How tech companies measure ‘legal’

In a working environment obsessed with metrics dashboards, key performance indicators, and objectives and key results, the legal function presents an elusive target. Compared to sales, marketing and product, “legal” in a growing tech company can seem an inaccessible alchemy of risk, contracting and policy.

But interviews with general counsels at tech companies and a survey conducted by TechGC — a private community of top lawyers at technology companies across the United States — reveal how innovative in-house attorneys measure both productivity and quality and position their teams as central to advancing enterprise-wide goals.

The Status Quo

Legal lags behind other departments in the metrics game. While more than three-quarters of general counsels surveyed said their companies collected regular, department-specific metrics, only 29% indicated that the metrics regime extended to the legal department.

Many point to the unpredictable and reactive nature of a GC’s work as a key barrier to collecting informative metrics. As Sarah Feingold, former general counsel at Etsy and Vroom, explains, “if there’s a dispute or there’s an employment issue, everything else drops.” Absent an established operating history against which to measure, it can be hard to identify trends and put those disputes in context. “I could say, ‘oh we didn’t get sued this quarter,’ but that’s not necessarily so indicative of my performance as the general counsel,” adds Katherine Hooker, Head of Legal at Greenhouse.

Productivity & Quality

Faced with these challenges, many general counsels first turn to a “goal cadence” — a set of time-bound, objectively measurable goals against which to report progress. Goal Cadences come in many forms including “Objectives and Key Results [OKRs],” “Management by Objective [MBOs],” and “Goals/Signals/Metrics [GSMs].”

“At the beginning of the planning period, I map out key projects — closing a financing, data security audits, updating TOS and privacy policies — and lay those out across the period. Then it’s simply: did I finish projects on time yes or no,” says David Pashman, former GC at Meetup and current GC at JW Player. More than 40% of GCs surveyed collect OKRs or something similar (the second-most commonly collected metric after legal spend [74%]).

Measuring outputs and productivity has its rewards, as Colin Sullivan, head of legal at Patreon explains. “When you measure, there are two purposes: one is to improve and the other is to demonstrate the value you are providing to the company.”  Many GCs stressed the power of metrics collection and presentation as key in characterizing how the company at large viewed the legal department.

But over-reliance on OKRs risks treating productivity as a proxy for quality, which can be more challenging to pin down. A full 45% of GC’s characterized the method they use to judge the performance of their own direct reports as “kind of a Potter Stuart Thing (‘I know it when I see it’),” a phrase famously used by Supreme Court Justice Potter Stuart to characterize hardcore pornography in Jacobellis v. Ohio. 

To to penetrate the qualitative side, GCs turn primarily to flash surveys of internal clients (e.g. the sales team) and to “360 reviews” — recurring professional feedback from both direct reports, lateral colleagues and managers. Regular reviews offer minimal disruption and a cost-effective method for generating metrics that can be compared over time to illustrate trends. As Ben Alden, GC at Betterment assesses it, 360 reviews offer an efficiency play. “A fully-scoped procurement process could include metrics on speed, cost and comparisons against benchmarked best practices. But that takes a lot of overhead to set up; versus a solid 360 review process makes sure that people are performing at their best and is ready out of the box.”

Version 2.0

More sophisticated metrics regimes yield more granular measures. In addition to core financial metrics like spend on outside counsel and performance against budget and spend as a percentage of overall operating expense, general counsels focus on tracking items like deal terms and risk exposure.

When it comes to managing individual matters, those who started by tracking the throughput and time-to-close of customer and vendor contracts graduate to data on trends in the frequency of agreement to particular contract terms like termination for convenience or particular indemnities. “Top line revenue doesn’t tell you if it’s a good deal,” observes Amit Khanna, GC at Knotel. “We use a contract administration software, and we’ve got it set up to let us know if we’re giving a particular term away 7 of 10 times.”

Similarly, those tracking trainings delivered or counting litigation and human resources “events” eventually extend their efforts to composite risk-exposure scores. As Tim Hirsch, GC at CaaStle summarizes it, “I record what we do, and how it worked out. Everything has a spend and a reputation axes.”

Branding Reality

Even as sophistication increases, metrics can be informative, but not necessarily actionable. As Ben Singer, former GC at Blue Apron and current head of legal at Procore puts it, “I want to come up with some other tool — a better tool and I don’t know what that is yet — that would allow us to make decisions based on responsiveness, accessibility, ability to meet deadlines, commerciality, ownership, ability to operate independently, collegiality.”

Liza Haskell, former GC at Gusto and current GC at Tide, has attempted to build the first part of that tool by defining for her team a set of target behaviors, mindsets and skills applicable at each of three professional levels. Attributes like service orientation, conflict resolution, execution and expertise provide a foundation for regular feedback reviews and allow her to draw an explicit link back to company-wide values.

At Knotel, Khanna presents a 20-some odd page deck each quarter, proactively couching all legal metrics in the context of company-wide values of speed, scale, quality, and consistency. Doing so helps protect against a tendency to pigeonhole the legal function. As Pashman summarizes it, “it is important to me that I’m not just the guy who reviews the contracts and makes sure we don’t get sued. I want management to see legal as a strategic partner to drive revenue and not just as a cost center or compliance function.”

Daniel Doktori is the Chief of Staff & General Counsel at Credly.