Legal: KPIs
Turnaround, exposure and obligation-tracking measures, and why the volume of contracts reviewed is not among them.
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Legal is a function whose good outcome is an absence: the dispute that did not happen, the obligation that was not missed, the clause that was caught. Absences are hard to count, so these measure speed, coverage and known exposure instead.
The six that matter#
| Measure | Definition | Target | How it gets gamed |
|---|---|---|---|
| Contract turnaround | Received to returned | Under 3 working days | Returning it with questions to stop the clock |
| Standard-terms rate | Deals closed on our paper | Above 60% | Weakening our standard until everyone accepts it |
| Obligation tracking | Contractual commitments with an owner and a date | 100% | Tracking the contract but not what it obliges us to do |
| Renewal warning | Notice before an auto-renewal or expiry | 90 days | Discovering the renewal after it renews |
| Open exceptions | Accepted legal risks past their review date | Zero | Not setting review dates |
| Policy currency | Policies reviewed within their cycle | 100% | Reviewing by re-dating rather than re-reading |
Obligation tracking is the one that surprises companies. Signing is treated as the end of the process, but a contract is a list of things we now have to do, and most breaches are not disputes about interpretation. They are obligations nobody assigned to anybody.
Auto-renewal is the most avoidable cost here. A 90-day warning turns a renegotiation into a choice; finding out afterwards turns it into another year.
Two counter-metrics#
| Counter-metric | Catches |
|---|---|
| Deals delayed by legal review | Thoroughness that has become an obstacle. Legal being the reason a deal slipped is sometimes correct and always worth knowing |
| Contracts signed without review | The real process, not the policy. Above zero means review is too slow and people are routing around it |
Exposure register, monthly#
| Question | Bad answer |
|---|---|
| What are our largest uncapped liabilities? | "We would have to check" |
| Which contracts auto-renew within 90 days? | Any not already flagged |
| Which obligations have no owner? | Any |
| Which regulations changed that affect us? | Unknown |
What is deliberately not measured#
- Contracts reviewed. Volume, and largely automated now.
- Clauses negotiated. Rewards friction over outcome.
- Legal spend alone. Meaningful only against risk carried. Low spend with high exposure is not a saving, it is a deferred cost.
Cadence#
| Weekly | Contracts in flight, anything blocking a deal |
| Monthly | Exposure register, unowned obligations, 90-day renewals |
| Quarterly | Policy currency, open exceptions, regulatory change review |