Legal departments face ever-increasing pressure to deliver contract value and streamline legal ops with shorter contract lifecycle times and improved contract performance. Legal departments that regularly measure the efficacy of their contracts against KPIs can proactively calibrate their legal contract management process to improve organizational impact through goal alignment and goal attainment. Discover four crucial legal department KPIs in this article.
Crucial Legal Department KPIs
Legal department KPIs should be specific, measurable, attainable, relevant, and timely. Contract management KPIs will vary by industry; therefore, legal departments will have their own particular KPIs.
To manage the success of any legal contract management strategy, legal departments must regularly measure results. KPIs should encompass quantitative and qualitative information around contract value, monitoring, and renewal.
Four common KPIs to gauge successful legal contract management process realization include cost effectiveness, productivity stats, contract effectiveness, and contract risk and accountability. Under each of these four umbrella KPIs are specific areas that can also be used to measure a legal department’s contract management software ROI.
KPI #1 – Cost Effectiveness: Performance metrics may include annual contract value, contract values by type, the value remaining after contract termination, inside and outside spending, legal spend against budget, spend by business units, and comparison to historical contract trends.
KPI #2 - Productivity Stats: Performance metrics may include contract lifecycle time, time spent on legal vs. administrative tasks, counterparty trends, trends in potential bottlenecks in requests and negotiations, invoice bounce backs, and missed milestones.
KPI #2 – Contract Effectiveness: Performance metrics may include the total number of contracts, contracts by counterparty type, compliance management, and renewal opportunity realization.
KPI #4 – Contract Risk and Accountability: Performance metrics may include a risk tool usage score for accountability, standard clause variance, the number of contracts expiring without renewal dates, the number of improper or delayed signature approvals, and disputes resolved.
Once these data are acquired and KPIs are analyzed, legal departments can leverage reports with contract management software.
Legal teams can configure report layouts to display crucial information with the help of an online report designer. Online report designer exportation options can include MS Word, spreadsheet, PDF, CSV, various image formats, rich text, and more!
Legal departments can also take advantage of executive graphical dashboards for reporting. Dashboards can provide valuable legal data at a glance for next-level contract analytics.
Executive graphical dashboards and other reports can be made available to senior management and the board so that KPI analysis is presented to key decision-makers for organizational success!
Meet Legal KPIs with Leading Contract Management Software
Legal departments face the challenge of overseeing the contract lifecycle from requests through renewals, while simultaneously attempting to show stakeholders the importance of an often complicated and undervalued process.
The goals of improving visibility, increasing productivity, and reducing risk are instrumental in the performance of effective legal contract management strategies but can be difficult to attain without defined legal department KPIs, which can be met with the right contract management tools.
If your legal department’s contract management process is not producing the intended value, leading-edge contract management software can provide your team with a means of measuring success. It can help your department hit KPI goals with contract monitoring, increased productivity, superior visibility, and risk reduction.
CobbleStone Software has helped thousands – including legal departments – to manage their contracts better with Contract Insight®, a robust and scalable AI-based document management suite designed to work for organizations of many industries and sizes.
Book a free demo of CobbleStone’s Contract Insight today!