The drive for increased efficiency and measurable performance has turned the spotlight on General Counsel (GC) and asked the question – ‘What is the value of the legal team?’. It is a question that keeps many awake at night, struggling to identify quantifiable results that can be tracked and evaluated over time. The old saying is ringing true – how do you manage what you don't measure?
Legal Key Performance Indictors (KPI) are seen as the solution, but are a minefield for General Counsel who don't know where to start in setting the right KPIs for their legal teams.
There are hundreds of possible KPIs that could be used to measure legal performance – from the percentage of legal budget spent mapped against matter outcomes, time taken to respond to legal emails, to external law firm invoice payments. However, where KPIs are a potential solution can often turn out to be a laborious form filling exercise that does not drive improved performance. KPIs become the goal, rather than the means to achieving a goal.
A legal KPI is as individual to a company as a fingerprint. Nevertheless, GCs often look to other legal teams, sometimes in a different sector, and copy the KPIs used as a starting point to measure performance. This results in behaviours by the legal team which may seem at odds to the desired outcomes of the GC. The initial issue, managing what you don't measure, turns into a more complex problem – managing what you are measuring!
When team performance is closely measured, it is understandable that tasks not under this measurement fall by the wayside. GCs have often found that great results in the KPIs they have set still produce underperforming legal teams where basic tasks are not being completed. Without setting hundreds of KPIs, how do GCs ensure that basic tasks are completed, and yet teams are stretched and measured against improved performance? The starting point for a GC in setting KPIs is fraught with difficulty.
Eversheds Consulting has worked with multi-national and global companies in optimising in-house legal strategy and processes. This has included objective and goal setting, as well as KPI measurement techniques and performance improvement. Using this experience, Eversheds Consulting present some top tips for GCs who are looking to introduce KPI and performance measurement into their legal team.
Defining KPI strategy
There are many competing priorities for a GC including controlling costs, demonstrating value of the legal team, managing risks and providing quality services to the business. This is without the additional pressures of managing the legal team effectively. Clear decisions on KPI measurement priorities are required to ensure they are focused, measurable and achievable. A GC needs to decide what the key focus of the team should be, as the KPIs used to measure this focus may determine that other priorities are not addressed as effectively.
A common mistake in using KPIs is that they are developed in isolation by the legal team, rather than in collaboration with the business. The KPIs should directly feed into the overall company strategy, the business unit strategies, the legal department strategy, and then individual performance appraisals. The KPIs that are integral to achieving company goals while ensuring that individual performances are aligned to this objective are a powerful tool. KPIs developed without wider consultation are often meaningless to the business, not implemented effectively, and quickly become cumbersome and outdated. Holding KPI workshops with representatives from business divisions and the legal team are an effective method of developing metric objectives that KPI’s can be developed from.
Many KPIs fail due to the complexity in collecting accurate and up to date data to measure performance. Staff should not feel that collating examples of performance is an extra chore to their day. Otherwise the metric is in danger of becoming a daily task rather than a complement to existing work patterns. Before deciding on a KPI, the GC should first ensure they have an effective, simple and easy to access data collection and reporting system. It is no good having a KPI measuring time spent on a matter if there is not an easy way for staff to record their time! Therefore, a KPI is as only as effective as the method in which the data is collected (in which to report it). This may mean improving legal software systems (such as using Sharepoint applications) or changing financial reporting systems. KPIs will add strength and improve team performance when they supplement daily work patterns, not add extra tasks to already busy workloads.
The process of deciding on KPIs and the method of data collection leads to the implementation of the metric measurement system. However, achieving a set of KPIs is only the start of the process. Time is the biggest contributor to their success. implementation of KPIs. A system of regular review and feedback is needed to ensure that KPIs are integral to ongoing performance. Analysis of data collated from metrics should also be used in conjunction with narrative feedback to provide a full picture of achievement. Only over time can incremental improvements to performance be measured and tracked. Hence, KPI implementation is a long term process that rewards sustained effort.
Spreading the net
KPIs can be used effectively to increase external counsel performance and help reduce costs and budget more effectively. They can also be used to improve business unit performance when requesting legal team services. Again, there are hundreds of KPIs that could be implemented in both scenarios. However, the same dangers lie in developing these metrics. It is often that these KPIs are developed independently of the internal legal team performance metrics, and sometimes at odds with the goals of the legal team. Hence, any KPIs used with external firms or internal business units should follow the same steps as outlined above to ensure a cohesive suite of metrics that drive performance of the legal team and those that deal with it.
KPI and metrics measurement are tools in the variety of methods for a GC to demonstrate the value of the legal team to the wider business. Success relies heavily on having a clear and communicated legal strategy. Without one, metrics are often unfocused, meaningless and do not help the GC answer that fundamental question – ‘What is the value of the legal team?’
Eversheds Consulting has successfully lead work across multi-jurisdictional and international operations including Africa, Europe, the Middle East, China and U.S for clients such as Qatar Foundation, GE , DuPont, and Volvo.
The team consists of lawyers, management consultants and project managers with business process re-engineering skills, project management expertise, internal audit experience and experience of dealing with high profile compliance change projects.
They have developed legal strategies and KPIs for world leading companies including delivering process improvements and efficiencies. They also provide implementation of effective monitoring and management systems to support businesses and position the team for future growth.