Traditionally expected to deal with regulatory issues, legal directors are faced with new requirements. Their place in the company is being reinvented and they are being asked to become business partners.
The legal department now has an established place in the company and is involved in strategic decisions. This is a common position for sales or marketing departments, but much less so for lawyers. Today, they are expected to be able to contribute to the growth of the company while justifying their added value. But how can you demonstrate your added value? Answer in this article.
Why measure the performance of your legal department?
In the same way as the company's "business" functions are used to measuring all their actions, lawyers will have to define measurement indicators: "KPIs" (for "key performance indicator"). These are criteria used to determine the performance of an organization.
Scary at first glance, these indicators are often considered, wrongly, as monitoring tools and/or unsuited to the typology of the legal function. However, when properly implemented, KPIs are real assets for the legal department.
These indicators highlight the activity of the professionals and especially the benefits they bring to the company. They allow us to measure the performance of a department and its relevance to the company, in order to orientate actions towards the achievement of the strategy. Without this data, it is difficult for the different departments of the company to evaluate the business impact of the legal department.
Define KPIs according to your objectives
As with any project that is intended to be reliable and effective, the first step is to set objectives. To do this, the project initiator must ask himself why he is seeking to evaluate and measure the activity of the legal department. You need to be able to make the numbers speak for themselves after you have obtained them, putting them in the context of the company's objectives.
Ask yourself who you want to reach and what message(s) you want to deliver with these performance indicators. The data will be different depending on the angle of measurement and the audience you are addressing. For example: the expectations of the general management and those of the marketing department are not the same.
Set your goals in relation to the company's strategy:
- Profitability of the missions
- Team productivity
- Stock performance
- Coherence between the legal department and the company
#1 KPIs to evaluate the performance of your business
Reveal the strategic function of your legal department.
What criteria should be used to evaluate mission performance?
- The percentage of completion of a project
- The number of contracts drawn up
- The number of contracts negotiated
- The number of disputes managed by the legal department
- The difference between the amount demanded in the event of litigation and the amount to which the company is actually sentenced
- Negotiated transactions
This (non-exhaustive) list of indicators will highlight the activity of the legal department and its financial consequences for the company.
- average response time to questions ;
- the number of internal solicitations ;
- the number and type of files processed;
- the departments that most often use the legal department;
- Litigation settled, won, lost and their amounts;
- the number of debts collected ;
- the breakdown of the budget allocated to the legal department ;
- the budget of the legal department compared to the total turnover of the company ;
- the number of hours of in-house training provided ;
- the number of contract negotiations conducted ;
- the turnover of your team members.
You may be surprised! By analyzing these figures, you will realize that, contrary to popular belief, the legal department is not just a cost center. It can even be a source of profit! The objective is not to make it a source of profit but to reveal its strategic potential.
#2 KPIs to highlight the work of your team
Apart from a performance issue, there is a managerial issue. The KPIs will become the dashboard of your legal team allowing to measure their daily activity.
With numerical data, you can manage your department and its adequacy with the company's activity. This gives you an overview of the progress of your projects and their health. The objective is not to track the activity of your employees but to highlight their work or to identify with them the pain points. Knowing the time spent on a project is essential to set objectives and coordinate your team.
However, due to the nature of the lawyer's activity, it is essential not to limit oneself to numerical criteria! Quantitative criteria do not fully reveal the performance of the legal department. KPIs must be put into perspective with qualitative criteria.
Business expertise and soft skills cannot be measured. Ask your operational staff about their level of satisfaction in their collaboration with the legal department: do they make information accessible? Are they responsive enough? Do they respond to your requests?
By crossing these different indicators, you will have an idea of the occupation rate of your teams and the distribution of tasks. This will help you in the management of your department and in the valuation of their activity.
Implementing KPIs: what benefits for the company?
KPI's that are set up with good intelligence will help you to convey a clear and accurate message. Through these indicators, you make the results of the legal department and its importance for the company accessible.
This data will also lead to the implementation of actions. The objective is to extract information and draw consequences for the teams as well as for the daily missions.
💡 Still, keep in mind that this measurement work must be done over time. You need to have points of comparison to make this data effective. Allow time for your indicators to mature and enter into comparison with the previous month's or year's data. There are bound to be changes and variations that will be important for your final interpretation.
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Legal director: a strategic function that must remain independent
It is important to remember that these indicators are specific to the company and its operations. Depending on the objective defined, and even the configuration of the company, the KPIs are likely to vary and may even be interpreted differently.
The lawyer is today a "business facilitator" with an obvious strategic place. However, it must be kept in mind that lawyers are still in charge of the company's security. Defining KPI's for the DJ does not imply putting productivity requirements on the DJ. The good lawyer is not the one who executes all his missions quickly but the one who studies, researches and compares before giving his answer. He can sometimes be seen as a hindrance to business objectives, but his role is above all to anticipate budgetary and regulatory risks while respecting the company's policy. The lawyer must be able to remain free to make decisions and take initiatives in accordance with the company's policy, while remaining a strategic player.
Your personalized activity reports in Hyperlex
Hyperlex offers a statistics module in its platform. At a glance, you can see the history of your contractual activity. This is where legaltech comes into its own: it provides the legal department with the tools to measure and highlight its value.
"We use the statistical dashboard to quantify the activity and convince the decision-makers, for example to justify a recruitment. Numbers are the most telling thing.
Benjamin Moutte, Legal Director at Rakuten France, Hyperlex client.
A true statistical dashboard, Hyperlex allows you to monitor the progress of your projects. In addition to a global vision, you offer your management a true performance indicator. Track, manage and secure your commitments by summarizing your activity and that of your employees.
Want to know more about Hyperlex dashboards? Request a demo!
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