Working hard is obviously imperative for organizational success, but you ought to dig deeper to analyze the fruit of your work — that’s how you work smart and gain the upper hand. Now, you might think, how can I do it? The answer is Key Performance Indicators or KPIs.
Sounds familiar, right? KPI is a common terminology in many industries, but what exactly is KPI? Why do we need it?
Well, that’s what this blog is all about. However, today we’ll focus on KPIs for in-house counsels and legal operations while they are focused on driving results.
KPI is a measurable value that helps you evaluate the effectiveness of your organization or any of the departments in achieving its major objectives. These values are typically expressed in numbers and are tracked over a period. Now, let’s find out how the legal department, specifically the in-house counsels and legal operations, can benefit from these KPIs.
Points to Consider Before Deciding the KPIs
Before diving into the KPIs and their benefits, you should keep a few things in mind for better planning and, consequently, improved outcomes. They’re as follows:
- Address the question of WHY — List down the main objectives behind developing the KPIs.
- Address the question of WHAT — Figure out your departmental goals.
- Address the question of HOW — Chalk out various strategies to achieve those goals.
Now that you’ve figured out 2Ws and 1H — the three pillars on which the KPIs will be erected, you should move on to a more advanced level of planning:
- Identify the most important aspects of performance to be measured by having a discussion with the managers of the departments who will be using the KPIs.
- Find out what is your company’s previous experience with key performance indicators, if any.
- Discover the existing processes and tools that could be used for measurement and metrics.
- Determine whether the KPI program is a high priority for other departments as well.
Top KPIs to be Measured by In-house Counsels & Legal Operations
Having considered the above-mentioned points, Zycus’s experience with large enterprises has helped us define some of the most important KPIs that you must track for your legal department:
The number of contracts your legal department has completed within the measurement period. It can be a gross number, say, 400 contracts per quarter. If you’re looking for a deeper analysis, you can categorize the total quantity by contract type, contract value, and so on.
How much time does your department take to close a deal from contract initiation to signature? This measurement is important because faster closures mean faster revenue generation. If you’re lagging behind, modern Contract Lifecycle Management (CLM) solutions like Zycus can help you achieve a quick turnaround.
Contract Approval Delays
While the previous point measures the overall time taken to close a contract, it is equally important to identify which sub-cycles are getting bogged down. Most of the time, delays take place in the approval cycles. With this KPI, contract managers will get to know which departments are taking longer for reviews and edits — as the contract draft moves across various departments for completion. Zycus’s automated workflows ensure faster approvals and quick closures.
Time Spent on Legal vs. Administrative Tasks
Key to the legal department’s performance is dependent on the time spent on legal tasks against the various administrative tasks. This can be efficiently analyzed with legal technologies like CLM powered with emerging tech and AI. In-house legal teams can bring back their focus on core legal matters which are the strength of any legal department.
Tracking your legal spend as a percentage of your organization’s revenue will help you to figure out the correct comparison or benchmark to follow. You can then set a target and try to manage or lower your legal spend to meet that target by setting up triggers and tracking the spend across categories.
Compliance management is one of the most critical KPIs to be measured, but it is difficult to capture all the required information under a single KPI. So, you’ve to track quite a few things, including:
- How many compliance issues have been reported?
- How many of them have been resolved?
- How many are still open?
- What is the average time taken to close each compliance matter?
Zycus\’s AI persona Merlin provides 360-degree visibility into contracts and keeps a track of compliance clauses in real-time. This ensures fewer compliance issues, which leads to better compliance management.
The Legal Counsel must know how satisfied the business with his legal department is. This helps him to get a complete picture and look for areas where the team can improve for a better outcome. The best way of measuring this is to conduct a legal department customer satisfaction survey, which will reveal an overall score.
ROI of New Technology & Processes
Finally, if your legal team has recently adopted a new legal technology or some innovative processes, it is important to track their performance — How helpful have they been? Was it worth the investment? You can consider if the new technology or process has:
- Accelerated contract closures
- Improved accuracy
- Increased your revenue
- Reduced your expenses
This helps you to decide whether you should continue with it or not.
How to Track KPIs the Correct Way?
Now that you’ve sorted out the KPIs to be measured, you must also know how to track them efficiently. Follow the steps mentioned below, and you’re good to go!
- Brainstorm what exactly do you want to measure and why it is important. (If you’ve come this far, this one has already been taken care of).
- Find out and utilize the existing information you have that could help you to measure the KPIs.
- Think of a format that would present the KPIs and your progress in the simplest way possible — for example, a dashboard.
- Decide what to (and what not to) share outside the legal department based on your readiness.
Despite all this planning, implementing the KPI program isn’t that simple. Remember, you’ve to do this while ensuring that the legal department is running as usual.
It’s very likely that you’ll stumble upon a few challenges. But at the end of the day, it’s worth it. Moreover, once you get the hang of it, things will get easier with time.
If you want to dig deeper, download our whitepapers on pre-award and post-award KPIs to be tracked for successful contracting. The use of these metrics with a major focus on process, people, and support system helps you achieve desired outcomes.