Can you identify the health of your business in 30 seconds or less?
- What is a KPI?
- Leading indicators, lagging indicators, and why they matter.
- What sort of KPIs should I be tracking in my law firm?
- Financial KPIs for Law Firms.
- Efficiency and Operational KPIs for Law Firms.
- Marketing KPIs to consider.
- KPIs for law firms with recurring client business.
- KPIs to track your firm’s legal performance.
- How often you should track KPIs.
- TLDR on tracking KPIs in the legal industry.
What is a KPI?
Leading indicators, lagging indicators, and why they matter.
What sort of KPIs should I be tracking in my law firm?
There are several KPIs that can be extremely useful, and should vary based on your goals. We typically recommend choosing 5-10 key metrics to focus on overall - going beyond that can be cumbersome to continuously collect, and individual KPIs can become meaningless among a sea of data. Keep it simple, keep them focused!
Financial KPIs for Law Firms.
1. Revenue and profitability
2. Billable hours
3. Average case value
Efficiency and Operational KPIs for Law Firms.
4. Utilization rate
Utilization rate is a measure of how much of an attorney's time is spent on billable work. To calculate utilization rate, divide the number of billable hours by the total number of hours worked.
A high utilization rate is important because it means that your attorneys are spending a significant portion of their time on billable work, which can increase profitability for your firm.
5. Average hourly rate
Average hourly rate is a measure of the average amount that your firm charges for its legal services. To calculate your average hourly rate, divide total revenue by the number of billable hours.
Tracking average hourly rate can help you understand the value that your firm is providing to clients and identify areas where you can increase pricing.
6. Case load
Case load is a measure of the number of cases that your firm is handling at any given time. Tracking your case load can help you understand the workload of your attorneys and identify areas where you may need to hire additional staff or delegate work to support staff.
Marketing KPIs to consider.
7. Pipeline / upcoming business
Wondering about your upcoming matter load, and what that looks like in terms of revenue and capacity? Tracking your pipeline can be a great tool for making sure your team has exactly the work you need, as well as taking proactive steps to manage upcoming work.
Are things looking a little slim? Maybe it’s time to boost marketing, and outreach efforts, or launch a promotional campaign. Have way too much and wondering how you will handle it all? Time to start hiring!
8. Client aquisition cost (CAC)
Also known as cost per lead, client acquisition cost (CAC) is a measure of how much it costs to acquire a new client. To calculate CAC, divide the total amount you spend on marketing and business development efforts by the number of new clients that you acquire.
This KPI can help you understand the efficiency of your marketing and business development efforts and identify areas where you can improve.
9. Lead conversion rate
This one can be helpful to track if you have many inquiries coming through your door, and want to get a better understanding of how many of these opportunities end up working with you, vs how many end up going with other firms. A CRM can track this automatically, and be helpful if you are finding there are many lost opportunities due to lack of follow up or a confusing client journey.
This KPI is important because it can help you understand the effectiveness of your business development efforts and identify areas where you can improve your marketing and sales processes.
10. Client satisfaction
Client satisfaction is a measure of how happy your clients are with the legal services that they receive from your firm. The easiest way to track client satisfaction is to keep an eye on your google reviews. Or, you can be more proactive and ask clients to rate their experience on a scale or conduct surveys to gather feedback.
Client satisfaction is an important KPI because it can help you understand how well your attorneys are meeting the needs of your clients and identify areas where you can improve the client experience.
11. Revenue by lead source
This can help you figure out what marketing efforts are making your firm the most money, and double down on what’s working. It can also help you identify areas where you are maybe not seeing any ROI, and adjust your marketing focus accordingly, or fix ads or efforts that just aren’t effective.