One feeling that is mutually shared by most in-house lawyers is that they are wrongly treated like cost centres. This means often they are being asked by finance to reduce spend rather than receiving the money needed to improve legal capabilities. However, the intelligent use of key performance indicators (KPIs) to quantitatively measure lawyers’ contributions can alter this ‘cost centre’ narrative.
At The Lawyer’s GC Summit 2020, a group of GCs across a range of industry sat down virtually with Stephanie Hamon, Head of Legal Operations Consulting at Norton Rose Fulbright, to discuss how to effectively use KPIs. In short, they need to be easily measurable and appealing to the key stakeholders.
“80 per cent of GCs don’t currently use defined metrics to measure legal outcomes,” said Hamon. If legal teams want to receive the funding they deserve, then this is one of the first issues to address. When deciding on what KPIs to measure, Hamon said GCs should consider how to define the outcome, how to measure the outcome and if the KPI appeals to the stakeholders.
Defining the outcome
There is no one size fits all method because each industry will prioritise different results, so some creativity will be needed in developing the KPIs, the key is to find a number to attach to them. And more is not always better. Too many KPIs can be confusing, so pick a few key ones and make sure they are tracked accurately.
“The KPI should just be there to help your decision making. Information is not useful unless you know what to do with it. Too many KPPIs can cause confusion,” warned Hamon.
A good KPI example was given in response to a panellist asking: “how can we find a way to measure the success of the advice given by the legal counsel when it results in the change of decision by the organisation?”
Hamon used an example from a previous bank she had worked at. The bank had managed to avoid regulatory fines thanks to advice given by the legal department. To measure their success, the legal team measured the total value of fines given to the other banks. This gave them a KPI that quantified the money saved by the legal team that could then be presented to the board.
Measuring the outcome
You can ask your team to track the outcomes of their work as they do it and compliment this with tracking software. For example, lawyers can keep a spreadsheet to track the number of contracts they have drafted while at the same time using software to monitor the number of hours they worked on each project.
Hamon emphasised the importance of your team understanding why they are tracking the data, saying: “If your team doesn’t understand why you are asking them to provide the input it can make them uncomfortable with it. They need to understand the process.”
An easy way to do this is to involve the whole legal team in the construction of the KPIs. This will mean that everyone is pulling in the same direction and will develop personal ownership of the success or failure of the KPI.
However, just because you are generating data doesn’t mean that specific stories of success cease to be important. For data to tell an effective story it must be complimented by anecdotes of the work that is being done. Providing boxes on a KPI dashboard for in-house counsel to fill with descriptions of their work is an easy way to record these.
Appealing to stakeholders
Collecting data is only valuable if it helps the GCs communicate with their stakeholders. The first step in creating a KPI is stakeholder mapping. CFOs will have different aims to heads of HR. The KPIs need to acknowledge this and capture how legal help them deliver on their individual strategies.
Just as including the whole legal team when drafting KPIs is beneficial, it is also useful to meet with the relevant stakeholders before. “You need to put forward a set of KPIs that answer the question: what is in it for me [the stakeholder]?”, explained Hamon. The easiest way to do this, is to ask them what they want.
Through a vast number of client conversations, it appears clear that KPIs and analytics will be one of the key priorities for legal departments in the short term. It is still an under-explored area and there is growing recognition that data is central to a powerful story telling around the legal function’s success.
Often it is hard to know where to start and people feel overwhelmed at the thought of gathering relevant data but you can use 3 simple questions to get you started:
- WHO (can I influence with KPIs): KPIs will only be efficient if targeted so identify your key stakeholders. This can be an evolving list.
- WHAT (will be relevant to them): KPIs should be about what matters to them, not what you want to tell them. Answer the “what’s in it for me” question they will ask themselves.
- HOW (do I move the needle): how often do you need to share these KPIs? In what forum? To make which decision?
Legal operations consultants from NRF Transform can help you navigate these questions and more as well as implement effective KPIs.
