The Law Dictionary defines KPIs as “a measure of a company`s performance (the company or department also applies here) in critical areas. As a general rule, monitoring is essential for business activities that, if done incorrectly, would likely result in serious losses or outright failures. Measuring progress or lack thereof is critical to achieving the company`s strategic goals or plans. As with many legal operations projects, the most important thing when it comes to legal KPIs is to just get started. Start somewhere! Once you have numbers in front of you, it becomes much easier to determine which ones you want to move and which ones don`t. This should be categorized by date/time and project type. This gives both the legal team and their budget controllers a clear view of what`s really happening in their pipeline each month. Most managers or directors experiment and view KPIs as a “control” mechanism. A mechanism to stretch the minimum performance of a team or department and increase performance year after year. On the other hand, team members experience stress in achieving the given KPIs. 1. Cost development: a KPI that helps legal departments control costs Often, moving this number is the main motivator for legal teams investing in contract automation software. This is because it can legally prove that they don`t block contracts and promotes a more efficient contract workflow overall.
Shieldpay`s General Counsel said that “the contractual workflow on a collaborative platform like Juro makes administration much easier – the legal team provides business value instead of blocking.” To learn more, check out this Juro + Shieldpay case study. Information is power. Implementing and implementing smart, well-defined KPIs can encourage superior performance – especially when fees or bonuses, for example, are at risk – and they can significantly help manage legal fees and reduce costs. Even reviewing KPIs and current processes for KPI definition can pay off as a business health check. There`s no better time than now to start. This KPI indicates the number of files (or files) assigned to a lawyer or paralegal. More people here measure the effectiveness of the in-house legal department and, most importantly, the team`s ability to manage the entire process. Every aspect of a business requires KPIs, and the legal function is no exception. For scalable organizations that manage growing contract volumes, legal KPIs are essential for measuring the success of your legal department and identifying issues before they lead to risk.
But what are legal KPIs, how can you define them, and how can you best track them in 2022? Efficiency. This category of KPIs can be reduced to its essence, namely: results. Results can be measured in several ways, including, for example, timeliness (how long it takes the legal department to deal with and deal with legal issues raised by the business); the number of legal issues handled by the entire legal team and individual lawyers; and the impact of advising the legal department on key issues and strategic priorities (e.g. in terms of financial impact, compliance with laws and regulations, transactions completed, judgments/fines/penalties avoided). This is often the first reaction of an attorney general when the conversation about KPIs is first broached. Just as the issues and needs described above don`t just apply to large legal departments, the use of data to prove the value of a legal department, regardless of size, also doesn`t apply. This series provides practical tools and guidance that resonate with departments that are just beginning to measure key performance indicators, as well as demanding departments where legal operations experts focus solely on metrics. 3.
Budget vs. Actual Spending. This is a fairly central KPI as it shows where the legal department stands in terms of spending targets, i.e. where actual spending is compared to budgeted spending. This should be tracked in two dimensions – year-to-date (year-to-year total expenditures greater than the previous year`s year-to-date budget) and for the last month, such as actual spending in June versus budget or forecast for June. Ideally, you will also follow by type of file, such as litigation, contracts, secretary general, intellectual property, etc. The average hourly rate of outside law firms (especially if your goal is to reduce that number) and how the ministry tracks other savings initiatives you have are also interesting. KPIs show management the value your legal department brings to the business. Build your reporting process around KPIs that highlight the positive impact of your business unit`s performance on business results. While I think it`s difficult to track the true value of the legal department through KPIs, there is value that can be derived from the process, even for small or single-person legal departments.
And as it`s probably clear, you can see that there are dozens and dozens of things you could measure as a KPI of a legal department, either as subcategories of my ten or as separate KPIs that I haven`t discussed. What you measure depends on who asks for it (if any) and why it`s important. Ultimately, you shouldn`t have more than ten KPIs (and less is better) that report on metrics that are critical to running the legal department, achieving specific goals, and protecting the business. This is a task suitable for a legal entity or team. And whatever happens, make sure you find an awesome way to showcase your KPIs. It sounds silly, but the right dashboard, PowerPoint design, or spreadsheet can make a big difference in how you and the legal department are perceived, regardless of what the KPIs actually show. It might be helpful to bribe someone from marketing with a free lunch in exchange for design help. For two excellent additional resources on legal KPIs, see “Acing the In-House Legal Department Performance Review” by Frank Cerrone and “Measuring Legal Department Metrics” by Stephen Mabey. While it`s mostly due to sales to keep up with these numbers, it`s always helpful for legal departments to know the level at which the legal department is engaged.
Once you`ve defined your legal department`s KPIs, you need to track them. If all other teams prove their worth by changing the numbers, whether it`s close sales, leads generated, or NPS, lawyers need to prove their worth as well. How do you define and track KPIs that measure legal success? These four tips will help you track the performance of your legal department with a clear focus on key metrics and a standardized process to capture them. Identify trends in your progress – while generating reports on your KPIs, create a dataset that shows how your service is performing over time. You can use this information to compare the movement of each KPI from month to month (or quarter to quarter) to see trends. Costs may rise and fall seasonally in some areas, or you may find that demand for one of your services increases at predictable intervals. You can also see positive trends that occur after the changes. Without legal operations management software, you`re limited in the amount of data you can collect, but you have a treasure trove of information hidden in your invoices, timesheets, contracts, and other records. You can always create low-elevation reports that show your value to senior management if you plan to do so. If you`re new to Legal Operations, you`ll likely come to work to drink from a fire hose. At 100 PSI, you can focus on topics such as data security, financial reporting, external consultant management, technology optimization, budgeting and alternative fee arrangements, and cross-functional alignment.
And somewhere is the need to develop key performance indicators (KPIs) for the legal department. However, your in-house legal team has measurable KPIs. It`s possible to track and report on your team`s performance without access to detailed data – it only takes a little more work to gather and organize the information you have in an insightful report. I am pleased to announce that I have returned to the Dallas office of Hilgers Graben PLLC as lead counsel. My law firm`s email address is smiller@hilgersgraben.com. Contact if you need anything. If you are interested in a CLE for your department on any of my blog topics, including today`s, we can set it up. Then it became more difficult. The next request was for the legal department to create and deliver KPIs. KPIs are metrics you track to determine if you`re on target with a goal or benchmark. Aside from the fact that, again, I had no idea what to measure (or how to measure it), it was infinitely harder now because the demand came from the CFO and CEO. Unlike my HR friends, this meant that it would be very difficult to “tamper” with it, i.e.
I actually had to develop large, functional KPIs. Damn. As with SMART goals, we finally figured this out and developed KPIs that measured different facets of the legal department.