Identifying and tracking key performance indicators, or “KPIs,” can be transformative for even the most established and successful companies -- and their legal teams. The emergence of sophisticated contract management and analytics platforms has allowed the value of these metrics to explode, putting new legal applications for KPIs into play.
But for legal teams just getting started with KPIs, it might be difficult to determine which areas of your legal operation should be rigorously measured and managed. This is understandable, as on the surface “KPI” is little more than a blanket term for any piece of data that might provide insight into performance, and virtually any metric you might evaluate has the potential to be a useful indicator in some way. In this post, we’ll cover a few top KPIs for legal teams to establish and why they’re so important to sustainability and growth.
Top KPIs for Legal Teams
Customer Acquisition and Satisfaction
Tracking customer satisfaction has been a popular KPI since the term came into use. (Just google "net promoter score" for a particularly en vogue example.) The same goes for customer acquisition funnel conversion rates. Customer satisfaction with legal operations, however, is a relatively novel concept. After all, customers often deal indirectly with Legal, either accepting your terms of service as part of a standard onboarding process, or negotiating a sales contract via your sales team, rather than lawyer to lawyer.
However, changes to contracts and/or the contracting process can deeply affect both customer satisfaction and close rates, which makes attributing customer satisfaction to legal operations a key legal concern. Legal should be tracking all the same acquisition and satisfaction metrics as Marketing and Sales, then comparing those to the metrics we lay out below to show how improving legal operations affects your company's acquisition and retention efforts.
Cost to acquire a customer
Acquisition funnel conversion rate
Average close time for sales leads
Customer satisfaction ratings (NPS, app store ratings, etc.)
Private legal firms are not notorious for their efficiency, not least because the longer a task takes, the more billable hours it can generate. In-house legal teams, however, are generally hired to save costs, which is one of the reasons automation through contract management software is becoming so popular with corporate counsels. Simply tracking how much more quickly and inexpensively your legal team can perform standard legal tasks -- like drafting, reviewing, and executing contracts -- can go a long way towards proving your value.
But that's not just a one-time, "we're better than your old outside firm" exercise. When you write a better, more modern contract that clients are happier to sign, it reduces close times. When you identify customers with soon to terminate contracts, teeing them up for sales to reacquire, you build out the sales pipeline and improve revenue. Tracking legal metrics helps tie them into improvements in other KPIs outside your department, demonstrating value and building a case for further collaboration.
Total contracts under management
Internally developed vs. third-party contracts under management
Average contract execution time, by stage (drafting, review, finalization, signature, counter-signature)
Average contract execution time, internal agreements vs. third-party paper
Automatically renewing vs. automatically terminating contracts
When used the right way, KPIs can be a game changer for your legal practice in both the short and long term. Once you know exactly which metrics to focus on, you can frame KPIs in the context of more specific goals and initiatives within your organization.
Tracking non-legals metrics is likely already standard practice in your business. If you want to add KPIs to your legal operation by way of the most advanced AI contract analytics and management solution on the market, contact LinkSquares today.