Tracking law firm KPIs or key performance indicators, can give you insight into how your firm is performing and allow you to make informed decision about your business. Every law firm’s measurement for success is different so it’s important to determine which KPIs will produce the greatest amount of growth.
When it comes to KPIs and metrics, you’ll want to break them down. You’ll want to segment your metrics into three groups: primary, secondary and tertiary. Your primary metrics are all about survival, which is exactly what you need if you’re looking to get to a growth state. You need to determine which KPIs are most important to your firm.
KPIs your law firm should track regularly
Survival KPIs are metrics that measure what your law firm needs to generate a significant amount of traffic, leads, clients, sales and profits. These metrics are indispensable and your firm won’t be able to measure or improve growth without them:
2. Breakeven cost (min. needed to cover all expenses)
3. Balance in your operating account(s)
4. Balance in your trust accounts (unbilled only)
5. Amount of accounts receivables
6. Amount of outstanding accounts receivables
7. Age of accounts receivables
8. Firm debt (credit cards, line of credit, loans, etc.)
9. Number of marketing actions taken in the last 30 days
10. List of marketing actions taken
11. Number of consults generated from each
12. Recommendation index (a 1 – 5 “likely to refer” scale)
13. Current run rate
14. Current expenses (monthly)
15. Current anticipated expenses (expenses from run rate)
17. Number of new cases/matters opened in the last full month
18. The value of these new cases/matters
19. Number of closed cases/matters
20. The value of these closed cases/matters
21. Number of new appointments/consults set
22. Number of prospects (consults who showed up)
23. Number of prospects who became clients
24. Marketing expense as a % of revenue
What makes these KPIs so useful?
They answer real, legitimate questions about your law firm. When you have answers to these questions, you have a clear set of goals and objectives in mind.
1. They’re all measure-driven, and difficult to manipulate. This means our biases are less likely to get in the way. An example of this would be, controlling the message and resources in your website but still being unable to compel customers to pay for your services.
2. Consistency means your KPIs are built on and oriented around principles. Most of the metrics in your business may fluctuate; however your KPIs should remain – producing the same results.
3. Leading indicators reflect the changes in the business hours, minutes, days and weeks into the future. Metrics that predict future KPIs are ideal as they give you greater explanatory power and preciseness.
We’re conditioned to focus on the details we can see, but tracking these metrics can provide a deeper look into how your law firm is really doing. Adopting a practice management software like, Bill4Time, allows you to easily track and report on your law firms performance. From tracking which matter brings the most revenue to monitoring cash flow with the built-in payments processor, Bill4Time Payments, your firm will have access to metrics that will boost your firm’s productivity.