KPI tracking can help legal teams spot areas that might be problematic and need intervention. They help legal counsel and legal operations in several areas:
KPIs provide legal organizations with a clear lens on what’s important. By highlighting particular metrics as key performance indicators, legal teams can concentrate their efforts and resources on what truly matters for growth and success. This focused approach ensures that teams are aligned in their pursuits and not distracted by irrelevant metrics.
In a time where companies are increasingly data-driven, it’s essential for legal to also embrace making decisions grounded in data. Having accurate and timely metrics ensures that decisions are based not just on hunches or intuition but solid, quantifiable data.
Transparency in performance metrics instills a sense of responsibility and can be motivating as milestones are hit. Tracking performance against established indicators promotes a culture of excellence and accountability.
KPIs serve as a barometer for where resources are best invested. It makes it easier to discern which areas provide the best ROI or where improvements are needed. This not only ensures optimal resource utilization but also fosters continuous growth and development.
KPIs can act as early alerts for potential risks or challenges that can be addressed proactively. Moreover, KPIs are a straightforward signal of the legal department’s health and direction to stakeholders, strengthening transparency and trust.
For a KPI to be effective and meaningful, it should have the following characteristics:
It must be tied to business objectives, strategies, or critical success factors.
The team should understand what the KPI means and how it’s calculated. Ambiguous KPIs can lead to confusion and misalignment. Ideally, teams should look at data from past years or from external sources for comparison and benchmarking. If not, the most valuable insights from KPIs might only emerge after a few years of gathering such data.
Each KPI should have an owner – a person or a team responsible for its achievement. This ensures role clarity and accountability.
The KPI should provide insights that can drive actions or decisions. If a KPI doesn’t change how a team acts, it may not be useful.
KPIs should have a set timeframe to make the goal more urgent and actionable. Clearly define the period the KPI is being measured, whether daily, weekly, monthly, etc.
While aiming high for improvement is good, KPIs should also be goals a team can genuinely meet. Setting unrealistic KPIs can have the opposite effect and can demotivate teams.
Focusing on the most critical performance indicators that align directly with success is important. When there are too many KPIs, this can lead to a dilution of focus, as well as too much time spent tracking, analyzing, and reporting. Focus should be on areas that lead to meaningful change.
It’s often more challenging for legal departments to establish KPIs due to the nature of their work, which is frequently reactive and tied to large-scale company initiatives such as GDPR compliance or new product releases.
Some overall KPIs for legal departments might include:
When double-clicking into the legal department, there are a few areas, such as Commercial Legal, Intellectual Property, Legal Ops around spend management, and Litigation, where the creation of measurable KPIs is easier.
For instance, for Commercial Legal, KPIs can involve monitoring contracts, tracking legal involvement percentages, and evaluating the average time various teams take to handle approvals or close out sales requests.
Intellectual Property KPIs might focus on the number of patents, copyrights, and trademarks applied for and granted.
Spend management KPIs might revolve around maintaining legal costs within a certain percentage of the company’s annual revenue. This can also include:
Litigation KPIs can help a company anticipate risks by quantifying and analyzing metrics related to ongoing and settled cases.
Although not all KPIs from the legal team need to be shared outside the team, sharing those that impact business stakeholders can showcase Legal’s value. When business stakeholders understand, support, and commit to the legal team’s KPIs, there’s greater alignment between business and legal objectives, smoother collaboration, and a higher chance of achieving desired outcomes. Here are some critical steps to obtain this crucial buy-in:
Involve cross-functional stakeholders in the KPI development process. This provides the legal team with different perspectives and makes stakeholders feel valued as part of the decision-making process. Solicit feedback on the proposed KPIs to refine them. This shows that the legal team is collaborative and values input from other departments.
When developing KPIs, it’s critical first to understand the business’s primary goals and strategies to ensure that Legal’s KPIs align accordingly. If stakeholders see a direct connection between the legal team’s KPIs and broader business goals, they’re more likely to support them. Take the time to educate them about why specific KPIs are vital and how they impact the broader organization.
Clearly articulate the purpose and rationale behind relevant KPIs. This will help stakeholders understand the “why” behind your metrics, making them more likely to support them. When sharing the reasoning, present complex legal concepts in layperson’s terms and avoid jargon. Being a good communicator helps bridge the knowledge gap and ensures stakeholders are on the same page.
Don’t wait until the end of the quarter to see how the team is performing. Regularly scheduled reviews can help identify trends, pinpoint areas of improvement, and adjust strategies as needed. Foster a culture of open feedback during these review sessions. Encourage team members to provide insights or raise concerns about the KPIs, which not only boosts engagement but also might bring to light potential areas of refinement or recalibration for the indicators themselves. Transparent communication and a commitment to continuous improvement are vital to leveraging KPIs effectively for in-house legal performance tracking.
Once the KPIs are set and buy-in is achieved, provide regular updates on progress to maintain trust, visibility, and accountability. Celebrate milestones and address any challenges transparently. Proactively and regularly share success stories where the legal department’s involvement led to positive outcomes.
Given today's technological advancements, in-house legal teams shouldn’t spend hours with a calculator and spreadsheet trying to figure out progress to date — who wants to bring back the law firm administrative stress of tracking down every billable hour? In the era of modern SaaS solutions built for in-house legal, there are now software solutions that can do the heavy lifting in terms of reporting and providing real-time updates.
For example, Streamline AI’s legal intake and workflow software also doubles as a powerful metrics capture and analysis tool. Because every legal request flows and tracks through Streamline AI, the software can automatically capture data for KPIs such as average Service Level Agreement (SLA) fulfillment, the percentage of requests meeting SLA, legal request volume growth each quarter, and more. By putting reporting and analytics on autopilot, legal teams can instantly dial in on exactly how long things take individually and across the team — something that would be otherwise too complex to track manually.
When correctly identified and implemented, KPIs provide clear insights into areas of strength and pinpoint potential shortcomings, enabling informed decision-making. Harnessing the power of KPIs allows legal teams to drive impactful improvements and achieve desired outcomes aligned with the business. Ultimately, a data-driven approach anchored in relevant KPIs can propel in-house counsel and legal operations to outsize business impact.