Indicators Measuring the Working Efficiency of Legal Departments
“Efficiency KPIs” will often assess and demonstrate the efficiency of LDs based on data traditionally available within them.
As an illustration, relevant “efficiency KPIs” can be of a financial/quantitative nature, measuring:
• the extent to which the LD has performed according to its budget: beyond the obvious usefulness of such an indicator, it is essential to stress that it may also be quite “unproductive”, unless it is assessed in conjunction with other indicators which can be used to determine whether the possible costs overruns have helped create, or avoid the destruction of, greater value;
• cost savings achieved in relation to, for example, adjusted internal staff or the engagement of external counsels.
When focused on efficiency, relevant KPIs can also measure non-financial/ qualitative objectives such as:
• the legal workload, the necessary internal staff and external resources, and the optimized allocation of tasks among them for an efficient coverage of legal matters within the relevant business organization. Such KPIs can help to address some potentially critical questions: should internal clients involve the LD in all contractual activities? Do business stakeholders sometimes avoid involving the LD on the basis that it is understaffed and therefore a bottleneck? Does the LD currently have the staff capacity to be involved in all of the company's key projects?
• the legal team's productivity, and especially negotiation cycle times, reaction times in contracting processes, number/value of contracts signed and reviewed by the legal team. These “efficiency KPIs” can, for example, help to assess the relevance of the actual “legal tool box”—templates, models of clauses, processes—and its adjustment to business realities, whether the LD uses state- of-the-art technology to manage its activities, etc.;
• internal client satisfaction when involving or interacting with legal team members. Beyond the most common limitations of this kind of survey, it is critical that the LD assesses how it complies with its mission statement: as a service provider and a (hopefully trusted) business partner, the LD needs to build the correct network among all internal business stakeholders (and not only within the professional community), and act in a way that is client-centric, collaborative and transparent when delivering legal advice. Developing qualitative “empathy” towards business stakeholders and asking lots of questions in order to help them reach the objectives is necessary to achieve relevance and value.
3.2.2