How Can LegalDepartments Measure Their Performance?
Implementing KPIs is not a one-off exercise. It requires the execution of a transformation program to make the successful transition to running LDs like real Business Units. In this respect, LDs need to follow the guidelines applicable to all business transformation programs.
For example, KPI programs need to be constantly improved. Different implementation phases can be defined: starting with a “soft” initial phase and at the next stage undertaking a core transformation phase. They also need to be regularly adjusted to the evolving business objectives and strategic goals. All this does take time, but the transparency rewards are meant to far outweigh the investment, as highlighted in Sect. 2 above.When narrowing down the possible indicators to be monitored, it is critical to determine whether the data needed to calculate them can be gathered easily and in a timely manner. Section 3.2 above explains how possible relevant KPIs can be based not only on working data traditionally available within in-house legal teams, but also on the increasing volume and detail of information obtained from customers, partners, the global ecosystem, suppliers, etc. Facing such a significant amount of data, it is critical to be able to access and gather it automatically where possible. For this purpose, the most efficient automation method will need to be carefully identified and implemented, whether it is an existing system or a new one to be introduced. KPIs can be implemented by means of multiple valuable tools. Some organizations use a multi-quadrant presentation method, which scores the different indicators. This can become a powerful tool when used alongside the implementation of a proper dashboard.
In terms of allocating responsibilities, LDs do not necessarily have to be responsible for the design and updating of all the relevant KPIs identified in Sect.
3.2 above. This is especially the case when indicators are aimed to demonstrate the full effectiveness of contractual activities in achieving business objectives and goals. Yet, a strong and active role played by LDs regarding all these matters is always recommended, not only to avoid building “legal silos” decoupled from the reality of the business context, but also to increase LDs' intimate knowledge of the business strategy and objectives and ultimately achieve their aspiration to be relevant and valuable business advisors who create value and address the most significant risks. The willingness to embrace such a strong and active role in assessing performance represents a real opportunity for company lawyers, as highlighted in Sect. 2 above.Finally, it is impossible to drive a successful KPI program without properly addressing cultural aspects within the relevant business organization. From this perspective, it is critical to anticipate internal resistance to KPI monitoring and to ensure that, when calculated, proper actions will be consequently undertaken to improve the measured performance and to facilitate the achievement of business, strategic or financial goals. Some company lawyers may question the transparency sought by measuring KPIs: what if KPIs are wrongly understood or used by other departments or by top management? For example, in environments with a weak collaborative and team culture, KPIs could be feared as merely serving to point the finger at the potentially poor legal performance, and then to reduce legal resources while ignoring the optimized “legal coverage” needed by the business. KPIs could also be seen as allowing the simple negative observation that lawyers are not sufficiently equipped with critical skills (e.g. contract & commercial management, project management, cyber security) without undertaking any consistent action plans.
It is also essential that change management forms an integral part of KPI implementation programs.
Experience shows that changes within legal teams require an assessment of their history, as well as their readiness and capacity to change. Changes will be mostly initiated from the top, enlisting executive advocates for support and direction (sponsorship) within and outside the legal team and different change agents within the legal team itself. It is also important to generate a data-driven business case for the implementation of KPIs to motivate the program and consult the LD's internal clients. Ultimately, the message needs to be clearly and regularly communicated to and received by all legal team members as well as the entire business organization.Liquid Legal Context
by Dr. Dierk Schindler, Dr. Roger Strathausen, Kai Jacob
Take a moment and capture what came to your mind when reading Pauleau/Roquilly/Collard's introductory story about the GC's speech at the all hands: “Utopia!”? Or: “The scenarios described are possible, but not part of the vision.”? “Talked about but not consistently pursued.”? Or are you already there? I guess all of us who work in an inhouse environment and who look at the wind of change as an opportunity to accelerate and see GCs as an image of a true and modern leader, who can demonstrate by means of relevant KPI's not only the value that Legal has created for the company, but also that and why the function could be shielded from the cost reduction pressure to a certain extent.
A great strength of the article by Pauleau/Roquilly/Collard is that the three authors resist the temptation to take a shortcut to a glorified image of KPI's. They start with the hardest questions and thereby with the questions that every single team member will ask as a department embarks on the journey of performance management: Why should legal departments measure their performance? What does “performance” mean?
As they then emphasize the need to link performance back to the creation of value, there is an interesting connection to Bassli's article on what inhouse expects from lawfirms, and also to Markfort's and Meents'/Allen's article on how law firms focus much more around outcome-based services.
As law firms reshape their offerings in light of that principle, should we think more aggressively about not only exchanging “question and answer”, but also requesting data associated with it that will talk to the KPI's we have defined for ourselves inhouse?Well, isn't data something that the new LPO's are actively using to demonstrate their added value, as much as to help their clients move towards a much more data-driven world? Both, Ross and Brown, representing two strong and innovative players in the LPO-industry, make a case for that. So,
(continued) let's look at it from an inhouse perspective: If our law firm partners and our LPO partners enable or even pursue a KPI-based collaboration—why do we not take them up on the offer and use their data as the first step into a KPI-enabled management of our work?
However, taking a step back, we must realize that all tectonic plates in the industry are moving: cost-pressure, outsourcing, automation and artificial intelligence through legal tech, performance management based on KPI's enabled by data. Can our people deal with that? Is this an environment that is perceived as holding broad opportunity, or rather threat? We will need to make sure that we hire talent that embraces the opportunity in this—and such talent will likely be individuals that embrace a dynamic entrepreneurial element of constant evolution in their jobs. Tumasjan/Welpe inform us about when “corporate lawyers act entrepreneurially.”
Professor Roquilly is currently Dean for Faculty and Research at EDHEC Business School. He is also Director OfLegalEdhec Research Centre and in charge of the Business Law & Management Program. He has performed different functions at EDHEC: creating, managing and developing the Legal Studies Department; acting as Dean for Graduate Programs; and managing major projects (e.g. EDHEC's first EQUIS accreditation). His research examines relationships between law and strategy, legal management, legal risks, compliance and ethics. He received the EDHEC Foundation Award for best research paper in 2001. Author of books and papers in academic and professional journals and the business press, Christophe serves on a number of boards (Scientific Committee of the Business and Legal Forum, Advisory Board of Arsened Taxand Law Firm, Advisory Board of the World Council for Law Firms and Justice, Advisory Council of the European Company Lawyers Association).