Strategy is proactive. We don’t take what comes to us. We create the opportunities we want. How do we see what moves to make, where to put resources, and where to defend? With key performance indicators, measurable values that tell us if we’re making progress toward a specific goal.
Great businesses usually have dashboards full of KPIs showing what’s working and where to focus. But one thing is usually missing: anything that tells us whether we have a legal strategy and whether it’s working.
Last month, we took on the most common answer business owners give when asked how their legal strategy is performing:
“Well… nobody’s sued us.”
That’s great, but it’s luck, not strategy. The numbers that matter most are leading indicators- the ones that move while you can still change the outcome. We then pair those with lagging indicators to see how things are going and whether the leading indicators predict what we want them to.
Building a Legal Risk Dashboard
But knowing you need a dashboard isn’t the same as knowing what goes on it. Your finance team has decades of standard metrics built into every accounting system. Legal strategy doesn’t come with a ready-made dashboard. So today, we’re going to build one.
The legal key performance indicators below aren’t an exhaustive list. Think of them as a menu. Pick the handful that match your goals, then run each one through the leading-or-lagging test before you commit.
Customers and Contracts
Customer Complaints and Online Reviews (Leading)
Complaints and Google reviews point straight at the gaps between what you’re providing and what your customers expected to receive. You might expect these to be lagging. But a complaint or a one-star review isn’t a legal matter yet. Most problems at this stage can be resolved quickly and cheaply. Therefore, they’re leading indicators of the disputes that come later if nobody’s listening. Track the volume, and more importantly, the themes. Five complaints about the same delivery term show a contract problem wearing a customer service costume.
Negotiations Over Your Standard Agreement (Leading)
This is about the legal terms, not deal points like price or scope. A handful of clients who take forever doesn’t mean anything. Some people are just difficult. But the trend tells a story. You can measure it in hours, or count the changes clients request and note where they land. Maybe last year’s redlines clustered in one section, and this year’s are everywhere.
If either number is going up, that means something. Maybe your agreement is out of step with what’s become market. Maybe economic conditions changed, and risks your clients could once absorb are risks they can no longer bear. Either way, the time to fix your template is before potential customers decide to go elsewhere.
A close companion is the percentage of deals signed on your paper. Whoever drafts the contract sets the starting point. On your agreement, you negotiate from terms designed for your business model. On theirs, you’re playing defense against terms written to protect them. A shrinking share says a lot about your leverage, the risks you’re taking on, and your business model.
Contract Renewal Rate (Lagging)
Keeping clients longer is great. If people are renewing and churn is falling, something is working. But notice when this number moves: after the client has already decided. A renewal is a verdict on the relationship you’ve already delivered. So treat renewal rate as the scoreboard, and pair it with a leading signal, like the terms clients ask for at renewal. If clients who used to sign for three years now want one-year terms or easier exits, you’re seeing the next churn number before it arrives.
Days to Get Paid (Leading)
Slow payment often points to a contract problem. Vague payment terms, no deposit requirements, no late fees, and no clear right to pause work all make it easy for customers to pay you last. A rising number here means the customer relationship is quietly weakening. Therefore, it gives you time to tighten your payment terms before a slow payer becomes a demand letter.
Key Contract Dates Calendared vs. Missed (Both)
This one teaches the whole leading-versus-lagging lesson. Every contract hides deadlines: renewal notice windows, price-adjustment dates, option periods, termination notice requirements. Count the deadlines you missed last year, and you have a lagging indicator. The auto-renewal you meant to cancel already renewed. But count the percentage of your active contracts with every key date on a calendar and an owner assigned, and you have a leading indicator. Same subject, different question, completely different ability to act.
Your People
Employee Training Completed (Leading)
Training sessions completed and hours invested in professional development point toward a more capable workforce. A team that knows how to handle a difficult customer, spot a safety issue, or follow your approval process creates fewer problems to clean up later. This one pairs well with a lagging indicator like employee-related incidents, so you can confirm the training is doing its job.
Workers With Signed Agreements (Leading)
What percentage of your employees and contractors have a signed offer letter or contractor agreement? What about confidentiality and IP assignment terms? In many growing businesses, the answer depends on when someone was hired. Early team members have handshakes. Later hires have paperwork. That patchwork works right up until a key employee leaves for a competitor, taking knowledge and clients with them. Therefore, measure your coverage now, while the gap costs a signature instead of a lawsuit.
NOTE: Not every employee needs an agreement. For many, an offer letter and employment at will work. Our focus here is your key personnel who develop or have access to critical items.
Internal Employee Concerns Raised and Resolved (Leading)
When an employee raises a concern internally, it feels like a problem. But it’s actually an opportunity, because the alternative is that they raise it with a state agency or an attorney first. Track how many concerns come in, how fast they’re resolved, and whether you have a consistent process for handling them. A sudden drop isn’t always good news, either. People may have stopped believing that speaking up does anything.
Headcount and Location Milestones (Leading)
Employment law doesn’t treat a 12-person company and a 60-person company the same way. Under federal law, major new obligations kick in at 15, 20, and 50 employees, and many state laws start even lower. Location matters too. Hire one remote employee in a new state, and that state’s wage, leave, and payroll rules may now apply to you. So track headcount and the states your people work in, and know which thresholds sit just ahead. Crossing one isn’t a problem. Crossing one without noticing is.
Compliance, Governance, and Brand
Fines, Penalties, and Late Fees (Lagging)
Add up what you paid last year in late filing fees, tax penalties, license reinstatement fees, and regulatory fines. Every dollar is a lagging indicator because the deadline already passed. The amounts rarely hurt on their own. But they’re a symptom that nobody owns the compliance calendar. Pair this with a leading number: the percentage of your annual reports, licenses, permits, and filings with a due date calendared and a person assigned. A late fee is the cheapest version of this problem. A lapsed license or an administratively dissolved company is not.
Major Decisions Documented in Writing (Leading)
This one is for businesses with more than one owner. How many significant decisions this year (a big hire, a new location, a distribution to owners, a loan) were documented with a written consent or meeting minutes? When owners are aligned, documentation feels like busywork. But undocumented decisions are exactly what owners argue about later, and what a lender, investor, or buyer will ask to see. If this percentage is low, your governance is running on memory. Memory is a terrible witness. And aren’t you in luck! We wrote a blog about how to make keeping meeting minutes easy. [link to https://waylaw.com/ink-insight-using-meeting-minutes-to-add-value/]
Brand Assets Protected (Leading)
List the names, logos, and taglines your business actively uses. Now count how many are registered trademarks. The gap between those two numbers is brand value you’ve invested in but don’t fully own. It feels harmless until you expand into a new market, license the brand, or face a buyer asking what intellectual property they’re actually acquiring. Closing that gap before any of those moments is cheap. Closing it during one is not.
Getting and Using Legal Advice
Contracts are easy to recognize as legal. The need for advice is harder to spot, because it rarely announces itself. These metrics show whether you’re getting legal input while it can still make a difference, and whether you use it.
Legal Questions You’re Searching and Prompting (Leading)
Here’s a metric you’re already collecting without realizing it: your search history.
Many legal issues show up disguised as ordinary business questions. Can I pay this person as a contractor? Do I need to collect sales tax in that state? What can I do if this customer won’t pay? When you type a question like that into a search engine or an AI assistant, you’ve spotted a legal issue. You just haven’t labeled it as one.
So count them. Once a month, scroll back through your searches and AI chats and tally the questions that were really legal ones, noting the topics. A rising count means your business is running into more legal decisions as it grows. A topic that keeps coming back means you’re making the same decision from scratch, and it probably deserves a policy, a template, or a standing answer.
How do you know whether a question is a legal one? Check it against these signals:
- A rule might apply. A law, regulation, license requirement, or tax rule could govern the situation, even if you don’t know which one.
- You know the rule and want to work it to your advantage. You’re asking how to structure things so the rule works for you.
- You’re making or accepting a promise about the future. You’re exchanging something now or committing to something later.
- Someone else has rights at stake. An employee, customer, co-owner, or investor will be affected by your decision.
- The answer starts with “it depends.” If the results keep hedging, the right answer turns on facts they don’t have.
- Location changes the answer. Where you, your employee, or your customer is located changes which rules apply.
- It’s hard to undo. Terminating someone, signing a document, or sending a formal notice can’t easily be walked back.
- There’s a deadline or a formal document involved. You received a notice or letter with a due date, or you need to send one.
- Being wrong would cost more than you’d comfortably lose.
A search result or AI answer is a fine place to start learning. But it doesn’t know your facts or your business, so it can’t weigh your trade-offs. The more boxes a question checks, the more it’s worth slowing down before acting on the answer you found.
Pair this with a lagging metric: how many times this year you discovered a legal requirement after you’d already acted. Every “I wish I’d known” moment is one your search count could have flagged.
Proactive vs. Reactive Legal Spend (Lagging)
Take every dollar you spent on legal help last year and sort it into two buckets: money spent building something (contracts, planning, deals, governance) and money spent fixing something (disputes, demand letters, cleanup). The ratio is a lagging indicator, because the money is already spent. But it’s one of the most revealing numbers here, because it shows what your legal strategy actually was, whatever you intended. If the fixing bucket is bigger, you’re paying premium prices for yesterday’s problems.
You may also find your legal spend was virtually nothing. That sounds great, but it’s a reactive lens. No legal planning likely means opportunities and money left on the table. Just as your CPA finds deductions that lower your tax bill, a lawyer finds ways to use the law and contract language to put you in a stronger position.
Opportunities Reviewed by Counsel Before Commitment (Leading)
This is the metric for the offense side of legal strategy. Of the significant opportunities your business pursued this year (new partnerships, new markets, new products, acquisitions), how many had legal input before you committed? Legal review after the handshake is damage control. Legal input before it is strategy, because the law can still shape the deal. A rising number here means your business is using the law to get ahead, not just to stay out of trouble.
Legal Recommendations Implemented (Leading)
Getting advice is half the job. Using it is the other half. List the legal recommendations you received last year from your lawyer, CPA, insurance broker, or an audit. Update the employee handbook. Register the trademark. Amend the operating agreement now that there’s a third owner. Now count how many actually got done.
Advice sitting in an inbox protects nothing, and “we’ll get to it” has a way of becoming “we never did.” A low completion rate is a leading indicator: the risk that advice addressed hasn’t gone anywhere, but it hasn’t landed yet either. You can still close the gap.
What’s Next?
Sixteen metrics is a lot. I know! The good news? You don’t need all sixteen. A dashboard with too many gauges gets glanced at and ignored, and one that gets ignored is no better than “nobody’s sued us.”
Go back to the rule from Part 1. Start with the goal your business is chasing right now, then pick three or four leading indicators and one or two lagging ones. If you’re not sure where to start, notice which example made you wince while you were reading. Maybe it was the contractor with no signed agreement, the auto-renewal nobody calendared, or the recommendation still sitting in your inbox. That wince means you’ve found a blind spot, so that’s your first metric.
Then set your baseline, decide what number means “act,” and put the review on your calendar.
And if you realized you can’t answer half of these questions about your own business, pay attention to that. It usually means your business has grown faster than its legal foundation.
If that’s the case, give us a shout! Team Way Law would love to help you build your dashboard and the strategy behind it. Let’s turn opportunities into legacy, together.