Innovation isn’t a side project

A key performance indicator (KPI) exists for one reason: to focus people, time, and budget on the few priorities that will make a meaningful difference to the organisation and to the clients of the legal function.

Early performance plans for legal teams often emphasised service levels and satisfaction - important foundations, and similar to what you might expect in a law firm setting.

As legal operating models matured, many departments introduced KPIs tied more directly to corporate targets. These could include contributions to priority projects, tighter control of external counsel spend, and developing the capabilities of senior team members. Innovation was usually present, but it lived inside other objectives: efficiency, cost reduction, technology, knowledge transfer, and process improvements.

That embedded approach helps, but it can also dilute accountability. If innovation is always ‘inside’ other KPIs, it is easy for it to be postponed when the urgent takes over. A stand-alone innovation KPI solves that problem. It forces the leadership team and the wider department to talk about innovation explicitly, choose initiatives that will matter to the business, and then invest the resources required to deliver them.

Innovation targets work best when they point to a small set of practical categories. Below are five themes that tend to produce real value when a legal team treats innovation as a performance objective:

• Rebalance capacity toward priority projects. Shift a portion of legal effort away from routine operational support and toward developmental or corporate initiatives that leadership considers critical.
• Build business-unit self-sufficiency. Combine training, templates, playbooks, and lightweight systems so teams can handle straightforward issues themselves. Pair that with a more targeted approach to contract reviews. Done well, this can free up a meaningful amount of capacity.
• Change how external counsel is paid. Where it fits, move away from hourly billing and toward fee models that reward outcomes and performance rather than time spent.
• Keep the work interesting. Design the operating model so lawyers and legal professionals spend most of their time on problems that require judgment and skill, not on repetitive, low-value tasks.
• Develop ‘beyond-legal’ capabilities. Invest in leadership, business negotiation, and project management so the team’s influence grows over time and legal is not seen as ‘strictly legal’ in its contribution.

Innovation fosters creativity, but it also requires discipline: selecting initiatives, sequencing work, and delivering results rather than staying in the idea stage. The outcome is often.

It is also more engaging than the alternatives. Working faster, working longer, or negotiating deeper discounts can improve short-term metrics, but they rarely improve the way legal supports the business. Innovation tends to energise teams because it creates better outcomes and better work.

To keep an innovation KPI from becoming a slogan, connect it to a simple operating rhythm:

1. Define what ‘innovation’ means for your department (adopt, improve, or redesign).
2. Create a small pipeline of initiatives and prioritise them against corporate goals.
3. Assign an owner, budget, and timeline to each initiative - and protect that time.
4. Review progress regularly and retire initiatives that are not delivering value.
5. Celebrate outcomes that help the business, not just internal efficiency wins.