Discover how to choose, set and track KPIs for your legal department in this guide.
Legal departments play a critical role in the success of a company, whether it's through risk mitigation or enablement. Yet, many businesses still aren't setting KPIs for their legal departments.
In this post, we'll cover what KPIs can look like for legal teams, why you should set them, and which legal KPIs work best for companies in 2024.
What are legal KPIs (key performance indicators)?
Legal KPIs are metrics that indicate how successfully a legal department or legal process is performing.
Like most key performance indicators, legal KPIs measure attainment against specific goals and projects by forming clear and actionable targets. These targets support the company’s objectives more broadly, but can also be used to identify bottlenecks and opportunities to improve existing workflows.
Why do you need legal KPIs?
1. Demonstrates how legal enables the business
Setting and achieving legal KPIs allows legal departments to demonstrate how they enable the rest of the business.
This is important because it encourages other departments to recognize the value the legal team brings to the company, rather than simply viewing in-house legal as a cost center or a department that just says ‘no’.
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 move the needle.
Every other team in the business proves its value by moving numbers, and legal KPIs give legal departments the opportunity to do the same.
2. Identifies bottlenecks and opportunities to improve
Legal department KPIs are also important because they flag inefficient processes in current workflows. This gives legal teams the opportunity to proactively address these problems before they impact the wider business.
For example, it’s common for legal departments to track contract approval times. The longer these approval times are, the longer it takes for business contracts to progress to signing, making it harder for commercial teams to capture revenue as quickly as they’d like. This is one instance where a legal department KPI has a direct impact on business growth.
How to set legal department KPIs
Decide what your overarching goals are as a legal department
Before you can set clear legal KPIs, you need to get a clear idea of what you actually want to achieve as a legal department. You can gain this clarity by asking yourself two main questions.
1. What does the business need to achieve?
Your goals need to be aligned with the goals of the business, just like KPIs in other departments. If the business has a particular revenue target, for example, your KPIs should be metrics that you believe will influence that revenue target.
One example here could be the contract templates your commercial colleagues rely on to close deals and recognize revenue.
To help the business achieve its goals at Juro, our General Counsel, Michael Haynes, rebuilt our MSA template with the sole objective of removing language that adds friction, making it a simpler document that attracts much less negotiation. This project ties directly back to Juro's revenue goals, and has a measurable impact that legal can track as a KPI.
2. What does the business want you to achieve?
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 engage with their colleagues and ask what they actually want from the legal department. If you truly want to enable other teams within the business, ask yourself the following questions:
- Where do your commercial colleagues value your input the most?
- When and how would they like that service to be delivered?
To save you some time, we actually asked business leaders want from their legal teams in a recent eBook. To find out what top-level executives from Trustpilot, GoCardless and USV had to say, hit the button below to download the eBook.
Design your legal department KPIs
Once you’ve established what you’re working towards more broadly, you can step back and identify more specific objectives that align with those goals. These objectives will form your KPIs.
Each legal KPI you choose should be relevant to the company’s wider goals and it should be clear how these KPIs will move the needle for the business.
Your legal KPIs should also be:
- Measurable: it should be possible to measure success against these KPIs, and there should be clear benchmarks for success
- Assignable: someone should always be held accountable for KPIs, otherwise it’s not clear who is responsible for working towards meeting them
- Realistic: the targets you commit to should be attainable, and there should be a clear idea of how the target can be achieved
- Time-bound: giving your KPIs a deadline as this helps with reporting and it ensures that your team knows what is expected of them and exactly when results need to be achieved
Get buy-in from stakeholders
You’ll then need to get your KPIs approved by the relevant stakeholders. At this stage, you’ll need to explain when the KPI is set for, who is responsible for achieving it, and most importantly, how it will drive success for the organization.
It’s common for KPIs to be fine-tuned and tweaked at this stage, especially if the stakeholders are aware of new and competing priorities.
Track performance against legal KPIs
Once you’ve eventually set and agreed on KPIs for your legal department, you’ll need to track performance against them. How you do this will depend on the nature of your legal KPIs, and what data you require to measure success against them.
For example, if your KPIs relate to contract management processes and efficiency, you’ll probably benefit from tracking them in a contract management platform like Juro where contract metrics are captured and reported on automatically.
Not only does a tool like Juro reduce the time you spend manually tracking progress against legal KPIs, but it also ensures your team has instant and accurate insights into these numbers, helping you to identify risks to success early on. To find out more about Juro's data-rich contract reporting and analytics functionality, hit the button below.