How to set legal KPIs (Key Performance Indicators) in 2024

How To
April 28, 2023
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. 

Contract management KPIs are particularly important in this context because they deliver a birdseye view of how efficient a contract process is, and where bottlenecks are occurring. 

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.

Read more about how to improve your MSA, and get a free MSA template to download too.

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.

Want to save 90% of time on contracts?

Book a demo to find out how Juro is helping 6000+ companies to agree and manage contracts up to 10x faster than traditional tools.

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Legal department KPI examples 

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 every company, but they’re definitely common among legal teams in high-growth businesses.

1. 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.

Tracking this KPI encourages more efficient work management and ensures that every project is adequately resourced and prepared for.

If you have contract automation software that enables your commercial teams to self-serve on contracts, it also means that you can delegate work according to its value, allowing legal to return to higher-value work.

Find out how Cazoo won back 30 per cent of legal team time by automating contracts in this Juro + Cazoo case study.

2. 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 resources where the need arises.It can also act as an indication for the resources required for future matters that are similar in nature and size.

Matter management software is a great tool for tracking time and cost per matter and can provide greater visibility into how successful you are against this particular KPI. 

3. Outside spend / Internal spend

Reducing your legal department's outside spending 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.

This legal department KPI is a popular one to compare against internal spend, as it provides a clearer picture of what percentage of work and spend is performed internally and externally. It also flags opportunities to make your existing processes more efficient and affordable. 

4. Contract review time

Contract review time is another useful KPI for legal departments since it provides transparency into where the company’s contracts are blocked and how long it takes for contracts to be reviewed and approved by legal teams. 

Businesses should always be working to reduce how long this stage of the contract lifecycle takes as the shorter it is, the faster businesses like yours can capture revenue and make those all important hires. 

5. Average contract value

While this KPI is often reserved for go-to-market teams, it’s always useful for legal departments to keep a close eye on total contract value too - especially when it comes to negotiating contracts

There are usually a few levers that legal teams can pull to help increase the value of a contract, so bringing legal into these conversations early on is a good idea. 

What is the best way to track legal KPIs in 2024?

As we mentioned earlier, the best and most efficient way to track legal KPIs is through a platform that captures and tracks data relating to the KPIs automatically. Not only does this give legal teams a clear and up-to-date view of their performance at any time, but it also means they don’t need to waste time and resources tracking this data manually. 

Juro’s data-rich, collaborative contract management platform provides instant visibility into your contract data, enabling you to measure success against contract management KPIs with ease. 

To find out more about Juro’s data-rich contract management platform, fill in the form below to book a personalized demo. 

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