5 key metrics every in-house team should track

Ever feel like your in-house legal team is operating in the dark? With so many matters and different departments with competing priorities, it's tough to keep an eye on legal spend. But what if there was a way to shine a light on your operations with a live view of resource allocation and expenses?

The secret lies in tracking the right metrics—and doing so in real time. You can proactively optimise your spending and increase efficiency by measuring the areas that truly matter.

But we know what you're thinking. Gathering data feels overwhelming—never mind choosing the right metrics. That's why in this blog, we'll share tips on collecting insightful data. Plus, we'll break down the key performance indicators every corporate legal team needs to follow. Combined, the two make it clear what’s happening with legal spend.

For ease, we’ve split this into three steps. Let’s get to it.

Step 1. Gathering the data you need

While the legal world has traditionally been rooted in precedent and experience, the most innovative teams are embracing a data-driven approach to legal spend management. By capturing and analyzing the right metrics, you can unlock insights that optimize your processes, allocate resources effectively, and quantify your impact in a language that resonates with business leaders.

But before you can reap the benefits of data-driven legal spend management, you need to lay a solid foundation. And that starts with gathering accurate, comprehensive data.

Set up data collection systems 📥

Start by selecting legal spend management software that seamlessly integrates with your existing systems, eliminating the headache of juggling multiple platforms. Look for solutions that automate data capture wherever possible, reducing the risk of manual errors and ensuring consistency across the board. The best legal spend management software collects and collates data on the work in progress so actions can be taken as the work takes place–leading to a better experience for all.

Working with Finance and IT 🔀

Using data effectively is a team effort. Here’s why these team collaborations are key:

• IT: Ensures your legal spend management software is properly integrated with other business systems like accounts payable. This integration creates a harmonious data flow, enhancing the accuracy and availability of your information.

• Finance: Ensures your data aligns with broader financial reporting and compliance standards. This helps with more strategic budgeting and forecasting.

   

Regular data audits 🔍

Insights depend on quality data so, it goes without saying, you need to maintain the integrity of your data. That's why regular audits are a must. Schedule these check-ins at consistent intervals—monthly, quarterly, or annually—to review the accuracy and completeness of your data. Use these opportunities to verify that your data collection systems are running smoothly and to correct any discrepancies that may have crept in.

To sum up: Follow these steps and you'll have accurate, trustworthy data to base decisions on. This data-driven approach will help you manage legal spending more strategically. But the real benefit is that it will show your legal team plays a vital role in the overall success of the company.

Step 2. Tracking key metrics every legal team should monitor

With legal spend management, knowledge is power. And that power comes from tracking the right metrics. Here’s why:

Total legal spend ➕

By monitoring total legal expenditures, you can streamline budget management, enhance budget accuracy, and assess if your law firms provide accurate estimations. Identifying trends, preparing for future costs, and justifying budget allocations to senior management are essential. This metric serves as a crucial benchmark for assessing the efficiency of legal operations and empowers teams to make data-driven decisions that directly impact the bottom line.

Spend by practice area and matter type 💸

Where is your money going, and why? This KPI breaks down legal spend into detailed categories, providing a detailed view of resource allocation. With this level of insight, you can pinpoint high-cost areas, identify cost-saving opportunities, and make informed decisions on where to focus your team's efforts.

Additionally, it enables comparison of law firms on similar pieces of work, ensuring you balance cost and expertise for optimal results. It also highlights areas that may require more attention or adjustment, facilitating more strategic planning and efficient use of legal resources.

External counsel spend efficiency 📈

Outsourcing legal work is a common practice, but are you getting your money's worth? This metric evaluates the return on investment (ROI) of external counsel expenditure, ensuring that every pound or dollar spent delivers maximum value. By analyzing this efficiency, you can determine when to keep work in-house versus when to outsource, striking the perfect balance between cost and expertise.

It also assesses the appropriateness of 'gearing'—making sure the right fee earners are working on your matters to ensure you are getting the expertise you paid for. It's a win-win for your team and the business.

Cycle time for legal matters 🔁

Time is money, and this KPI helps you optimize both. By tracking the duration of legal matters, you can identify bottlenecks, streamline workflows, and reduce costs associated with prolonged legal activities. Shorter cycle times mean faster resolutions, increased efficiency, and a leaner bottom line. It's the ultimate productivity hack for your legal team.

Matter outcome versus spend ⚖

At the end of the day, it's all about results. This KPI evaluates the relationship between legal matter outcomes and the resources allocated, ensuring that your investments yield proportional benefits. By tracking this metric, you can enhance accountability, optimize future resource allocation, and demonstrate your team's ability to deliver successful outcomes while maximizing efficiency. It's the ultimate proof of the value you add.

To sum up: With these key metrics, you'll unlock data-driven insights that accelerate your legal team to new levels of operational excellence and strategic impact.

This next section gets exciting. Let’s now look at best practices that take these numbers and create visuals that show the true impact–and in real-time.

Step 3. Create reports that demonstrate the value of the legal team

The ability to take raw data and share a visual for performance is how leading legal teams work now. In an instant, they can share where there are bottlenecks, cash flow at this very moment, and even share predicted spend. This sounds great, right? Well, there are key things you need to achieve this:

Choose the right tools ⚒

Choose wisely by opting for solutions that seamlessly integrate with your legal operations platform and enhance your ability to produce insightful, data-driven reports. Look for features like real-time data processing, user-friendly interfaces, and customizable dashboards that allow you to paint a vivid picture of your team's impact.

Advanced legal spend management software—like Apperio—offers robust functionality that can handle complex datasets and generate clear, actionable reports. These tools should facilitate seamless integration with other business systems, ensuring that your reports provide a comprehensive view of the legal team's impact.

Use report templates and visualizations 🗺

Let's face it—no one wants to sift through walls of text and endless spreadsheets. The secret to captivating your audience lies in the art of visualization. So:

• Leverage templates that organize information logically and highlight critical metrics like total legal spend, matter outcomes, and cycle times.
• Visual aids like charts, graphs, and heat maps can help illustrate trends and comparisons more effectively than text-heavy documents ever could.
• When designing reports, prioritize clarity and simplicity to ensure they are accessible to all stakeholders, regardless of their familiarity with legal details.

And focus on visualizations that convey the strategic value of the legal department, such as cost savings, efficiency improvements, and successful matter resolutions. These visual narratives will resonate with business leaders and demonstrate your team's impact in a language they understand.

Frequency and distribution of reports 📊

Consistency is key when it comes to demonstrating the ongoing value of your legal team. Develop a reporting schedule that aligns with key business cycles and decision-making timelines, typically on a monthly or quarterly basis. Ensure these reports reach all relevant stakeholders, including senior management, the finance department, and other business units.

Tailor the depth and focus of each report to the interests and needs of its audience to maximize its impact and usefulness. Additionally, consider hosting regular review meetings to discuss these reports, offering a platform for feedback and fostering a deeper understanding of the legal team's contributions.

To sum up: By maintaining transparency and effectively communicating your team's successes, you'll solidify your position as a trusted advisor and strategic partner within the organization.

Data-driven insights: A legal team's roadmap to gaining that seat at the table

Today, the legal teams that thrive are the ones that embrace the power of metrics and insights. By following the roadmap outlined in this article, you've equipped yourself with the tools to take your legal operations from a cost center to an asset—one that has to be at the board table.

At the core lies accurate, comprehensive data from streamlined collection systems and cross-functional collaboration. But the true differentiator is translating metrics into compelling narratives that resonate across the organization through cutting-edge reporting tools and visualizations.

By meticulously tracking and reporting on these key metrics, you showcase your proactive management and deep understanding of how legal intricacies directly impact the broader business goals. This not only helps in making informed decisions but also strengthens your reputation as an essential leader.

The path to data-powered legal excellence starts here. Dive straight in and book a demo of our legal spend management software.