Measurable Legal Team Metrics Drive Decision-making

Mature legal departments use data to drive strategic decision-making, but how should legal team metrics be set up and measured? Enterprise legal management software is a technology that runs a corporate legal department. It helps deliver the data from legal team metrics culled from key performance indicators, measurable goals, and analysis of various factors including legal spend, billing and invoicing, contract life cycle, workflow management, and matter management outcomes, among other analytical considerations.

Why Measure Legal Team Metrics?

Every business wants measurable data to prove value. This goes hand in hand with corporate guidelines of profitability, especially for public companies. A legal department is viewed as a cost center and not a business partner. To ensure that the legal department value is showcased, assessing and measuring metrics is one of the best methods to prove worth.

Spotting patterns and trends across the law department is another reason why measuring legal team metrics is important. Imagine a legal department without any rhyme or reason for decision-making. This would be pure chaos for the legal operations team as well as the lawyers and their paralegals. Moreso, it would be a disaster for the leadership team who could not share analytical reporting with the C-suite.

Budget management cannot succeed without patterns and trends to guide decision-making for increasing legal spend, hiring more talent or looking at ways to cut costs in other areas. Decision-making prowess with data and legal team metrics advances growth in the legal department. It also allows scalability for legal operations.

Which Legal Team Metrics Feed Data-Driven Decisions?

• Legal Spend. Most every legal department requires the services of outside counsel. Legal spend budgets increase or decrease based on talent, matter type, partner rates, duration of a matter, overall success of a business, and other factors.
• Technology. Is there disparate and non-functional software in the legal department? How old is that software? Which users benefit the most from the software, or is it idle with fewer users? Is there a solution, like enterprise legal management software, that compiles various functions including contract lifecycle management? While technology overall is not a measurable metric, extrapolating aspects of software usage is for example, measuring productivity based on the implementation of new software is a viable legal team metric.
• Talent. The price of talent in a legal department changes with the economy, availability, competition, and the legal department's budget. The makeup of the legal team or legal operations team contributes to the maturity of the department. If the hiring managers look for low-level expertise instead of paying for senior lawyers and those with more experience, this impacts the department.
• Productivity. Can you measure productivity in a law department? This is one of the primary key performance indicators that every legal department should measure. As legal team metrics go, productivity is critical. Time management provides one element of productivity measurement while the usage of software tools provides another. For a remote global workforce, there are screen usage tracking tools that show hours of workflow and screen captures showing the type of work in real-time.
• Cost and Budget Management. The highest expense for a legal department is legal spend. Costs and fees associated with legal spend should be tracked alongside the dollars leaving the company to pay for outside counsel. More mature legal departments utilize enterprise legal management to manage billing and invoicing. The intelligent financial review tools, powered by AI, available in enterprise legal management software enable improved management of vendor invoicing. Legal operations teams and legal team reviewers can see where invoice errors are automatically flagged and corrected. Billing guidelines can be enforced, and corporate legal teams that elect to use managed bill review services have an expert team of legal authorities reviewing invoices that may require future negotiation. These and other financial management applications critically influence data-driven decisions. 
• Legal Operations. In the world of support for law department management, legal operations manage the workflow of the entire department. How well is that done? Measuring legal operations metrics is as important as measuring legal team metrics. Everyone in the department needs to know how efficiently and productively they’re working, how many matters are open and their status, where contracts are in the life cycle, if the budget is on track to balance at year-end, and much more.
• Vendor Behavior. How many law firms does a company work with? That answer depends on various factors, including but not limited to legal issues, legal team talent, legal spend budget, matter complexity, and more. Assessing measurable metrics to benchmark vendor behavior is a necessity. Legal department success depends on the success of outside counsel. No one can prove that a law firm delivers the best legal services if metrics aren’t tracked.
• Matters. Who serves the bulk of legal matters in the legal department? Does in-house counsel manage most matters? Or, is it necessary to hire law firms to supplement needed talent? Look at matter cycle time as a key legal team metric. This includes measuring both in-house and outside counsel teams. Matter resolution is a determining factor for future hiring decisions. If outside counsel drags on and on, using valuable budget, someone needs to monitor and inquire about this behavior.

The legal team metrics above contribute to new data and a new method that legal department leadership and analysts can use to review and conclude the patterns they see and trends in the legal department. Compiling data is not enough. A legal operations team member, perhaps a data analyst, should focus on the analytics to pull the patterns for improved operations. Only then, can such analysis drive data-informed and strategic decisions that feature legal team metrics. Reach us to learn how ELM software contributes to this task.