In a recent Above the Law article, Mike Quartararo, President of ACEDS, said, “You want to know why the billable hour is so entrenched and not going anywhere any time soon? It’s because it provides a direct, measurable metric or benchmark for the value of a lawyer to a law firm.” But it seems the billable hour is pretty much where it stops – for now – when it comes to KPIs. He continues, “Few, if any, firms are tracking the type of work, and none that I’m aware of are looking at the quality of the work (at least not in any systematic way).”
In parallel, tracking and measuring outside legal spend becomes the standard KPI for corporate in-house legal teams. But if this is the only metric, then the legal department will more than likely remain a cost center for the organization. They may reduce outside legal spend, possibly by using technology to cull data sent for outside review or by bringing other tasks in-house, but until a priority is put on setting clear objectives with trackable and measurable outcomes, progress will be the result of trial and error.
Alignment between Legal Ops and the Legal Department
A first step in setting KPIs for a legal ops manager is to identify all of the key practice areas (contracts, M&A, internal investigations, eDiscovery, etc.) within the organization and work with the General Counsel to establish goals for each of these areas, then create KPIs around those goals. Each organization will have different priorities and opportunities in different areas, so determining what these are up front will avoid headaches later.
Data Availability and Data Integrity
Once goals are in place, you then need to determine what data is needed in order to measure them, find out if that data already exists within the organization, and who owns the data (it may live outside of the legal department).
A few examples legal ops managers might look for:
- Number of outside firms and service providers under contract
- Number of matters currently underway or that took place in previous years
- Average spend per matter
- Common key custodians
- Data types across the organization and processes needed to retrieve it
- Cost per stage of the EDRM (governance, legal hold, preservation, collection, processing, review)
- Software and other technology currently in use by the legal department and its value
After an inventory is complete, partner with data creators to evaluate any obstacles to begin tracking data against objectives.
Align KPIs with Overall Business Objectives
The legal department can be an island of sorts in the middle of a corporation. Aligning legal operations goals and KPIs with larger company-wide objectives can lead to important gains in ways that may have been overlooked at first. For example, if one of the main goals of the company is diversity and inclusion, then KPIs should be established to determine how the legal department aligns with this overall objective. This may begin with tracking the size and demographics of the legal team itself, hiring practices, wages and pay equity, along with other aspects of the legal department that are needed to benchmark against the overall business objective.
There is no denying that communication (or the lack thereof) can be an obstacle when it comes to reaching objectives. One main issue is that so many of the stakeholders involved with the legal department communicate in very different ways. Which is why it’s helpful to find a “translator” who can bridge the gap between Legal, IT, and other business units to help identify obstacles to communication that may be getting in the way of tracking KPIs. Once this is established, regular meetings or check-ins may be needed to clarify any issues between those stakeholders which may arise as a result of measuring KPIs.
Some aspects of a successful team aren’t measurable, but many of them are. First, you need to take the time to understand the departmental and organizational goals and then begin benchmarking the current state of things. Once that benchmark is established and tracking performance against that benchmark becomes standard, it may be surprising how many opportunities for improvement will become clear, or how goals may be revised based on data that was unknown until tracking began. After all, ignorance may be bliss, but knowledge is power.