KPIs for Legal Teams: How Tech GCs Measure Success

While CFOs might not be fluent in legalese and GCs may be stymied by sales jargon, there's one language every business stakeholder understands: Cold, hard KPIs (Key Performance Indicators).

KPIs can be a lingua franca that bridges sales, finance, product, and more. Concrete metrics that demonstrate success not only streamline cross-departmental collaboration, but also take the ambiguity out of a legal team's value.

Below, L Suite members make the case for setting legal KPIs, specific metrics to track, and common challenges to navigate.

Key Takeaways:

• Tracking KPIs allows legal teams to quantify their impact on the business, demonstrating value beyond traditional legal functions.

• Legal KPIs vary from organization to organization but often include metrics like contract turnaround times, legal spend as it relates to company revenue, and speed of deal closures.

• Challenges around tracking KPIs include getting organizational buy-in and the logistics of collecting data. Ensuring clear, consistent communication with all stakeholders and adopting software solutions can help mitigate these pain points.

The Case for KPIs

Analyzing metrics related to a legal function's volume of work, complexity of tasks, and outcomes can help GCs make data-driven decisions about where to allocate resources — as well as when to automate processes, adopt new tools, or make new hires. It can also ensure the rest of the organization views legal as a strategic business partner invested in the company's larger goals and success.

As one L Suite member puts it, KPI metrics typically fall into three broad categories:

• How legal helps the company make money

• How it helps the company make more money more efficiently over time

• How it helps the company save money

More specifically, KPIs encompass everything from contract turnaround times to compliance and risk — though the specific KPIs an organization focuses on will vary depending on the company's industry and stage of growth.

Key KPIs for Legal Departments to Track

In an L Suite Braintrust conversation, Roman Perchyts, General Counsel at document workflow platform airSlate explained that he breaks legal KPIs into four categories:

1. Time (e.g. contract turnaround time, time to respond to an HR request)

2. Quantity (e.g. number of requests processed per teammate, number of requests month over month)

3. Quality (e.g., Net Promoter Scores, satisfaction survey results, and risk scores)

4. Money (cost per contract, spend against budget, spend over time, etc.)

Within those buckets, specific KPIs may include:

Legal Spend vs. Revenue: This metric provides insight into how efficiently legal services are delivered and the impact of legal spend on the company's bottom line. Tracking this ratio over time helps the business make informed decisions about where to invest in legal capabilities — like when to hire or ramp up use of outside counsel.

Contract-Related KPIs: By analyzing contract throughput and bottlenecks, legal departments can identify areas for improvement or automation — often leading to faster deal cycles. Clarissa Cerda, Chief Legal Officer at information security company Pindrop Security, Inc., noted that measuring contract metrics involves a degree of finesse. "The nuance is how you measure and whether you're keeping a contract log that helps you track turnaround time or time-to-close average once it hits legal queue," she wrote in a recent L Suite conversation on Braintrust.

Non-Contract-Related KPIs: Perchyts wrote that one of the main priorities when identifying KPIs is tracking not only contract performance, but the efficacy of the entire legal function. To do this, he monitors metrics like:

• Percentage spent vs budget

• Percentage of quarterly Objectives and Key Results (OKR) completion

• Internal team satisfaction rating, based on quarterly or bi-annual anonymous feedback surveys

• Number of legal claims over time (where legal claims are indicative of risk)

• Average number of days for processing requests (where speed is important)

• Risk scoring of contracts, claims, and programs (like privacy or security) over time

• Simple yes/no responses on certain self-evident projects like fundraising or M&A

A Note on KPIs vs. OKRs

In The L Suite community, there's some debate on the difference between KPIs versus OKRs. Some companies opt for one over the other, but both concepts involve setting goals and measuring outcomes.

While KPIs are crucial for ongoing performance monitoring and operational efficiency, OKRs are valuable for setting and achieving growth-oriented goals. KPIs can indicate success or failure in specific areas by offering continuous monitoring over time, while OKRs are ambitious, specific objectives within a set timeframe (often quarters or fiscal years).

Roxanne Quinlan, General Counsel at marketplace platform and dropshipping solution Marketplacer, tends to use OKRs to motivate the team to complete important projects within a set timeframe. “For example, we measure our privacy maturity score against an independent standard. An OKR might be to improve our score from X to Y by X date. Sitting behind that is work required to strengthen the privacy program," she said.

Implementing KPIs: Common Challenges and Potential Solutions

Defining and tracking legal KPIs isn't without its challenges, from selecting meaningful metrics to ensuring accurate data. Here's what L Suite members have to say about overcoming these hurdles.

Defining the 'Right' KPIs

Every organization has a different approach to KPIs, and what works in one environment may not translate to another. One area where this is particularly evident is in measuring turnaround times for contracts. As any GC knows, the root cause of a delay is often multifaceted, as many different parties bear a degree of responsibility.

"[Metrics] re: contract turnaround time can come back to haunt you unless you have very standard, non-negotiated agreements and are essentially just processing," wrote Jeri Looney, former General Counsel at hydrogen-electric aviation company ZeroAvia. "One big, nasty negotiation and your turnaround time can get blown out of the water."

René Paula, Chief Legal Officer at AI company NotCo, suggests looking at the bigger picture. "To elevate the legal function to a strategic level, you need to have KPIs that are not about the sausage-making, but rather major transactions closed, new markets opened, litigations settled or won, or dollars saved by renegotiating major deals/leases," he wrote. "I try to stay away from ever being in a slide deck that says something like, 'The help desk cleared 2,000 tickets this month.' That's not what a board of directors cares about, so neither should you."

Collecting and Analyzing Data

A KPI is only as effective as your ability to measure it — a task that can be complicated by gaps in legal technology infrastructure or clunky integration with other business systems. To streamline data collection and tracking, some L Suite members have adopted software solutions that allow their teams to monitor key metrics like the number/types of deals they're working on and current stage of completion.

In addition to facilitating easier housekeeping, software can be immensely helpful when it comes to pinpointing bottlenecks. Tracking platforms can illuminate details like how much time a contract is sitting with legal vs. another business unit vs. a counterparty, which can help put a stop to unproductive "blame games."

Some GCs have gone the bespoke route for tracking the status of legal team tasks, asking IT to build out a simple "legal department task tracker" that keeps track of when a task started, what its due date was, and when it finished.

Getting Organizational Buy-In

Implementing new processes can be met with resistance. This may stem from concerns within the legal department about being reduced to mere numbers, or from other departments wary of additional demands on their time and resources.

Active engagement with all stakeholders is a must for boosting buy-in. Demonstrating the benefits of KPIs through pilot programs can provide tangible examples of their value, helping dispel fears or doubts. Additionally, being open to feedback and willing to adapt KPI strategies can encourage a sense of ownership and collaboration.

And sometimes, results speak for themselves. When Matt Boisen, General Counsel at SaaS platform Highspot first joined the company, he found a convoluted, manual agreement process was bogging down deal closures. "Every agreement was being heavily negotiated, which wasn't scalable," he said. To streamline the process, Boisen and his team did some benchmarking and ultimately landed on a strategy to standardize order forms.

This move wasn't fully embraced by the sales team at first — but three years after implementing the standardization strategy, Highspot has transitioned from completing just 8% of deals via order form to 75%. The move has significantly streamlined the deal-closure process, and sales is now firmly in favor.

Boisen's team's ability to showcase concrete progress boosted confidence in the legal team across the whole organization. "We now have a report that shows the percentage of contracts that were order forms and how long it takes to get deals done," he said. "It helps the business understand that legal isn't just a black box where contracts go and pop out signed two months later."

For expert insights on how to start defining and tracking KPIs, L Suite members can be a valuable resource. Apply to join the community today.

About The L Suite

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