Track KPIs using an intelligent legal technology solution. Or get a head start when setting up your KPIs with the advice of our digital legal experts: Hans Van Heghe and Yves Lefere. “But only gigantic legal services can do that.” 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. Nevertheless, it was and still is an unsatisfactory experience for many in-house lawyers.
Especially because looking at numbers and graphs on pretty dashboards can be fun for some, there`s usually little context conveyed or captured by a KPI. Without context, you`re missing out on many important nuances about the value of an in-house legal department. KPIs, for example, rarely grasp how departments “think” and “react” to suddenly prioritize pressing issues, what work is set aside (or additional legal fees are incurred) because the CEO or a particular business unit now has a new No. 1 priority. How do you distinguish between an in-house lawyer who may be stuck in a mega-deal or a complex case and others who deal with dozens of minor but important issues? Or how to find out what risks, litigation, bad deals, costs and other pain are avoided because the legal department was involved. In other words, KPIs are all about measuring intangibles, and much of what in-house lawyers do every day – and where they add the most value – often takes the form of those intangibles. The biggest mistake most legal departments make is trying to track too many KPIs. If you have more than ten, you have problems and may overanalyze things.
The process should go like this: What story would you like to tell about your department, the legal work done in-house, and the value of contributions from you and the in-house legal team? In the following articles in this series, we`ll take an in-depth look at metrics and KPIs that affect: 1. Contract quantity. Fairly simple measure: how many contracts did the legal department conclude during the measurement period? It can be just a gross number or, better, a target set earlier in the year, such as 500 contracts per quarter. I like this measure because I have always believed that one of the highest and best applications of the legal department is the conclusion of contracts, because contracts are the big one on the runners of the company. If you want to go into detail, you can break down the number of contracts by type, such as: commercial contracts, NDAs, suppliers, complex, simple, in value or other types of contracts that your department is working on. This CPI for the legal department is a popular comparison with internal expenses because it gives a clearer picture of the percentage of work and expenses done internally and externally. 7. Compliance Management. This requires the company`s compliance function to be located in the legal department, which is still quite common today.
As with process management, it is difficult to create a KPI for this domain. In my experience (and because the board has always been interested in compliance issues), we have followed, among other things: I`m having trouble writing this post about KPIs. It took much longer than it should have been – with several starts and stops. First, should they be KPIs or KPIs? Much like the debate about UBI and UBI in baseball, passions on this point run high. I think “KPIs” sounds better, so I`ll go for it. Second, and more important than the KPI/KPI controversy, KPIs don`t work particularly well for in-house legal departments. In fact, I had that eureka moment a long time ago when I was first asked, as General Counsel, to provide “SMART” targets[1] to the legal service for a coming calendar year. I literally had no idea what they (HR) were talking about.
And when I asked them for a few examples, it was clear they had no idea either – at least when it came to developing SMART goals for the legal department. For other parts of the business, SMART goals seemed obvious and worked very well. For the legal, not so much. But I (and my team) eventually figured it out and came up with goals that were a bit muddy – “SMART-ish” – but no one objected to. For some examples, see an older article titled “Setting Goals for the Legal Service.” Once you have a good understanding of what will affect your legal department`s KPIs, it`s important that you create KPIs that are achievable, measurable, and linked to desired outcomes. The best way to do this is to ask the following questions: However, it`s less common for legal teams to actually get the obvious and ask their peers directly what they want. Where do your sales colleagues value your contribution the most? When and how do they want this service to be provided? We`ve worked with dozens of legal teams who wanted to be more data-driven, and the same metrics keep popping up.