At a recent event a GC of a top 100 FTSE company asked the question: why shouldn’t law firms and other suppliers of legal services be tied to KPIs/SLAs in their engagements? It is a question which GCs are increasingly asking as they look at how to service their legal needs. 

According to a  study which we carried out as part of the GC Excellence Report, GCs are under pressure to provide more for less and justify their decisions to the board. However, traditionally, measuring the output of a legal department has been difficult with Key Performance Indicators (KPIs) not prevelant in the legal in-house market. It is, of course, common for most large businesses to expect their suppliers to be tied to SLAs and KPIs in the contracts which regulate delivery of their services. The success or failure of the engagement is often measured against these KPIs and SLAs.

So, why shouldn’t the same basic principles apply to the delivery of legal services – and why are so many lawyers reluctant to embrace these performance measures?  And could  we see more and more GCs expecting law firms to adhere to KPIs/SLAs – as the next step in the change in the “balance of power” between GCs and law firms? 

It’s clear that the trend towards having KPIs and SLAs in engagements for the supply of legal services is now common in the LPO and LSO space.As a supplier of legal support services, we are seeing SLAs being adopted in the majority of our key engagements with large international businesses. In fact, if the customer and the supplier sit down to discuss and pre-agree parameters of success and failure of engagements,  such an agreement brings clarity and transparency to the engagement – and that can only be good for both parties.  As a supplier, we know exactly what and how we are expected to deliver our services and the customer knows exactly what to expect from us.

So it certainly looks like this change towards adopting KPIs/SLAs in relation to the delivery of legal services is being accepted by alternate legal services providers in the UK, such as LPOs.  It remains to be seen whether GCs can convince their preferred law firms to adopt a similar approach towards their engagements.

Robert Glennie is executive director of NewGalexy Services. Download The GC Excellence Survey here.