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Key Performance Indicators

In the Survey, we identify a variety of different potential metrics in various categories. We expect that no law department collects or is in a position to collect data for every metric listed.

One focus of the Survey is therefore to help law departments narrow their data collection efforts by focusing on what are called “key performance indicators,” or KPIs, instead of a more detailed drill-down into the numerous supporting performance indicators and data points that can be measured. In this way, OLSI hopes to encourage the broadest level of response and, as such, to generate more helpful data for benchmarking purposes.

Defining an appropriate list of KPIs helps us avoid falling into the trap of collecting data or analyzing numbers simply for the sake of collection or analysis. A KPI would represent a measure of a particular law department’s performance on some scale or in respect of some specific area of performance or focus. Were a law department to renounce the use of outside counsel completely, for example, the number of outside firms retained or the amount of fees paid to outside lawyers would prove meaningless for that law department, whereas a means by which to measure the effectiveness of the exertions of in-house personnel would provide much more meaningful information for the leader of that department.

A Word About Measuring Quality

Defining consistent criteria for measuring quality in the execution of legal service delivery and departmental operational activities is a difficult task. OLSI has received feedback about concerns over including KPIs that would be subjective in nature. Accordingly, select KPIs have been included that in effect measure quality indirectly by measuring a more objective proxy for “quality.” For example, instead of a measure that directly goes to satisfaction ratings (which may not exist in areas like the proactive delivery of legal advice), we have normalized the KPI to measure the degree to which the department is meeting the client satisfaction targets it has set for itself in collaboration with its clients. This approach allows flexibility for its users while maintaining a degree of comparability. Since there is no distinct category for “quality” in the metric types, “quality”-focused metrics have been classified as process efficiency metrics, as these metrics really measure efficacy of the process.

Focus on Performance Metrics

Although one could choose relevant KPIs on any of several bases, OLSI is focusing on “performance-metrics” KPIs, that is, metrics that drive the desired increases in quality, productivity, and efficiency that law departments seek. The OLSI Survey therefore focuses on metrics that can be used to provide: (1) feedback to guide change, (2) assessment and baseline information, (3) a compelling business case, and/or (4) a diagnostic tool to identify areas for improvement and set priorities. There are four general types of performance metrics:

·   Cost effectiveness (e.g., $6.22 per invoice): these measures tell how well companies
    manage cost, including allocation of personnel resources.
·   Staff productivity (e.g., 93 invoices processed per FTE): these measures describe
    how much output each FTE has produced.
·   Process efficiency (e.g., 11.2 percent error rate): these measures provide insight into
    how well procedures and systems support the organization.
·   Cycle time (e.g., processing time of 3.8 days): these measures describe how long it
    takes to complete a task.
 
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