Modern legal teams are partners to the overall business. They drive profits and move their companies forward, as opposed to solely mitigating risk. To ensure that they are viewed as true business partners throughout the organization, legal teams are adopting business best practices and measuring and managing key performance indicators (KPIs).
KPIs allow legal teams to describe, analyze, and improve the work they do to benefit the organization. They have two key components: they are both measurable and meaningful. In the next three blog posts, we will outline 20 KPIs that your legal team can (and should) track.
Kicking things off, the following six topline metrics help your legal team determine the scope of your legal portfolio and how quickly you execute new agreements. The latter is particularly important for any sales organization, as time-to-close is a critical metric in driving revenue and profits.
Total agreements under management
How many legal agreements are in your contract repository, requiring regular monitoring and review. This metric explains the total workload of your legal staff.
Internal vs. external agreements
How many agreements did your legal team draft, vs. how many agreements are on third-party paper. This metric explains how often you're setting terms for customers, vendors, and partners.
Total agreements of each type
What's the breakdown of sales vs. employment vs. general business contracts like lease agreements and non-disclosure agreements (NDAs) in your portfolio? This helps explain what drives your legal team's work and where you need to staff up or develop expertise.
Average close time for all agreements
How long does it take to draft, redline, finalize and execute any contract? If this number is long, you may need to address your process, your people, or both.
Average close time for internal vs. external agreements
How long does it take to close an agreement on your paper vs. someone else's? In-house close time should be significantly faster; if not, there's a problem.
Average close time of each agreement type
Closing a sales contract is very different than hiring a contractor. You should be able to speak to how long it takes to execute each type of agreement.
Next week on the blog, we will highlight six growth metrics to track for your legal team. Can’t wait? Download this eBook that outlines the full 20 key performance metrics to improve legal’s ability to drive profits.