Monitoring in-house legal performance goes beyond determining the efficiency of your team. If done right, it can also be leveraged during annual budget discussions as a potent feedback funnel and as an opportunity to revisit operational strategies. And yet, something as critical as this has largely remained a sandbox function for a set of reasons:

1. There is no universal metric to cover the entire scope of an in-house counsel’s operations
2. A considerable volume of the legal tasks is immeasurable, e.g. negotiating deals, and risk management
3. Legal is mostly viewed as an assistive function, which means performance measurement is confused with cost conservation than as a means to improve legal delivery
4. This is where setting bold and strategic In-House Legal OKRs becomes essential to shift perceptions and enable meaningful evaluation.

Most metrics tracked by in-house professionals today are iterations of law firm metrics, and hence don’t bear strict correlations to business Objectives and Key Result (OKR). To make these efforts more impactful, aligning with legal KPIs that directly connect with business outcomes is crucial.

Take, for example, contract turnaround time (TAT). While it is a perfectly fair assessment of legal operations on standard/template contracts, it does not apply universally to high-risk or high-value situations that might require multiple back and forth negotiations. Hence, by tracking contract TAT, legal remains fixated on the velocity of service delivery while bypassing quality. Instead, teams should track progress toward their In-House Legal OKRs, which might include targets beyond mere speed, such as negotiation efficiency or business enablement.

In this blog post, we will explore the importance of setting measurable goals for legal departments and how they contribute to the overall performance of the in-house legal team. By combining clear In-House Legal OKRs with a robust framework of legal KPIs, legal leaders can drive smarter, data-backed decisions.

Top 10 measurable performance metrics (KPIs) for the in-house legal department

“If you are a commercial-driven business, the most important thing is to show how fast you are closing deals, what percent of deals are getting closed without any edits, how many litigations you are handling and how much you have saved, and how many templates have you created to support other business units. I don't think there is one key metric that defines the legal team — it really depends on the business.”

— Chief Legal Officer in the Event Tech industry

#1 Number of contracts

Track the number of contracts requested, processed, and produced by the in-house legal department over a period. Defining the periodicity of this assessment is dependent on a few factors:

• The average length of a contract cycle
• Customer or vendor cycles and periodicity
• Internal resource or external help availability

Contract volume can act as a foundational legal KPI, providing hard numbers for your team’s throughput. It also supports goal-setting around In-House Legal OKRs, such as improving turnaround time or expanding self-serve options.

If you already have a contract automation tool, you might also need to track the number of contracts you have made self-serve within your determined period, to exhibit that you are accelerating the business.

This metric can help you monitor performance and assess the success of specific In-House Legal OKRs tied to productivity and legal enablement.

#2 Types of contracts processed

Segregate the contracts by categories such as type, value, complexity, counter-party, and more. You also need to keep track of the deviation in contract terms from standard clauses.

By understanding the contract mix, legal can better prioritize resources. For example, if your In-House Legal OKRs include reducing risk in high-value agreements, tracking contract types helps align activity with intent. Similarly, this data directly supports legal KPIs tied to complexity and risk exposure.

#3 Contract value

The best way to determine the immediate monetary impact of your team on the business is to understand the incoming or outgoing value of the contracts you directly generated, reviewed, or helped automate.

A good idea is to separate recurring/renewed contracts from newly generated contracts to help your business discover more information about their top lines. Tracking contract value feeds into broader legal KPIs and enables more precise In-House Legal OKRs around legal’s contribution to revenue protection and realization.

#4 Contract quality

Speak with dependent business teams on what the acceptable risks in specific contracts are. Figure out the templatization/execution process and analyze the turnaround time and degree of iteration required to complete the contracting process.

You can utilize this data to understand the quality of your overall contract templatization process or even identify the efficacy of a particular member in handling contract requests and delivering business-focused solutions. Improving contract quality can be both a legal KPI and an In-House Legal OKR, particularly if you’re aiming to reduce back-and-forth cycles or legal escalations.

#5 Contract success rate

This is calculated as the percentage of contracts executed successfully from the bulk of contracts sent to the legal team. This can help uncover usual roadblocks and promote discussions towards solutions. You can also explore the success rates for specific contract types.

Also, consider computing the contract renewal rate as part of this KPI.

Together, these become measurable indicators supporting broader In-House Legal OKRs like efficiency, business satisfaction, and reduction of risk exposure.

#6 Administrative costs

Contracts aren’t the end of the responsibility for in-house legal teams. Hence, it is also important to assess the time, effort, and people engaged in non-contract-related tasks. This includes repository management, compliance management, IP management, outreach programs, and more.

Tracking administrative burden as part of your legal KPIs helps justify budget and headcount increases. When paired with relevant In-House Legal OKRs, it supports smarter resourcing and operational decisions.

#7 Legal spends per business unit

Analyzing legal spends per business unit allows you to keep track of who your major dependents are and helps you establish a business case for your team in front of the C-Suite. It also helps decision-makers understand your inherent value to the organization, while allowing you to understand and plan better by identifying your most frequent tasks/functions.

This level of budget clarity is critical when defining In-House Legal OKRs that tie directly into business cost management goals.

#8 Litigation Expenditure

Tracking what works (or does not) for your litigation tasks is a direct subset of the industry you operate in. And, therefore, while there is no silver spoon solution, there are a few factors to consider while trying to account for them:

• Threshold value: There will invariably be some matters with a greater monetary consequence than others. Establish a threshold value (e.g. $100,000) and track the number of litigation issues above that value
• Average cost per litigation: This is calculated as the net spend on litigation matters divided by the total number of litigation matters and should include everything from external counsel spends to settlement costs
• Percentage of wins
• Percentage of matters settled before trial
• Ease of interactions

Monitoring litigation KPIs like these contributes to both budgeting conversations and team performance assessments. They can support targeted In-House Legal OKRs such as “reduce litigation spend by 15% over two quarters” or “increase settlement ratio by 10%.”

#9 Documentation index

A lot of times critical data whether in your contracts or other communication/documentation channels can slip through the cracks and cause larger repercussions.

Striving towards continuous documentation is therefore not only a bureaucratic compulsion but also a corporate necessity. Use a Likert scale to rank team members on the basis of their ability to comprehensively document or arrest data.

Metrics like this, while softer, offer insight into legal’s cultural fit within the organization. Embedding them as In-House Legal OKRs shows proactive leadership in cross-functional collaboration. They can also complement traditional legal KPIs with a human-focused view.

#10 Net Promoter Score (NPS)

This is especially crucial for legal teams in scale-up businesses. Unlike in larger conglomerates, in-house legal departments in startups communicate with most other business teams, are fairly exploratory in their role, and have multiple business objectives to take care of.

Understanding ease of communication and business favorability for such a team and its members is a good indicator of work efficiency and fluidity.

The best way to do that is to undertake a quarterly survey of all business/client-facing lawyers in your organization. This will provide consistent legal KPIs related to:

• Understanding of business goals
• Responsiveness
• Timely counseling and proactivity
• Flexibility to accommodate business goals
• Approachability

Strong documentation practices support key legal KPIs related to risk management and compliance. You can also establish In-House Legal OKRs around documentation consistency or audit readiness.

Also read: 4 Crucial Contract Management KPIs to Track for Legal Success

7 Ways to quantify the legal workload

Many of legal department goals (e.g. risk management, deal negotiation, business consulting, and enablement) are not immediately measurable and are seen as transitory operations. However, quantifying them allows legal teams to create better In-House Legal OKRs and report using clearer legal KPIs.

"It is important, especially in a company like ours, to be dynamic about performance metrics. If we have a target of completing one hundred contract negotiations in a particular quarter, that does not mean that we need to complete one hundred twenty in the next quarter if the business has other initiatives that it needs us to focus on during that time period."

~ Adam Glick, Head of Legal at Intercom
Episode 8: Building a Value-Driven In-House Legal Team with Adam Glick

Hence, to give the board a clearer perspective of the legal team’s bearings and to quantify legal workload better, the problem needs to be fragmented into each of its moving parts.

#1 Set a risk tolerance threshold

Across the industry, unmitigated risks can lead companies like Robinhood to a $70 million fine and skyrocketing legal costs ($1.4 million in 2019 to $105 million last year).

Legal teams should tie risk tolerance into their In-House Legal OKRs, e.g., “document and approve risk thresholds for five key contract types this quarter.”

"At the beginning of my career, practicing law was about reducing risk and exposure for my clients - without taking into consideration some of the practical implications of whether my guidance was helping my clients achieve their strategic objectives. As I look back, I would have been more practical in my advice and realize that there are times where risk is acceptable, and the true “practice” of law is evaluating the risk v/s the desired business outcome."
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~ Adam Glick, Head of Legal at Intercom
Episode 8: Building a Value-Driven In-House Legal Team with Adam Glick

How to determine acceptable risks for your business?

Acceptable risks are defined in terms of impact and probability. Tracking time spent at each stage of contract review or negotiation can build granular legal KPIs, while improving internal visibility for meeting In-House Legal OKRs.

1. Impact of the risk: includes commercial, reputational, and process impacts
2. Probability of risk occurrence: calculated both quantitatively and qualitatively. Quantitative assessment depends on legacy data and prior occurrences, while qualitative assessment varies with the confidence in the approach of the legal team or risk owner

Integrate risk-prioritization at your Key Result Area (KRA) setting stage and utilize this data to monitor where individual and team resources are being expended.

The best course of action for legal leaders is to build a rulebook of default positions and mandatory provisions. This helps minimize oversight during the contract negotiation/drafting process and decreases the chances of surprises in the negotiation process.

Playbooks/rulebooks help you identify your aggregate positions on each agreement and give you a better idea of business priorities while negotiating.

Evaluating contract risks against your threshold

Once you have set playbooks or identified default positions on your contracts, your best course of action is to identify the degree of deviation that was accepted on high-value contracts.

Identifying the key deviations/variations from your standard clauses and determining their frequency gives a fair idea about what particular issue keeps reappearing during your contract executions. Coupling this with the frequency of instances where deviations were accepted will give you a clearer understanding of what the organization’s risk threshold is.

This data can set the foundation of your risk threshold against which the following five key structures of every new contract can be evaluated.

1. Scope of services
2. Estimated turnaround time
3. Pricing and payments
4. Geographical risks
5. Client and customer friendliness

A greater deal value for customers with the potential for upselling indicates a higher probability of risk-taking while contracts with lower deal value can be deprioritized.

Assign weightage basis the risks associated with each of these structures and plot on a 2x2 matrix, like the one below.

#2 Make information-tracking granular

A critical roadblock in the legal team’s performance measurement process is the ambit of qualitative work. Tracking time spent at each stage of contract review or negotiation can build granular legal KPIs, while improving internal visibility for meeting In-House Legal OKRs.

Deal turnaround times are, therefore, no longer indicative of the quality of negotiations. Latency by any other stakeholder can in turn impact the legal team’s performance numbers. The best way to bypass this problem is by arresting information at every stage of the contract negotiation process with the help of existing technology.

For example, SpotInsights by SpotDraft arrests time-related data at every instance of a contract stage and represents it pictographically for both template and non-template contracts.

This does not only paint a clearer picture of the legal team’s involvement in the process but also actively points out the usual bottlenecks, contract categories that consume most time and bandwidth, and opportunities to streamline operations in particular contract stages.

#3 Measure interactions with legal

The number and type of review requests are excellent indicators of workload. This supports In-House Legal OKRs like reducing response time for high-priority contracts, and sets baselines for efficiency-oriented legal KPIs.

While interactions cannot typically be measured, the frequency of information exchange is a far more tenable metric to look at. It does two things:

1. Determines the degree of legal intervention and support
2. Gauges deal velocity across sales, HR, and other business teams
3. Helps establish the legal team’s impact on business ops

A simple way to do this is to track the number of review requests received per month on a spreadsheet and set filters based on the contract types or status of the review.

However, if you want to bypass the manual effort and chances of errors or oversight, SpotInsights lets you track inbound review requests per period automatically and seamlessly . It can also break down each data point by the type of contract to highlight the areas for legal intervention.

#4 Constantly improve with data granularity

For growing companies, revisiting templates and refining negotiation cycles is vital. Teams can use this data to establish continuous improvement-oriented In-House Legal OKRs and back them with trend-based legal KPIs.

For example, a high frequency of sales contract revisions can indicate that your standard templates should be revisited, as is usually the case for a growing business.

By shifting towards a data-first approach, you are constantly made aware of similar signals about potential improvements. When you have your data dashboard ready, it is also easy to negotiate for a better legal budget by pointing out charts and figures that highlight your growing needs.

For example, a microscopic insight across contract stages can help you identify average negotiation rounds across contract categories and prioritize contract types when you begin the next cycle of templatization.

#5 Track periodic improvements

It is not enough to measure performance data. Legal leaders are also constantly emphasizing periodic improvements.

Comparing quarter-over-quarter legal performance is essential. With a dashboard built on measurable legal KPIs, legal leaders can set stronger future-facing In-House Legal OKRs aligned with strategic growth

#6 Focus on business satisfaction

Perhaps the largest complaint from leaders is that the in-house legal team is viewed as a cost center and, therefore, does not have the necessary enablement. While we covered how to work towards building a value-based reputation in a previous blog, the system is only feasible as long as there is a continual process to gather and leverage feedback from teams that are reliant on in-house lawyers.

Measuring feedback from internal stakeholders helps legal position itself as a business enabler. Positive NPS or CSAT scores can form part of your legal KPIs, while overall business alignment can be written into your In-House Legal OKRs.

However, as a team that supports virtually all business cycles within the company, data on business satisfaction should instead be processed within the team.

Legal needs to track customer satisfaction suo motu and leverage these insights to:

• Build better rapport with other teams
• Iron out communication inefficiencies, and, more importantly,
• Use these insights to exhibit value during board meetings

#7 Track Net Promoter Score (NPS) for the in-house legal team

Create team- and individual-level targets to boost internal collaboration and response rates. Use NPS benchmarks as inputs into both legal KPIs and cultural or service-focused In-House Legal OKRs.

Ask clients (internal stakeholders and external partners) to rank individuals and the team based on:

• Responsiveness
• Ability to understand business challenges
• Simplicity of solution
• Turnaround time
• Ease of communication

Using NPS benchmarks can also help you build a robust culture and take the in-house legal team culturally closer to the business by imploring your team members to communicate in terms that your stakeholders find convenient.

Checklist for establishing measurable goals and OKRs for your in-house legal team

When it comes to setting goals for your in-house legal team, a systematic approach is crucial for success. By considering your company's targets and incorporating thoughtful planning, you can establish In-House Legal OKRs that align with your organization's overall vision.

Here's an easy-to-follow checklist to establish OKRs and goals for legal.

#1 Define your desired outcomes

Begin by brainstorming and defining what you want to achieve. Keep your company's strategic priorities in mind as you identify areas where your legal team can make a significant impact. Engage with key stakeholders to gather valuable insights and ensure that your goals are in line with their expectations.

#2 Establish a measurement system

Use available data to develop actionable legal KPIs that support long-term goals. Evaluate the existing data within your legal department or across the organization and consider how to effectively organize and analyze it. Explore available technologies and tools that can assist in data collection and analysis, enabling you to derive meaningful insights.

#3 Draft Objectives and Key Results (OKRs)

Translate your goals into specific objectives and key results (OKRs) to provide focus and clarity. Select the top 3-5 objectives that align with your legal department's mission and the overall company strategy. Ensure that each objective follows the SMART criteria: specific, measurable, attainable, relevant, and time-bound. Clearly define the metrics and milestones that will indicate successful achievement of each objective.

#4 Assign ownership to each OKR

Designate individual ownership for each key result. While key results reflect the performance of the entire legal department, assigning an owner ensures accountability and effective monitoring of progress. This person will be responsible for tracking and reporting on the key results, keeping the team aligned and motivated.

#5 Develop progress reports

Tie visual dashboards to clear legal KPIs. Consider using visual dashboards or reports that provide a clear overview of the status of each objective and key result. Additionally, include qualitative observations and interpretations to provide a holistic understanding of the progress made.

#6 Regularly review for alignment and utility

Revisit your In-House Legal OKRs to adapt to shifting priorities. This can be achieved through routine meetings with key stakeholders or by actively tracking the company's overall objectives and key results (OKRs). Regularly assess the utility and relevance of your goals, making adjustments as needed to stay on track and adapt to changing circumstances.

All set to thrive in the evolving business landscape?

Monitoring the performance of in-house legal teams can serve as a valuable feedback mechanism and an opportunity to revisit operational strategies during budget discussions.

By breaking down complex legal operations into smaller, measurable parts using legal KPIs and setting ambitious, business-aligned In-House Legal OKRs, legal teams can enhance performance, demonstrate value, and thrive in today’s evolving business environment. It is through effective performance monitoring and alignment with business objectives that legal departments can thrive in today's dynamic and evolving business landscape.

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