April 15, 2015
Top KPI Metrics for the Legal Firm Business Dashboard
The success of a law firm isn’t solely determined by how many cases are won or lost. Case outcomes are a small snapshot of success. The big picture, though, includes a number of financial, operational and marketing-related KPI metrics and data points that must be considered. However, in order for executives to discern actionable information from these various data points, they can’t be analyzed disparately or in separate silos. These metrics must be reviewed simultaneously and in relation to one another on a centralized business dashboard so executives can note trends, make comparisons, and properly track goals.
By using a business dashboard, firm executives can see the full scope of their successes and failures. This lets them glean powerful, actionable information that can be used to fuel company wide decisions that improve the organization and move it toward success.
Common Law Firm KPI Metrics
There are no hard-and-fast KPIs that all law firms should use when measuring their performance. In fact, in order for KPI tracking to be truly effective, the metrics chosen need to be as closely related to the firm’s unique goals as possible. They should also be quantifiable and directly tied to the firm’s long-term success.
But while there is no standard set of KPIs to choose from, there are some metrics that are more commonly used throughout the industry than others. If you’re unsure which KPI metrics to use on your firm’s business dashboard, these common measurements may give you a great starting point:
- Partner / Attorney Hours – How many hours has each attorney on the payroll worked in any time period? How do those hours compare to the company wide average? How much of the total time record does each attorney account for? These metrics can speak to the efficacy of your staff and the work ethic of each employee. It can show you who’s working the hardest, who’s the most efficient and who needs improvements.
- Client Growth – How many clients did you serve this month versus last month? How about this year versus last year or the year you opened? This can shed light on your firm’s overall successes throughout the years. It can also give you powerful information with which to compare. Measure your client growth against revenue and staff growth. If you’re doing it right, the three should all be directly related – when one increases, the others should, too. If you’re not seeing this correlation, it may be time to make some internal changes.
- Billing Realization – How much time did each attorney spend on a case, and how much of that time was actually billed in the end? This can give you a glimpse at how effective your attorneys are, and it can pinpoint areas where improvements need to be made. Billing realization directly correlates with revenues, so if only a small portion of time is being billed in the end, changes should be made swiftly to prevent any additional losses.
- Dormant and Repeat Clients – Out of all the clients you’ve served, how many have come back for repeat business? How many have remained dormant since you resolved their first matter? Their second? If your percentage of repeat clients is extremely low, it may point to a client satisfaction issue that needs to be resolved. It can also give you the data you need to launch client outreach programs, so you can get back in touch with dormant clients who may require your services.
- Fee Per Client – On average, how much are you making per client? How about per new client or repeat client? This information can give you an idea of where to focus your efforts. If you’re getting more funds from repeat clients, then you may want to retool your organization, and focus more on relationship-building and client outreach. If new clients are more profitable, increased marketing efforts and advertising campaigns may be a better venture.
- Fee Per Matter – How much did your firm earn per matter this year? How about per each type of matter? Similar to the fee per client metric, this data can help you see where to navigate your organization in the future. If divorce proceedings are your most profitable matter, consider focusing your efforts in that area of law. If they’re your least profitable, think about cutting them out of the equation altogether and focusing on more financially productive areas of business.
- Lead Cost – How much did it cost to acquire each client lead? How many of those leads led to paying client relationships? This can give you insight into how effective your marketing, advertising and outreach campaigns are, and it can help you make your existing efforts more cost-effective.
When these KPI metrics are viewed collectively on your business dashboard, they can provide an accurate glimpse at your firm’s performance as a whole. They also give you valuable insights on which you can base decisions and implement company wide changes.
Determining KPI Metrics for Your Business Dashboard
Though these are the most commonly used KPIs, they may not be the best ones for your company. To ensure you choose the right metrics, establish long-term goals for your firm first. Do you want to build client relationships and foster repeat business? Do you simply want to focus on transactions and revenue? Do you want to increase your new client list? Once you’ve determined your goals, you can begin establishing measurements and benchmarks that track your successes and failures in reaching those goals.
Need help determining your firm’s KPI metrics? Want to see your existing KPIs in action? Contact Xeo today or try out our free business dashboard software now.