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Assessing the Impact of Your Digital Transformation: Key Metrics to Track


According to a 2020 Thomson Reuters report, 64% of Legal leaders identified "insufficient use of technology" as a risk factor for profitability, ranging from medium to high. Furthermore, 91% of these leaders have high expectations that technology is critical for company revenue by allowing them to optimize legal processes and cut expenses.

Yet, finding the right technology solutions should not be just a means to reduce legal costs — you need to seek a strategic partner in the vendor and their platform. This approach implies evaluating software performance and the partnership similar to how you would assess your team member's efficiency. 

Not only should the vendor view your pains as their own — they need to work with you to collect the data and the metrics that will quantify and communicate the performance of the technology. 

Key legal metrics that your team should take into account

Integrating legal tech solutions within Legal can revolutionize how lawyers operate. By effectively assessing the impact and value of using technologies as applied to your operations, you can measure the ROI of implementation, optimize the use, and drive meaningful outcomes for your organization. Here are the most critical legal KPIs to evaluate your digital transformation efforts' direct and indirect value.

Economic Value Generated by the Legal Department

Legal departments play a crucial role in saving corporate funds. From managing intellectual property portfolios to handling compliance programs and offering legal advice - their work has significant indirect economic value. While the economic impact may vary across different business sectors, it's essential to recognize that legal departments can help a company avoid substantial expenses.

You can measure the economic value of the legal department by quantifying the volume and outcome of legal matters. For example, you can add up the number of contracts completed, the total revenue they bring into your company, and the financial risks or fines you thwarted.

Projected vs. actual expenses

Companies make cost projections based on past expenses. Actual costs are determined after the budget has been spent. You can measure the impact of your new processes by tracking your expenses. You can also use the metrics to ensure your digital transformation is within budget. 

Determine the actual and projected expenses ratio by dividing the former by the latter.

Legal talent retention

Talent retention should be a top priority for any department long before you start noticing any red flags. As your company wants to be competitive in the market, so does your team want to be edgy both as professionals and as a department. A large portion of professional growth is attributed to learning new technology and innovating operations, as technology helps your team become better strategic experts. 

To assess your retention data, ask key questions such as the current number of employees in your legal department, the frequency of position or role changes, the number of employees lost in the past 6-12 months, and the addition of new hires in the same period.

If you are unsure of the answers, it's a sign that data management should be improved to track talent retention effectively. Maintain records of employees' educational background, experience, NPS, positive outcomes, and sentiment towards the department's digital initiatives, and incorporate peer reviews into your department's tasks.

The Ratio of High-Value vs. Low-Value Work

Boost the efficiency of your legal department by evaluating the time spent on low-value, low-risk tasks. Identify opportunities to automate these tasks using specialized software, freeing your specialists to focus on strategic and critical work. 

For instance, if you delegate routine day-to-day contracting work to a CLM software, the ratio of this metric will demonstrate greater efficiency, which, in turn, will signal that your innovation tactics are working towards the company's growth goals.

Legal Workload

Optimizing legal workflows allows business teams to only turn to Legal for review and quality control. This approach makes Legal departments responsible for putting the finishing touches to stay on top of risks and compliance, which saves their time.

Frequent requests for legal assistance and greater-than-usual attention required by business units signal serious workflow flaws. To address these requests, senior management usually goes down one of three primary paths:

  • Onboarding new hires to tackle the workload.
  • Assigning more work to the existing team members.
  • Implementing technology to safely delegate more to business units.

One of the ways you can measure legal workload is by adding up the hours the lawyers are clocking in and tracking the time spent on each task. This tactic is the simplest way to compare the Before and After of implementing software to validate your technology investments. 

Another tactic comes from the project management domain: you can calculate the aggregate score of the legal workload per person and department. This approach requires:

  1. Documenting each task and incoming request. 
  2. Selecting a score range that would represent the work's complexity/risks involved/time needed for execution/resources required. The score range can be adjusted to match your task breakdown and help you see a compelling picture (some teams use simple 1-5 rankings, while others go as far as Fibonacci numbers)
  3. Assigning each task a corresponding score. 
  4. Assigning the task to the person responsible for the execution. 
  5. Summing up the overall score per person/team per a specific period. 

Using this tactic helps you better manage the workload and identify patterns that call for attention. 

Cost of Outside Legal Advice

Hiring external counsel is the go-to approach when dealing with high-risk matters when your team needs more in-depth expertise or the legal workload overwhelms your in-house department. 

Yet apart from finding a company that matches your expected level of expertise and selecting the best-qualified specialists, the cost of outside counsel services is the primary driver in final decision-making. Typically, niche boutiques offer more excellent value from in-depth experience, yet at a higher price than full-service companies offering cross-practice service. 

From day one, measuring time and expenses spent on external advisors can help management decide if hiring new specialists in-house is more rational or continuing with external assistance. Suppose the services of an internal lawyer dramatically increase your legal spend as opposed to the costs of on-call external legal aid. In that case, this gives you enough data to prove that outside counsel is necessary. 

As outsourced specialists, you can grant external counsel access to your legal technology to manage high-risk tasks and administrative work. When your automation efforts start demonstrating time- and cost-savings for in-house teams, they should equally impact the cost of outside services, generating results within less billable time.

Measuring KPIs for implemented technology (exemplified by CLM software)

Implementing software opens up a goldmine of data--yet there is no one-size-fits-all handbook that lists all the metrics you need to track to define if your legal tech (and CLM) software is effective. Its performance should be evaluated against the:  

  1. Goals you set (e.g., "We need to delegate managing NDAs to business teams without increasing risks")
  2. North star metric you are working towards (e.g., saving costs)
  3. Hypotheses you set before implementing technology (e.g., "If we launch CLM software, our in-house lawyers will have to review only 2-5% of the NDAs generated by other units"). 

And as the ROI of any software or activity is mathematical, the metrics you track to evaluate tech performance should also be quantitative. At the same time, not all metrics and KPIs can make a difference.

Some metrics are called "vanity metrics" because they give you nothing but a falsely inflated view of a company's growth or potential. This data isn't necessarily useless, but it can stir you away from the metrics that demonstrate the change in performance.

If, for example, you were looking to outsource NDAs to business units, you might be tempted to track the overall number of NDAs generated through the software. But if your north star metric is saving costs, this data would not help you decide if the software you are using is right, as this number doesn't show you which team member generated the contract, how long it took them, and whether legal had to review it. 

Yet, while specific performance metrics are unique, a few high-level indicators of software service quality may not be apparent at the buying stage but have a massive impact on your experience as you start using it. 

Game-changing Key Performance Indicators for Any CLM Software

As you enter a partnership with a software vendor, you can expect them to work with you to gather and analyze the data you need to justify your investment. After all, the vendor should be your most trusted ally in helping you see the uplift in your operations. So we've outlined a list of KPIs that help you assess the performance of your CLM software: 

  1. Team sentiment score. Software is meant to be used and is expected to improve your team's daily operations. For it to be fully efficient, you need to ensure the team (1) understands the benefits of using the tech and (2) their sentiment reflects the vendor's claims. Run a short survey evaluating your team's experience with software: ask them basic rating scale questions, or prepare a sentiment matrix if you need a clearer picture. 
  2. Vendor team response time. From the day you start implementation, you will have questions, changes, and custom requests, especially if you choose to phase the onboarding to start seeing value sooner. As you progress, more of your requests will be linked to specific time-sensitive tasks, so the vendor should be set to process them when you need help instead of queueing them up. Having a dedicated Customer Success manager and analyzing how quickly and professionally they respond to you foreshadows your client and user experience with CLM software (and any other legal tech). 
  3. Frequency of software updates. As your business matures, your operations scale, and your needs and expectations evolve--the software you use should also keep improving. Stay on top of the update history: how often are new versions or updates issued? How quickly does the vendor process your custom requests? Do the changes made inside the CLM system ease your operations and set you off for a self-functioning contract ecosystem or take you back a few steps? If the software cannot accommodate your scaling requests, it might be time to sunset it. 
  4. Task-related risk score. Contract- or matter-related risk score is a metric that should go down as you implement technology, as it directly communicates its efficiency. Identify and keep track of risks and threats within your target area, and measure the 'before' and 'after' scores related to software implementation to determine the technology's role in mitigating them. 
  5. Task progression velocity. Measure how long the specific task takes to move across its lifecycle. While the human factor can blur this metric, you should be able to see measurable software-related increases in the velocity. Working with contract lifecycle management, you need to (1) define all the stages your contracts go through, (2) have a ballpark figure for how long it takes for your contract to progress from one stage to the other, (3) and measure the change across those stages directly affected by CLM software. 
  6. Time saved. The innovation aims to optimize your operations to save time, reduce legal costs, and eradicate non-value-add work to make your team more productive and effective. Your vendor should assist you in calculating exactly how much time the software helps you save and what is the monetary value attached to these savings. Whether it's contract automation, e-billing, or any other legal technology, savings data should be available to ensure long-term benefits outweigh the short-term investment of cost and resources. 

Keeping track of your contract management software performance is vital as it helps you understand how you benefit from it, whether it's simplifying processes, boosting your team performance, saving time, or maybe the software is failing you.

A simple means to understand if your software is performing well

With time, it is easy to grow so connected to the technology we use daily that it becomes hard to evaluate software performance without emotional bias. 

For that, we prepared a contract management risk scorecard that empowers you to understand software efficiency better and determine whether it is time to sunset your tech and move on to a new provider. With its help, you can assess risks and their severity and fine-tune your risk management and innovation strategies to account for software-related liabilities.


Effectively measuring your digital performance is essential for the success of your legal department. By leveraging technology and implementing legal tech solutions, you can optimize processes, cut costs, and drive meaningful outcomes for your organization. 

Tracking the performance of your software through relevant KPIs helps assess its efficiency and value. ContractWorks contract management offers a solution that will help you streamline contract management processes, enhance efficiency, and reduce costs. 

It also helps businesses track performance in several ways. CLM software can help companies to identify areas to improve their efficiency and compliance by providing real-time visibility into contract data. Additionally, CLM software can generate reports and analytics that can be used to track performance over time.

Book our free demo to experience the advantages of simplified workflows and better data visibility.

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