How should you measure legal?


Apr 5, 2023

All teams in a company are expected to show measurable results toward the company's goals. If we asked you how you are measuring and tracking your legal operations to demonstrate value and impact, could you tell us? If not, you’re not alone in this. However, with legal directly impacting every aspect of business – with agreements and processes put in place to ensure business is done right – this needs to change for you to be proactive and stay ahead of the competition.

Since measuring legal is not a standard process yet it may be difficult to know where to start. We’ve put together a checklist for how to get started, along with recommendations for KPIs and metrics your team can use. 

Where to start? 

All the KPIs and metrics you choose should be directly related to the company’s overall goals for that year(s). Therefore, there’s no better place to start than doing a workshop with the legal team and anyone involved in legal operations to brainstorm what actions the legal team takes that can have an impact on that goal. This also ensures the team’s awareness and alignment of  the company’s goals. 

Workshop to define legal’s impact on company goals 

Keep it simple and fun. Write down your company’s goal on a whiteboard in the center, and pass out sticky notes to everyone in the workshop. Give everyone 5-10 minutes to write down as many possible ways they think legal can impact the goal, and then have everyone present and place their sticky notes on the whiteboard.

Once you have an idea of which areas you need to start measuring, you can start drafting KPIs and metrics around them. 

KPIs & Metrics to get you started

KPI: Decrease negotiation time on sales contracts by 25%
Why? To negotiate and change terms less, which means deals get done faster and there is more time for the legal team to deal with higher-complexity and higher-risk tasks. 

KPI: Decrease response time on legal request tickets by 20%  
Why? This means legal processes aren’t blocking teams as much, and other teams have the tools they need to do their job (signing customers, collaborating with partners, signing new talent, etc.). 

KPI: Reduce share of third-party contracts handled by 15%
Why? You want to be signing agreements on your terms as much as possible, and the more third-party agreements there are the more review and negotiation time there is. This adds delays for all parties involved. 

KPI: Decrease the share of contracts processed in manual workflows by 30%
Why? The more manual the process, the longer things take. So find places where you can eliminate manual processes. For example, for each NDA someone wants to sign do you need to book a meeting with them to further understand the scope? If so, that’s time taken from each of you. Find a process where you can automate standard questions for standard documents, such as NDAs.  

KPI: Increase the number of low-legal touch* contracts by 40%
Why? By automating as much as possible, while maintaining high standards and control, everyone in the company is able to continue their workflow with minimal bottleneck issues.

Metric: Amount of time from law change to updated contracts
Why? Having an eye on when the law changes and knowing how quickly you can react means that you are able to reduce risk, and also have the best and most up-to-date contracts for your customers, partners, and employees. This increases confidence in your brand ;). 

Metric: Amount of time it takes to draft a contract 
Why? The faster you draft contracts the quicker the deal, partnership, new hire, etc. gets done. 

How many errors, on average, occur during the drafting process? 
Why? Errors can mean risk, and they can also mean customers or employees losing confidence in how agreements are drafted. Or, if you have a process where teams can create their own contracts, but there are a lot of errors, this means that you don’t have a process that truly works for the company. 

Metric: Amount of time spent on high-volume/low-risk contracts 
Why? Knowing how much time you spend on this is important so you can improve upon it. It also illuminates just how much time you are spending on low-complexity contracts like employment contracts, or NDAs. 

*low-touch legal is legal work that automates administrative and repetitive processes that are potentially high-urgency, but often low-risk. It allows the legal team to be involved as little as possible, and gives more autonomy, while maintaining quality and control, to the rest of the organization. 

There are plenty of other KPIs and metrics you can use to measure legal. Just make sure to tie them directly back to the overall company goal(s). This allows you to prove the importance and value that the legal team brings, and also shows that you are actively working towards the same shared company goals as the rest of the organisation. 

Please note: Pocketlaw is not a substitute for an attorney or law firm. So, should you have any legal questions on the content of this page, please get in touch with a qualified legal professional.

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