According to a recent survey, CEOs prioritize having a GC who can act as a strategic business partner and a key cog in the company’s leadership. To reach this status, you must ensure your legal department’s operations align with the business objectives of the company.

Key performance indicators (KPIs) are a necessary method for evaluating the output of your team, its operational health, and the value it brings to decision-makers. In this guide, we look at our top seven legal KPIs all GCs should follow to ensure the future success of their team.

Key Takeaways

• Legal KPIs on the volume of legal operations, the types of matters your department handles, and their outcomes are useful for knowing future needs in terms of hiring or the use of ALSPs and outside counsel.
• Keep track of the benefit you receive from outside counsel by tracking legal KPIs on their costs and outcomes.
• Retention rates of your legal team and other data on their makeup help maintain the health of your department and projecting future demands.

1. Number and Category of Matters Managed

A simple but essential legal KPI your department should track is the number of matters and projects it handles over a given period. This KPI provides valuable insights into how much activity your department has in certain workflows and can in justifying additional hires or identifying areas of exposure within the company. Examples of matters your department could track might include:

• Requests for contract drafting, review, or negotiation.
• Litigation and conflict resolution (e.g., mediation, arbitration, settlements.).
• Compliance matters (e.g., SEC filings, secretary of state business filings).
• Other administrative legal workflows (e.g., preparing legal notices, trademark or copyright registrations, research projects.)
• Miscellaneous items that benefit the organization, like training for business partners in other departments.

2. Age and Experience Level of Your Legal Team

As a GC, part of your primary duties is to manage the members of your legal department, which includes succession planning for its future. Monitoring the age ranges and experience levels of your legal team is one method for making sure your legal department is well-rounded.

Legal departments risk becoming imbalanced if they don’t have enough younger team members to replace older attorneys who retire or leave the company. The opposite could also be an issue if the legal department is too inexperienced to meet the needs of business partners. So, you need to maintain a balance between experienced attorneys and younger team members to ensure a diverse and capable legal team.

3. Cost of Outside Counsel to Complete a Matter Request

GCs often need to use outside counsel to complete a matter that is either outside the ability of the legal department or in a location outside their jurisdiction. Many legal departments engage several different firms for such tasks, such as worker’s compensation or contract disputes. Knowing how much it costs for outside counsel to complete a legal project is necessary for determining their overall value to your organization.

Without this data, you risk overpaying and may not have the information to effectively weigh other options, such as an ALSP or another law firm. Get granular with your spend management data by tracking the individual spend within a firm. For example, how much of the bill comes from associates versus partners on a matter?

This information will enable you to make more informed decisions on outside counsel selection and cost management.

4. Time and Cost to Complete Legal Operations and Processes

It’s not just the outside counsel spending that needs tracking. GCs also need to track the time and cost of completing all legal operations, processes, and workflows to understand how efficiently their department is running. Measuring cost can be difficult because your attorneys and staff don’t bill hourly like outside counsel. However, you can determine general figures through indirect measures, such as the proportion of a legal team member’s annual salary relative to the number of matters they handle each year.

The time it takes to complete each legal workflow is also useful for forecasting future capacity and setting reasonable expectations with your c-suite and business partners. Having this information readily available could justify actions like outsourcing the legal process to get a faster turnaround.

5. Success Rates and Outcomes of Legal Operations

You need to track the outcomes of all legal operations to determine the success of legal team or if any issues need resolving. Some datasets on legal outcomes you could track to gauge overall success rates include the following:

• The final status of contracts drafted or reviewed
• Rejected filings made to various governmental and regulatory agencies and the basis for the rejection.
• The disposition of legal claims and litigation matters (e.g., settled, no claim filed, lawsuit dismissed, judgment).
• Legal claims resolved in-house versus through outside counsel.

6. Total Liability or Risk Saved by Legal Department

Another metric that your c-suite and business partners will appreciate is the amount of money saved by your legal department from avoided liability and risk. This can also be a difficult KPI to track without data from third parties explaining the general expense of certain liabilities. However, reasonable and educated assertions about the dollars you save the company in unnecessary risk can go a long way toward securing your position as a strategic business partner.

For example, you might take the cost of legal settlements compared to the potential liability of the case in a worst-case scenario from a jury award. The difference would give you the amount the legal department saved the company.

7. Retention Rates of Legal Talent

A final KPI worth following is the retention rates of your legal team. In other words, once you fill a position in your legal department, how long do they stay before taking a different position in the company or leaving altogether? Knowing this KPI is paramount to accurately forecasting the legal talent needs of your department, especially in competitive environments where talent is scarce and expensive to onboard.

Get Help Measuring Your Legal KPIs with Morae’s Workflow Consultants

KPIs are a widely used data analytics tool for measuring the overall benefit and value of an operation. Legal departments need to familiarize themselves with relevant KPIs to showcase alignment with the company’s business and mission. If you’re new to setting up and tracking KPIs, our skilled consultants are available to offer their expertise to uncover valuable insights into your department’s operations.

Schedule a consultation with an Morae representative today.