Law school teaches you to become an expert at practicing law. However, the business side of running a law firm—and ensuring its long-term success—is equally as important, if not more so. And it’s often overlooked.
Honestly ask yourself: Are you regularly setting time aside to track what’s important in order to make well-informed decisions and drive profitability at your firm? Key performance indicators (KPIs) can help you do just that.
To start monitoring and analyzing law firm KPIs, you need to choose which ones to track. But first, it’s important to understand just what KPIs are—then you’ll be on your way to making data-driven decisions and changes to improve your law firm, and bringing in more revenue.
What Are KPIs?
Key performance indicators are metrics you can use to measure specific goals within different areas of your law firm, such as marketing, finances, intake, client satisfaction and business development.
Measuring and tracking KPIs helps you understand how your firm is performing in response to various actions, including:
- New marketing tactics
- Additional budget
- Branching out to other fields of law
KPI data can provide valuable insight into your firm’s performance and give you the knowledge you need to answer critical questions, such as, “Are my marketing efforts working?” or “Are my clients satisfied?” For the best results, your law firm’s KPIs should be measurable, specific and targeted to the unique goals of your practice.
How Do KPIs Impact Law Firm Success?
Working with KPIs can improve your firm’s profitability by:
- Measuring Performance — KPIs help you understand how well your firm is performing. For example, they glean insight into how many clients you are converting, the rate at which your firm is growing year-over-year, how well your marketing tactics are working, etc.
- Streamlining Accountability — KPIs make it easy to understand which team members are accountable for the wins and losses within your firm. They can help you make adjustments and improve your management process.
- Powering Predictive Analytics — Predictive analytics use existing information about your firm to predict what will work in the future. By measuring and tracking KPIs, you gain insight into how well your law firm may perform in the future based on current performance. This way you can determine what changes need to be made to drive even better results.
- Simplifying Decision-making — With a streamlined KPI tracking system in place, you have myriad data right at your fingertips to help you make informed decisions in real-time. This simplifies and speeds up the decision-making process, thus improving your firm’s overall performance.
Which KPIs Should Your Law Firm Measure?
While KPIs can vary from firm to firm, the most important indicators are universal.
- Legal Marketing KPIs — Website traffic, email performance, landing page web form conversions, cost to acquire a customer, organic traffic, retention rates, client engagement rate, conversion rate, etc.
- Productivity KPIs — Number of billable (or revenue-generating) hours, utilization rate (billable hours/billable hours worked), realization rate (billable hours invoiced/billable hours worked), number of successfully resolved cases (week, month, quarter), deadline compliance, etc. (Keep in mind that lawyers spend 69% of their time on non-billable activities—while this is the norm, it’s definitely not a good practice to have and you should always seek to cut-down that number.)
- Client Intake KPIs — Cost of acquiring clients, number of cases opened, number of new clients (by marketing source), number of set appointments, number of potential clients converted to paying clients, etc.
- Client Happiness KPIs — Referrals, retention rates, level of satisfaction, number of filed complaints, client satisfaction score, NPS (Net Promoter Score), average stars in reviews, etc.
- Client Development KPIs — Number of cases closed, average value of closed cases, average fee per client, number of new cases per practice areas, etc.
The KPIs you measure during any given period can depend on your current goals. For example, if the goal is to attract new clients, you need to focus on client intake KPIs. If the goal is to improve client retention, you should monitor client happiness KPIs.
How to Get Started
Getting started with KPIs for your law firm is easy—but first, you must know your goals. By following these steps, you can start tracking and monitoring KPIs to enhance your firm’s development strategy.
- Choose the Right KPIs — Each KPI you decide to track must be relevant to your firm’s current goals. KPIs can (and should) change as new goals appear.
- Set Targets — Each target you work with must be measurable. This makes tracking KPIs easier. Consider adopting a S.M.A.R.T goal system.
- Track KPIs — You need to track each piece of data associated with KPIs by setting up a tracking system that keeps data intact for months, or even years. Most KPIs require continuous tracking to provide quality insight.
- Measure Results — Run reports monthly and analyze data so you can start taking corrective action based on your findings. KPIs only work if you incorporate them into your firm’s business strategy. To generate consistent and long-term results, continually tracking and measuring KPIs should remain an integral part of your law firm’s operations.
Use KPIs to Make Data-Driven Decisions at Your Law Firm
KPIs can help you become a data-driven lawyer and work towards improving your firm’s profitability.
Measuring and tracking intake-specific KPIs helps you gain valuable insight into your firm’s marketing strategy. Working with a legal call center, like Alert Communications, allows you to boost your intake KPIs and see better results. For more information, visit www.alertcommunications.com.