For many new legal operations professionals, developing meaningful KPIs for the law department is a top goal. Many GCs and CLOs are looking to prove the value of the legal function to the business. Not sure how to get started? Read on for practical tips and useful resources.

1. KEY
PERFORMANCE
INDICATORSBY SHERI PALOMAKI

2. ©2015 SeyfarthLean Consulting | 2
01 / definition

3. ©2015 SeyfarthLean Consulting | 3
Technically speaking…
The Law Dictionary defines KPIs as
“measures of a firm's (company’s or
department’s applies here too)
performance in critical areas.
Typically, monitoring is essential for
such business activities that would
likely cause severe losses or outright
failure if done incorrectly…
measuring progress or lack of it are
essential for achieving the firm's
objectives or strategic plans.”
01 / definition
In simpler terms, KPIs measure the performance
of a department, company, firm, business unit.
Typically, these metrics use numbers and are
tracked over a period of time.
There is no ‘right answer’ for what metrics you
should use to evaluate your department. But
going through this exercise will get you closer.

4. ©2015 SeyfarthLean Consulting | 4
02 / questions

5. ©2015 SeyfarthLean Consulting | 5
Developing and implementing
KPIs is a complicated process
that tends to be fraught with
political sensitivities, change
management challenges,
alignment issues, and
infrastructure problems.
Think these questions through.
1. Why are you developing KPIs? What is the main objective?
Justify value? Demonstrate results? Track trends? Identify
training? Benchmark spend?
2. What are the department’s goals? What are the company’s
overarching goals? Is there a strategic plan you could review?
3. What aspects of performance are of value to leadership
(company, law department, business units)? Be sure to
interview each of the leads, including the General Counsel,
heads of the business units, and others who will be using
your KPIs. You have to know what’s important to them and
build buy-in.
02 / questions

6. ©2015 SeyfarthLean Consulting | 6
4. Does anyone internally have extensive experience developing
and implementing KPIs within the organization? If so, seek
them out and talk to them about their experiences. This could
save you a lot of time as you embark on the effort.
5. Are metrics being tracked in other areas? What do those look
like and what is the process for evaluating and measuring
them?
6. In general, what is the company’s experience with key
performance indicators? Have they implemented them
before? If so, what worked? What were the lessons learned?
Developing and implementing
KPIs is a complicated process
that tends to be fraught with
political sensitivities, change
management challenges,
alignment issues, and
infrastructure problems.
Think these questions through.
02 / questions

7. ©2015 SeyfarthLean Consulting | 7
02 / questions
7. What processes and tools are in place already that could help
with measurement and metrics? What processes and tools
would need to be implemented and what does that effort look
like? “Not everything that counts can be counted (so says
Einstein or someone!).”
8. Where does the KPI program fit in with other department
priorities? High enough to tackle now? Or will it have to wait?
Make sure you have enough time and resources to focus on
the effort before you start. A stop and start approach is
frustrating for everyone.
Developing and implementing
KPIs is a complicated process
that tends to be fraught with
political sensitivities, change
management challenges,
alignment issues, and
infrastructure problems.
Think these questions through.

8. ©2015 SeyfarthLean Consulting | 8
03 / challenges

9. ©2015 SeyfarthLean Consulting | 9
Developing and implementing an
effective KPI program is a
ginormous effort that will require
attention while the team is still
pursuing “business as usual.”
This, in and of itself, is a
significant challenge.
Here are some other challenges
you should be prepared to tackle.
Developing the actual list of metrics is not easy or fast. It will
take collaboration across the legal team to secure their buy-in
from the beginning and a schedule with milestones to keep the
effort on track.
Be mindful of “silos, politics, and turf wars.” (Also, Sheri’s favorite
book!) Aligning performance metrics to the company and
business units you serve will require careful navigation around
organizational dynamics. Know what is most important to be
effective, get buy-in early and often, and revisit alignment
regularly.
03 / challenges

10. ©2015 SeyfarthLean Consulting | 10
Developing and implementing an
effective KPI program is a
ginormous effort that will require
attention while the team is still
pursuing “business as usual.”
This, in and of itself, is a
significant challenge.
Here are some other challenges
you should be prepared to tackle.
Implementing KPI may have unintended consequences in your
culture. Be sure to think through what kind of behavior you’re
trying to encourage and discourage before solidifying your KPI.
Identifying WHAT to measure is difficult. Identifying HOW to
measure is more difficult, and often requires infrastructure
improvements and change management. This is usually
overlooked in the early stages of KPI development. Understanding
up front your infrastructure’s capabilities and how gathering data
will affect your team’s processes will help you in the long run.
03 / challenges

11. ©2015 SeyfarthLean Consulting | 11
Developing and implementing an
effective KPI program is a
ginormous effort that will require
attention while the team is still
pursuing “business as usual.”
This, in and of itself, is a
significant challenge.
Here are some other challenges
you should be prepared to tackle.
Analyzing the data is a minefield. As you review and analyze the
data (especially early on), be critical of the numbers and ask a lot
of questions before sharing across the team, company or
business unit. It will take some time to refine the process, and
avoid the pitfalls of “garbage in, garbage out.” Critical review of
the data should be a milestone in your overall plan for executing
KPI. Only when you are comfortable with the data should you
share outside of the core group.
03 / challenges

12. ©2015 SeyfarthLean Consulting | 12
04 / metrics to consider

13. ©2015 SeyfarthLean Consulting | 13
Cost Effectiveness: Optimizing Department Spend
• Inside and outside spending, typically expressed as a percentage of
company revenue.
• Total cost of resolution, on an average per-case/type basis. Track and
compare year over year (YOY).
• Total cost per FTE (including both compensation and benefits costs
associated with each in-house employee)
• Spend to budget, compare YOY or as a percentage of matters completed
in budget
• Ratio of inside spend to outside spend
• Reduction in spend, tracked YOY
04 / metrics to consider
As consultants for law department
operations, we are often asked, “What
should I measure for my department?”
The answer is, “It depends.” (We know
that’s not the answer you’re looking for.)
We have pulled together our collective
experience and review of the research,
and have prepared an initial list to use as
a starting point. Some will matter to you,
some will not, and some will matter but
you will have no way to measure. All of
those factors have to come into play. It’s
okay to start small and simple.

14. ©2015 SeyfarthLean Consulting | 14
Staff Productivity: Optimizing Department Time, Money and
Resources
• Number of in-house attorneys per 1,000 company employees
• Number of in-house attorneys per $B in company revenue
• Number of matters (or other volume metric) handled per in-house
attorney
• Percentage of cases successfully resolved (against predefined success
criteria)
• Spend to budget per in-house attorney
• Percentage of cases handled internally, without outside counsel
• Work type by position
04 / metrics to consider
As consultants for law department
operations, we are often asked, “What
should I measure for my department?”
The answer is, “It depends.” (We know
that’s not the answer you’re looking for.)
We have pulled together our collective
experience and review of the research,
and have prepared an initial list to use as
a starting point. Some will matter to you,
some will not, and some will matter but
you will have no way to measure. All of
those factors have to come into play. It’s
okay to start small and simple.

15. ©2015 SeyfarthLean Consulting | 15
As consultants for law department
operations, we are often asked, “What
should I measure for my department?”
The answer is, “It depends.” (We know
that’s not the answer you’re looking for.)
We have pulled together our collective
experience and review of the research,
and have prepared an initial list to use as
a starting point. Some will matter to you,
some will not, and some will matter but
you will have no way to measure. All of
those factors have to come into play. It’s
okay to start small and simple.
Process Efficiency: Executing Efficiently and Effectively
• Time spent on legal vs. administrative tasks
• Time spent per month processing outside counsel invoices
• Number of matters handled within budget
• Cycle Time processing invoices accurately
• Compliance with Outside Counsel Guidelines (e.g. invoice bouncebacks)
04 / metrics to consider

16. ©2015 SeyfarthLean Consulting | 16
Matter Statistics: Throughput & Disposition
• Number of matters by type/each year
• Average legal spend by matter type
• Average per-matter cycle time: track separately for litigation, contracts,
transactions
• Average time to trial (or settlement)
• Matter count by location (or business unit)
• Return on investment
04 / metrics to consider
As consultants for law department
operations, we are often asked, “What
should I measure for my department?”
The answer is, “It depends.” (We know
that’s not the answer you’re looking for.)
We have pulled together our collective
experience and review of the research,
and have prepared an initial list to use as
a starting point. Some will matter to you,
some will not, and some will matter but
you will have no way to measure. All of
those factors have to come into play. It’s
okay to start small and simple.

17. ©2015 SeyfarthLean Consulting | 17
Client Experience: Tracking Business Unit Satisfaction
In the absence of established service levels, surveys tend to be the most
effective way to track and measure client satisfaction. On a scale of 1-5, how
do internal clients rate the law department in:
• Efficiency
• Response time
• Accessibility
• Cooperation
Do you have a system in place to track complaints? Measuring volume and
severity trends are also possible options for metrics.
04 / metrics to consider
As consultants for law department
operations, we are often asked, “What
should I measure for my department?”
The answer is, “It depends.” (We know
that’s not the answer you’re looking for.)
We have pulled together our collective
experience and review of the research,
and have prepared an initial list to use as
a starting point. Some will matter to you,
some will not, and some will matter but
you will have no way to measure. All of
those factors have to come into play. It’s
okay to start small and simple.

18. ©2015 SeyfarthLean Consulting | 18
Outside Counsel Performance: Efficiency and Effectiveness
• Average cost of resolution by firm
• Total spend by firm (YOY)
• Compliance with Outside Counsel Guidelines (e.g. invoice bounce-backs)
• Actual spend vs. budget per matter (or matter type)
• Average blended rate by firm and by matter type
• Law firm ratings (surveys by inside legal team)
04 / metrics to consider
As consultants for law department
operations, we are often asked, “What
should I measure for my department?”
The answer is, “It depends.” (We know
that’s not the answer you’re looking for.)
We have pulled together our collective
experience and review of the research,
and have prepared an initial list to use as
a starting point. Some will matter to you,
some will not, and some will matter but
you will have no way to measure. All of
those factors have to come into play. It’s
okay to start small and simple.

19. ©2015 SeyfarthLean Consulting | 19
05 / our favorite links

20. ©2015 SeyfarthLean Consulting | 20
05 / our favorite links
Source Year Title
Kris Satkunas, Metro Corp Counsel 2015 The Mojo in Metrics: Validate Law Dept. Value by Adopting Right Metrics
Harrison Underwood InsideCounsel 2015 Key Performance Indicators, Part 1 & Part 2
Mike Haysley, Metro Corp Counsel 2014 I Don’t Know What You Should Be Measuring, but You Do
Cristina Tareta, Performance Magazine 2014 KPIs for Legal Departments
ALM 2014 Law Department Metrics Benchmarking Survey (full survey behind paywall)
Patrick Johnson, ACC 2013 Top 10 Metrics that Your Legal Department Should be Tracking
Catalyst Legal 2013 Performance Data for the Legal Department
Association of Corporate Counsel Europe 2012 Metrics and Concrete Measures to Demonstrate Increasing Tangible Legal Value
Law360 2012 Operationalizing Law Department Performance Metrics
ACC Value Challenge Toolkit 2009 How to Utilize Metrics

21. ABOUT THE AUTHOR
Sheri Palomaki is a SeyfarthLean Advisor at SeyfarthLean Consulting. In that
role, Sheri is an evangelist for the transformational power of process
improvement and project management in the delivery of legal services. She
works with Seyfarth Family legal teams and their clients to facilitate the
application of SeyfarthLean. In addition to her bachelor’s degree from the
University of North Carolina at Charlotte, Sheri earned an MBA from the
University of Maryland.
Follow her @sheripalomaki or contact her at spalomaki@seyfarth.com.
ACKNOWLEDGMENTS
Many thanks to Susan Hackett, past Senior Vice President and General
Counsel of the Association of Corporate Counsel, for her generosity in
providing experiential insights.
Visit Susan at http://www.legalexecutiveleadership.com/susan-hackett.
© 2015 SeyfarthLean Consulting. SeyfarthLean Consulting LLC is a subsidiary of Seyfarth
Shaw LLP. Seyfarth Consulting LLC and its employees do not provide legal services.
slc.seyfarth.com