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Legal Department KPIs: Which Ones Are the Right Ones?

Two women across from each other holding the Annual Report | Legal KPIs: Which Ones Are the Right Ones?

When running a Legal department, you’re responsible for mitigating risk and protecting the company. You’re handling everything from compliance to contract management. What’s worse is you’re also trying to accomplish this while economic factors push Legal departments to do more with less. To keep your department running smoothly and within budget, you need to demonstrate the ways your work on the legal team contributes to the strategic initiatives of the overall business. Tracking relevant Key Performance Indicators (KPIs) is one of the best ways to accomplish that. Legal department KPIs let you monitor your department’s performance as it relates to your most important goals. If you track the right KPIs, you can improve your legal team and your business’s understanding of how you’re performing, learn where you can improve, and make better decisions overall. 

There’s no magic bullet list for KPIs, of course. Instead, you need to choose the KPIs that align with your business’s goals, whether they are contract management or client growth. Keep reading to learn what makes up Legal department KPIs, examples of these KPIs, and how to select the KPIs that matter for your business.

What are legal department KPIs?

A Key Performance Indicator is a quantifiable measurement of your performance over time regarding a specific measurement. KPIs are a crucial information tracking process used by an organization to determine how well it meets its goals. 

A KPI has two critical components: a specific metric being tracked and a target with a deadline for that metric. A Legal department KPI is specifically related to your Legal department’s performance.

KPIs are different from other metrics. Most metrics are used simply to monitor your performance. However, a KPI is intended to track a specific goal. For example, if your goal is to increase your client base, your KPI might be your business’s total number of active clients. You can support that information with other metrics, such as the number of new clients you win each month and the amount of churn you experience, but they are not your main focus. They give you more information, but they are not the key performance indicator.

Examples of Legal department KPIs that prove value to the business

There are plenty of metrics that your Legal department can track. However, your KPIs should be intricately connected to your department’s fundamental purpose. These KPI examples cover the fundamental responsibilities of Legal departments, so they can be excellent ways to monitor your most significant accomplishments and demonstrate your achievements to the firm as a whole. 

Contract costs

Contracts and contract management are some of the essential responsibilities of the Legal department and in-house counsel. Contract cost leakage can be a significant hit to your budget. If your contracts aren’t realizing their expected values, your business won’t achieve its full potential. By tracking contract cost leakage, you can improve your business’s overall revenue flow, proving your value to the business.


You can zoom in and track how your costs compare to your budget. Ideally, the percentage of your budget spent on contracts should be equivalent to the amount of time your team spends on them. By tracking this KPI, you can monitor whether contracts take up too much of your team’s resources and adjust your practices to reduce those costs. Tracking your spend-to-budget also allows you to determine the business’s ROI on its investment in your department and demonstrate your value.

Spend by contract type

Zooming in further, you can track how much each type of contract costs. You may discover that you’re wasting time on standard contracts like NDAs that take up significantly more time and effort than their value dictates. This can help you find places to streamline your contract management process and recover time that can be spent on more complex and higher-value contracts.

Time to sign

If you’re concerned about bringing in new clients, you can monitor the time it takes to sign your contracts. A shorter time to close typically means your contract creation process is more efficient. It also increases client satisfaction, leading to more finalized contracts overall.

How monitoring the right KPIs can prove your value

Why does monitoring the right KPIs make such a difference? It’s because they provide quantitative data about what your department is doing. They also give you hard numbers that demonstrate how your department offers value to the rest of the company. For instance, you can use the right KPIs to support your reports and C-suite presentations, giving your colleagues a reliable, data-based understanding of your department’s accomplishments.

Other ways that KPIs can help your department include:

Culture of quantitative data analysis

When you prioritize your KPIs, you build a culture of quantitative data analysis in your department. That’s invaluable for any organization that wants to make improvements quickly and effectively. 

When your department is used to making decisions based on numbers, you can make choices more quickly and with less debate. You can adapt to changing circumstances more readily and keep your business on track. The culture of data analysis gives you the tools to support your company in new situations, providing both flexibility and strength.

More effective staffing

You can learn much more than just the big picture when you track KPIs. For example, if you’re considering the time to sign, you’ll discover kinks in the contract development lifecycle. When you understand the bottlenecks in your contract creation process, you can take steps to improve things for your business through more efficient staffing. 

Tracking KPIs gives you the information you need to make staffing and hiring decisions. For example, if your biggest bottleneck in contract management is the workload facing your staff, you can choose to increase headcount. Studying your KPIs will also help you understand what skills to look for in new staff, leading to a more effective Legal team overall.

Better decision-making

By definition, KPIs provide quantitative data about how your business in general and department specifically are performing. This makes your decision-making better for two reasons. First, it helps you clear out misconceptions. When you’ve collected hard data about your contract management process (how many contracts are going out the door, the average number of redlines, time to sign, etc.), there’s no way to argue whether or not Legal’s activities are beneficial to the business. Tracking KPI helps you get a clear view of how the department is performing and its strengths and weaknesses. 

Second, KPIs act as a focus for your energy. By setting a few KPIs, you determine where you want to focus your resources in advance. There’s no confusion about what to pay attention to or what numbers matter. 

Greater goal achievement

Tracking KPIs for your legal department ultimately helps you achieve your goals. KPIs track your performance in targeted activities, giving you a clear overview of how you’re doing. If something begins to go wrong, your KPIs act as a warning, letting you take action immediately. 

This is invaluable for your department and the business as a whole. KPIs objectively measure your efficacy, whether you’re trying to reduce costs, increase efficiency, or grow your client base. They provide the information and analytical basis to ensure you’re on target overall and support your value to the company.

Choosing the right KPIs to monitor

So how do you choose the right KPIs to monitor? That depends on your business and your department’s role within it. While the KPIs listed above are a good place to start, there’s no single list of metrics that every Legal department must track. Here’s how to choose the KPIs that matter for your firm.

  • Consider your firm’s goals: Every department’s ultimate purpose is to support the business’s goals. Legal is no different. Consider what your company is trying to achieve. Growth? Reduced expenses? Efficiency? Something more specific? The KPIs you track should be directly related to those goals.
  • Consider your role in the firm: Different firms give their Legal departments varying levels of strategic control. When considering your KPIs, keep your department’s involvement in the company’s strategic planning and decision-making in mind.
  • Choose the KPI that most directly tracks your goals: You can choose KPIs based on how they actually support your goals. If you’re just trying to improve your own department, tracking KPIs like spend by contract type can help you improve efficiency within your own processes. However, if you’re trying to support sales and customer satisfaction, you can monitor complaints and time to contract close.

Adjust the KPIs you monitor as your firm evolves: Your company won’t stay the same over time, and neither should your KPIs. Regularly check in with your KPIs to make sure they’re still in line with the company’s goals and update them if not.

Get started tracking Legal department KPIs

There’s no one-size-fits-all KPI mix that you must track. By determining the KPIs that make sense for your department, you can start collecting and analyzing data about how well you’re supporting your company’s overarching goals.

You can get started by considering goals like contract cost reduction and time to sign and how they may break down into numbers. This will help you make better decisions, develop a culture of quantitative analysis, and work toward your goals. 

Ironclad can help. Ironclad’s Process Metric Reporting tool can help you track your KPIs in real-time. It provides an easy-to-read overview of your department’s performance, so you understand how you’re doing at a glance. That saves you time and effort, letting you make the most of your KPI tracking with less hassle. 

You can learn more about how Ironclad can help you track your KPIs by scheduling your free demo today. 

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