Lawyer at the computer looking at KPI Dashboard

7 KPIs that Challenge Legal Departments

Published on : 22/02/2021 22 February Feb 02 2021

KPIs or “Key Performance Indicators” have become essential in many areas, including within legal departments. But which KPIs can lawyers no longer do without?

 Those 7 key indicators will help you optimize your performance.

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What Makes KPIs Valuable to Legal Departments? 

Now that legal departments have access to massive amounts of data, there's a new problem: KPI overkill. Legal Department Managers are learning the hard way that just because they can measure something doesn't mean they should. 

Every business leader today understands how important it is to have strategic KPI metrics that measure against objectives and goals. Tracking and reporting KPIs takes effort – and if your KPIs aren't leading to improved processes, they're not helping you manage your business. 

Before we dive into the 7 KPIs, let's go deeper to understand what makes up a valuable Key Performance Indicator. 


Understand the difference between a Metric and a Measure

It is essential to understand the difference between a metric and a measure when considering KPIs (Key Performance Indicators). 

A measure is a number that doesn't give you much context to analyze the business impact or to take further action for your legal business. 

For example, you may see ten conversions (responses) for an online ad you are running. The ten conversions are a limited measure and don't tell you much about the possible deeper issues with the ad's performance. 

If those conversions came from 100 impressions, that would be a very positive indicator. But it is not as high-performing if they came from a thousand impressions. Context is everything. 

A Metric is a Quantifiable Measure

On the other hand, a metric allows businesses to evaluate the performance of processes. It adds additional data points to the measure for better analysis.  

If you were to generate a report saying that we completed 100 legal contracts, it would not be a particularly useful report on its own. The questions might arise, over what time period and what type of contracts? Were these employment contracts a result of a hiring initiative? Or were these new business contracts indicating something else entirely? Even more helpful might be to compare the numbers from the prior quarter and investigate the spike in numbers. 

So, we use metrics to tell a story with additional data points. We can then focus on valuable KPIs to track, presenting a more substantial picture of how things are going. Often, KPIs are displayed in a dashboard to make it easier to consume and interactive for "what if" scenarios. 

It may be helpful to think of a measure as one ingredient in a recipe like flour. The flour is essential to make the recipe, but you may not want to eat the ingredient by itself. 

What Makes a Legal Department Successful with KPIs

  • Educate employees, so they get behind their KPIs
  • Get rid of meaningless KPIs
  • Refining and evaluating KPIs as an ongoing process
  • Understand the difference between lagging and leading indicators

Below are the 7 KPIs that challenge legal departments 

1. Expense Evolution: a KPI helping legal departments control costs 

Controlling Legal departments’ budgets are a top priority 
  • Categorizing legal expenditures by highlighting the most expensive items allows for optimization.
  • Departments should measure changes in legal spending.         
o    Are you still in line with the cost control measures you had previously implemented? 
o    Have these measures been effective? 
o    Comparing changes in external legal expenses provides a good indication of whether your budget is on track.

2. Average Processing Time: an indicator to gain efficiency 

•    One of the most important legal department KPIs is the average time for processing a file or contract. This measure must also consider the nature and complexity of the processed files.
  •     KPIs for better performance        
o    Map your interventions and classify them by nature and time spent.  
o    Quickly distinguish between low value-added interventions and those where your added value is critical.
o    This KPI also represents the satisfaction of your internal customers, including the often-mistaken perception that your response time is too long.

3. Number of Files Processed: a KPI which reflects your productivity 

  • Case volume – quickly identify areas of improvement.
o    If you have an increasing number of low-value files, then think of digitalization! 
o    Automate recurring tasks, such as generating standard contracts and responding to frequently asked questions. 

4. Internal Customer Satisfaction: measure the quality of your service  

  • Score – a concrete measurement of customer satisfaction.           
Quality is at the heart of any business approach.  Measuring satisfaction provides a clear and readable score of your services.
  • Analyze the results of this KPI.         
This analysis is often complex because it involves a combination of factors such as time spent per file, quality of answers, and operational assistance.

5. Annual Activity Report: a powerful retrospective tool 

  • Assess important matters.
o    Evaluate which major matters kept your operational staff busy during the past year, as well as gain insight into future matters.
  • Risk factors – identify and intervene.
o    What types of files have you dealt with most often? 
o    Have you identified new risk factors? 
o    Have you intervened in your domestic market and/or noticed an increase in international files?  

6. Company Risk Levels: an essential preventive KPI 

  • Subjects at risk.
o    Recognizing subjects at risk and risk levels is imperative to a company's longevity.
o    Company exposure is mitigated with tools based on artificial intelligence that provide real risk prevention policies, particularly in contractual or litigation matters.

7.  Opportunity Detection: measure your contributions

  • Measure operational impact.
o    In addition to supporting operational staff, legal departments play a big role in business development.  
o    Reviewing negotiations and contract terms will help detect business opportunities.

Download the helpful checklist below to add vital KPIs to your Legal Department or Practice to optimize performance.  

Download the checklist


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