Legal departments used to focus mainly on risk management. Your primary responsibilities were handling legal issues, ensuring compliance, and protecting the company from legal troubles.
As a result, you would spend most of your time:
- Reviewing contracts
- Managing litigation
- Ensuring regulatory compliance
- Handling internal investigations
While your role was critical, it was often seen as a cost center rather than a value driver.
Today, your role has evolved significantly. Legal departments are now strategic business partners. You help drive business goals and create value for the organization.
This shift is happening as more legal teams use contract analytics to gain insights into their processes. With this data, you can fix process bottlenecks and address potential issues before they become problems.
No longer seen as roadblocks, legal departments now contribute beyond compliance and litigation.
“It is vital for a GC to position and exhibit the team's work in terms of value or ROI. It is the language that your non-legal peers are used to. That usually comes down to numbers, charts, and graphs. You have to learn to speak their language.”
~ Sterling Miller, CEO & Senior Counsel, Hilgers Graben PLLC
Tomorrow’s Counsel, Today - Sterling Miller’s Guide to in-house growth
In this post, we will explore how to measure legal’s impact using contract analytics. We'll cover key performance indicators (KPIs) for legal departments, effective methods for measuring legal performance, and how to communicate legal’s value to stakeholders.
What is Contract Analytics?
Contract analytics is the process of using advanced technologies, including artificial intelligence (AI) and machine learning, to analyze and extract valuable data from legal contracts.
This helps legal departments and businesses gain insights into contract performance, risks, compliance, and other critical metrics.
Also read: Legal Analytics: Definition, Tools, and Applications
Why Contract Analytics is Important for Legal to Showcase its value
“Most C-suite executives bank on data and hard metrics and not word-of-mouth. When you have certain metrics that shed light on how legal teams have contributed to growing the revenue stream of the company, it becomes easier for the GC to make business cases.”
Gitanjali Pinto Faleiro, General Counsel, Company Secretary & CCO at Greenhill & Co.
The Counsel Corner: Navigating the C-Suite As a GC
Contract analytics helps you turn your legal department into a valuable partner for your business. Here’s how you can showcase that value:
#1 Show your worth with clear data
You can use contract analytics to track key metrics like contract cycle times and compliance rates. This data helps you prove your department's efficiency and effectiveness to executives.
Instead of just saying you’re doing a good job, you have hard numbers to back it up. This shifts the perception of your legal team from a cost center to a strategic partner.
#2 Spot risks before they become big problems
Contract analytics helps you identify potential legal risks early on. By analyzing contract terms, you can spot clauses that might cause issues down the line.
This proactive approach shows how you’re protecting the company’s interests every day, preventing problems before they escalate.
Also read: How to Use Contract Analytics Software to Uncover Insights
#3 Stay compliant without the hassle
Keeping up with changing regulations is challenging. Contract analytics helps you stay on top of compliance by continuously monitoring contracts and alerting you to any issues.
This ensures you maintain high compliance standards and avoid legal penalties, demonstrating your role in safeguarding the company’s reputation.
#4 Make smarter business decisions
Contract analytics provides insights into contract performance, helping you make informed decisions about negotiations and supplier relationships. By understanding past patterns and outcomes, you can align your choices with the company’s strategic goals, actively driving business growth.
#5 Work better with other teams
Using contract analytics fosters better communication and collaboration with other departments. The clear, data-driven insights you gain are easy for non-legal teams to understand, aligning your strategies with broader business goals. This shows that your legal department is an essential part of the company’s overall performance, not just a support function.
Also read: How to enable collaboration between legal and business
How to Communicate Legal’s Value to Stakeholders
Your business teams need to know that your team is not a cost center. And unclear communication and poor presentations will only push you further away.
“I built trust with quantitative, factual reporting to Finance, Strategy, and the CEO, as well as working hard and proving my value, while owning my seat at the table. Doing that requires an enormous amount of effort. It’s important to have a vision and go to your business leaders with the metrics showing how they align with the business strategy.”
David Lancelot, ex-VP Global Head of Legal, eBay Classifieds
Embracing Legal’s Role as Business Co-Leaders
To generate buy-in from stakeholders, present data that directly addresses their concerns and interests. Show how your legal department’s work supports the company’s strategic goals.
For instance, demonstrate how efficient contract management speeds up project timelines or how proactive risk mitigation protects the company from potential losses. When stakeholders see the direct benefits, they are more likely to support your initiatives.
Here are some ways you can do this:
#1 Speak the language of business with numbers and data
Using data to communicate legal’s value bridges the gap between legal and business teams. Data provides concrete evidence of your department’s impact, making it easier for non-legal stakeholders to understand and appreciate your contributions. Present clear, data-driven insights to ensure that your message is not just heard but also understood.
#2 Tell a compelling story
Transforming raw data into a compelling story is key to engaging stakeholders. Use the data to highlight how your legal team’s efforts have led to tangible benefits, such as reduced contract cycle times, improved compliance rates, or significant cost savings.
Narrate these achievements in a way that resonates with your audience, showing them the direct link between legal activities and business success.
#3 Proactively answer stakeholder questions with data transparency
Anticipate questions that stakeholders might have and prepare data-driven answers. Be transparent about your methods and results.
Provide detailed metrics and visual reports that make it easy for stakeholders to understand your findings. By addressing potential questions head-on, you build trust and credibility.
#4 Customize data presentations for stakeholders
Tailor your data presentations to meet the needs of different stakeholders. Filter data by date ranges, contract types, and users. Customize reports to highlight the most relevant metrics for each audience.
For example, executives might be interested in high-level summaries and strategic insights, while team leaders may need detailed operational data. Customizing presentations ensures that your audience receives the information they need to make informed decisions.
Also read: How Legal Teams Should Calculate and Showcase ROI
Key Performance Indicators (KPIs) for Legal Departments
Key Performance Indicators (KPIs) are your way of proving your worth to the rest of the business. They help you track progress, spot areas for improvement, and show just how much your team contributes to the company.
Essential KPIs to measure legal department value
“The one metric that I love is legal spend over time versus revenue. The spend may go up, but it won't go up nearly as fast as revenue. Finding a group of companies, getting the data on who works there, how much they spend on external counsel, lawyers per billion, etc., is a difficult task. But once you put that hard work in, you can show your legal leaders what your total legal spend versus revenue over time versus benchmarks was. That's the kind of thing that makes your CFO smile.”
~ David Lancelot, ex-VP Global Head of Legal, eBay Classifieds
Embracing Legal’s Role as Business Co-Leaders
#1 Contract cycle time
How long does it take for your team to get a contract from draft to final signature? That’s your contract cycle time.
Shorter cycle times mean you’re working efficiently and not holding up business operations. It’s a clear indicator of your ability to support the business quickly and effectively.
If you can shave days off this process, you not only make your business teams happy but also boost overall productivity.
#2 Contract value realization
This KPI is all about the financial benefits you bring in through your contracts. Are you negotiating better deals? Are you securing terms that lead to significant cost savings or increased revenue?
Tracking this helps us show that your work has a direct impact on the company’s bottom line.
#3 Risk mitigation metrics
Risk is everywhere, and part of your job is to manage it. you need to track how you'll identify, manage, and reduce risks. This could include the number of risks you’ve spotted and mitigated, or the overall impact of your risk management efforts.
By showcasing your proactive approach to handling risks, you prove that you’re essential in protecting the company from potential legal and financial troubles.
Also read: Effective Contract Risk Management: Top Tips & Strategies
#4 Compliance rates
Staying compliant with laws and regulations is a non-negotiable aspect of your job. High compliance rates mean you’re doing an excellent job at keeping the company on the right side of the law.
This not only helps avoid costly legal penalties but also maintains your company’s reputation. you need to be diligent in tracking this to show that you’re upholding the highest standards of legal compliance.
#5 Cost savings
Everyone loves saving money, and this KPI is all about demonstrating how you do that. Whether it’s by reducing external legal fees or improving your in-house processes, cost savings are a big deal.
This shows that you’re not just spending money but are also finding ways to be more cost-effective. Highlighting these savings helps us prove that you’re fiscally responsible and always looking for ways to optimize resources.
#6 Client satisfaction
Lastly, client satisfaction is a key measure of your success. This is about how your internal clients perceive the support and service you provide.
Gathering feedback through surveys or direct conversations helps us understand their needs better and improve your services. High client satisfaction scores indicate that you’re meeting or exceeding expectations, which is crucial for building strong, positive relationships within the company.
Also read: 6 Benefits of NPS for In-House Legal - SpotDraft
How to Track and Measure Legal Team KPIs
#1 Set clear objectives to define success
“The first thing is to make sure you delve deeper into the business and the product. And then understand the strategic initiatives for the business. What is the business trying to accomplish? What are their goals, objectives over the next two quarters, four quarters, or six quarters? You can then focus your efforts and energies on ensuring that you're helping move the company forward with those objectives and goals.”
~ Adam Glick, ex-Head of Legal, Intercom
Cultivating Meaningful Connections for In-House Legal Success
Start by setting clear objectives for each KPI. Define what success looks like for your legal department. For instance, decide the ideal contract cycle time or target compliance rate you want to achieve. Clear objectives will guide your tracking efforts and help you measure progress accurately.
#2 Use SpotDraft’s Contract Analytics to simplify tracking
Leverage SpotDraft’s contract analytics to track and measure KPIs efficiently.
SpotDraft Contract Analytics offers:
- four out-of-the-box dashboards with over 30 metrics, giving you a 360-degree view of your contract lifecycle, from approvals to turnaround times
- pre-built charts that provide visual and detailed insights, helping you track progress and make better contracting decisions
- powerful filtering capabilities that allow you to view data by date ranges, contract types, and users, making it easy to pinpoint and address improvements
“SpotDraft makes it easier to provide concrete proof instead of estimates.” ~ G2 Review
#3 Make data collection a daily habit
Ensure that you gather relevant data at regular intervals to keep your KPI measurements up-to-date. For example:
- Contract cycle time: Track the start and end dates of each contract process
- Compliance rates: Monitor adherence to regulatory requirements and internal policies continuously
SpotDraft Contract Analytics simplifies this by automating data collection and providing real-time updates on key metrics.
#4 Turn data into actionable insights
Once you have collected the data, analyze it to understand trends and patterns. Look for areas where you are performing well and where there is room for improvement.
- Contract value realization: Compare the financial benefits realized from contracts against set targets
- Risk mitigation metrics: Evaluate the frequency and severity of identified risks and how effectively they were mitigated
Also read: Contract Value: Everything You Need to Know
SpotDraft’s pre-built charts make this process straightforward, offering visual insights that are easy to interpret.
#5 Share your success with clear reports
Regularly report your findings to stakeholders. Create clear and concise reports that highlight key insights and progress towards objectives. Include visual aids like charts and graphs to make the data more accessible.
Don’t forget to share survey results and feedback from internal clients to highlight areas of success and opportunities for improvement.
Finally, schedule periodic reviews to discuss the results and make any necessary adjustments.
#6 Get the whole team on board
Ensure that your entire legal team understands the importance of KPIs and how to track them. Provide training on the tools and processes used for measurement. Encourage a culture of continuous improvement where everyone is committed to achieving the department’s goals.
Also read: Rethinking OKRs, KPIs, and Goals for In-House Legal Teams
The future of legal departments in a data-driven world
Contract analytics has become an indispensable tool for modern legal departments. It allows you to track key performance metrics, streamline processes, manage risks proactively, and demonstrate your value to stakeholders with concrete data.
To stay ahead in this data-driven world, start leveraging the power of contract analytics with SpotDraft. SpotDraft Contract Analytics offers robust dashboards, detailed metrics, and powerful filtering capabilities to give you a 360-degree view of your contract lifecycle. Demonstrate your department’s value, streamline your processes, and make better contracting decisions.
