Tackling KPIs: how legal can align with the business

This is an interview from our in-house legal report, in which we take the temperature of in-house legal at some of the world's fastest-growing scaleups. Find out what really keeps legal teams up at night, with insights from leaders who have scaled legal at Airbnb, Whereby, Motorway, and more: download the in-house legal report here.

Two contradicting stats in this year’s report caught my attention - 81 per cent of respondents believed legal should have its own KPIs, instead of aligning with business goals - and at the same time, 65 per cent chose ‘aligning with the business’ as their biggest challenge.

Being out of sync with the business is one of the cardinal sins of running an in-house legal team. You work for a business, and ought to be aligned behind what the business is trying to do.

There are plenty of ways to resolve this issue of misalignment - and I believe KPIs are definitely one of them. So what can legal teams do to align KPIs with the business? Here’s what I did during my time managing legal at Airbnb and Chegg.

1. Adopt key business goals as part of legal’s KPIs

At Airbnb and Chegg, I would insist on taking key business goals and making them part of my team’s KPIs. Cascading them through the team helped us all work towards an individual goal, and therefore enable the business.

Even though we’re lawyers, we ought to all be working enthusiastically to enable business success. If those business KPIs are also my team’s KPIs, then legal has a greater advantage when it comes to informing and educating the business on regulatory and legal issues - you can tie these challenges to an objective the business understands.

I agree to take on the business goals as part of legal’s own, but it’s a two-way street - the business needs to adopt a legal KPI as an objective too

2. Encourage the business to adopt legal KPIs

Both legal and the business needs to be incentivized to drive growth of the business in a way that isn’t reckless. The business wants to grow, as quickly as it can, and legal wants to encourage this without taking on unreasonable risks - so what do you do?

I tackled this by insisting that business leaders took responsibility for a few legal or regulatory KPIs. We would all sit together as an executive team and discuss each function’s objectives - and I’d tell the business that I wanted legal to be incentivized alongside the business.

The ultimate goal is to support the business, and help drive the mission of the company. So I agree to take on the business goals as part of legal’s own, but it’s a two-way street - the business needs to adopt a legal KPI as an objective too. It’s a trade-off, and the business understands the value of this.

3. Hold the business accountable

This exchange of KPIs is necessary for discussions between legal and the wider business; it holds each party accountable, and ensures that we’re all aligned with how we look at and approach risk.

For example, when I had regulatory and litigation expenses at Airbnb that were attributable to a business unit, those were charged to the business. If a particular business unit does anything that results in significant regulatory or litigation costs, they pay it!

The impact it has on the team’s budget ensures everyone’s a little more cautious towards reckless decisions moving forward - the business learns to take on risk, but not too much risk, in the same way legal does.

It also benefits from a legal perspective - without an understanding of risk, I’m just saying ‘no’ all the time when the business wants to try something new.

Nothing goes wrong, and I’m a hero to the legal department - but the rest of the business hates me, and there’s no balance between being risk-averse and helping the company scale. That’s not success.

Aside from these direct changes to how you set KPIs, there are other perspectives you could consider to make sure legal is aligned with the business.

In the early stages, with your lean legal team, you want to be aligned with C-suite on what legal’s objectives should be and where you should be dedicating your time

Consider legal as a customer support function

I always saw legal as a customer support function, where the wider business is our client. Our role is service-based, and revolves around enabling others.

I sent out anonymous surveys to different areas of the business, getting feedback on how effective legal was as a supporting organization - and based on the results I would set KPIs specifically around offering that support.

My KPIs would be a blend of six points around:

• Business goals
• Customer support
• Legal objectives, such as budgeting and mitigating risks
• Leadership, such as managing and building a strong, diverse team

Set KPIs sooner rather than later

Everyone should have KPIs, and should set them as soon as possible. You also need to review these on the same cadence as the business - whether that’s quarterly or annually.

Even if they aren’t formally reviewed every quarter, they should be reviewed and updated periodically to ensure that they’re up-to-date and keeping pace with the business.

It’s important to have these in place regardless of whether you’re managing a global team, or sole counsel at a high-growth business. In the early stages, with your lean legal team, you want to be aligned with C-suite on what legal’s objectives should be and where you should be dedicating your time.

And when you’re managing a global team, you have a lot of direct reports to guide - so KPIs are important for that focus and alignment.

The misconception I often hear around creating and tracking KPIs is that it’ll take too long to do so - and so time-crunched lawyers will sideline this work in place of other projects.

But setting these KPIs doesn’t need to eat up your time, and neither does it need to involve fancy technology - an hour with a pen and notebook is all it really takes to identify your goals and ensure you’re best serving the business.

Want to hear more from legal leaders at some of the world's fastest-growing scaleups? Download the in-house legal report here.