Top 10 metrics your legal department should be tracking
Unlike other business departments, legal departments have traditionally not busied themselves with tracking graphs, charts, and metrics on their department’s performance This has been changing in recent years as the complexity of running a legal department and the scrutiny legal departments are under from the executive level have increased. The question then becomes, what metrics are the most valuable to manage a legal department and show its value to stakeholders in the company? The following list provides a starting point of metrics legal departments should be tracking.
1. Spend to budget
This metric—indeed, most of the metrics on this list—pre-supposes that a more basic metric, overall legal spend, is being tracked. Tracking budgets is one of the most effective ways to predict and control costs for legal departments. A department cannot determine if expectations have been met if there are not budgets to benchmark the spend against, period. Budgets control costs because law firms know that their spend is being tracked, and if they exceed their budgets, they will need to explain why. Tracking budgets and spend over time also provides benchmarks as to what certain types of matters should cost so the legal department can set its own budget on matters based on how much they cost in the past.
In addition to tracking budget for matters, tracking budgets per law firm is also a useful tool for measuring a law firm’s ability to accurately estimate budgets. This allows the legal department to stay on top of the firms that are not keeping to their budget (whether under or over budget) so that spending will be as predictable as possible and surprises will be minimized.
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