For lawyers, paralegals,
and legal professionals.
Here’s how you can use Key Performance Indicators (KPIs) to track the performance of your firm.
Success as a lawyer or notary who is running their own office involves much more than just practising law. While it’s important to ensure your firm provides exceptional service for clients, there are a variety of other metrics you can and should be tracking to continually assess the performance of your firm.
Enter: The Key Performance Indicator, or KPI. Key Performance Indicators provide you with insights into how your firm is running and whether or not you’re succeeding at reaching your goals. Much as the name implies, KPIs indicate the health and performance of your business on certain major metrics.
According to David Girolami, Senior Business Advisor at BDC, Key Performance Indicators enable business owners to “make informed decisions based on actual data, not just gut instinct.”
KPIs are how you measure your firm’s success. But what KPIs should you track? And how do you track them? Here’s what you need to know.
Key Performance Indicators are quantifiable pieces of data that measure your business’ success. They enable firms to make informed decisions about operational changes. There’s no shortage of KPIs you could track, from billing KPIs, to productivity KPIs, to client retention KPIs and more.
Measuring KPIs renders a number of benefits to law firms and notary offices. First and foremost, KPIs improve firm performance by enabling staff to clearly see where they’re failing and which areas require improvement. Secondly, KPIs can improve efficiency by helping firms assess and tweak their processes. Finally, KPIs provide teams with accountability by establishing clear goals.
Measuring your KPIs can help you to make better, more informed decisions. You can use KPIs to answer questions like whether now is an appropriate time to hire new staff, or which practice areas are making you the most money. With KPIs, you can even streamline your client intake process by making data-driven decisions around client intake practices.
There’s no shortage of KPIs you could track. But if you want your firm to boost its profitability, it’s best to zero in on a set of 5 or 6 major KPIs you want to use to measure the health of your business. Your KPIs should be diverse enough to measure the performance of multiple areas of your business, giving you a holistic view of your firm.
According to the American Bar Association, some of the best legal KPIs to measure include:
Financial KPIs help you measure what matters most: Your firm’s money. Financial KPIs can include metrics like your total debt, your monthly overhead, your annual revenue, your collection rate, and your average accounts receivable age.
Client and Matter Development KPIs are designed to track how you interact with your clients and how you conduct client work. These metrics include things like the average fee per client, the number of lawyers assigned to each client file, your total number of active clients, and your average number of open matters per client.
Client Satisfaction KPIs help your firm measure how happy your clients are with your service, which can help boost your firm’s reputation and enhance client retention. Client Satisfaction KPIs can include things like your average client retention rate, your number of client referrals, and your reviews.
Marketing KPIs can enable you to determine how well your marketing strategy is performing and help you make data-driven decisions around new campaigns. Marketing KPIs might involve your average monthly website visitors, your average cost of acquisition per client, your lifetime client value, and other marketing metrics like social media reactions or newsletter opens.
Individual Performance KPIs measure your individual staff’s productivity. Some individual performance KPIs to track include billable hours, number of unbilled days, and number of uncollected days.
Lead Analysis KPIs help you to track where your leads are coming from and how healthy your lead pipeline is. Metrics to track include average value of new cases, conversion rate, total number of new clients per month, and number of new clients from each client source (e.g. organic traffic versus referral).
Tracking your Key Performance Indicators isn’t just a good exercise for measuring the health of your firm; it’s also a highly effective decision-making tool. With KPIs, you can gain tangible insights into challenges and answer questions with actual data.
For example, if you’re struggling to determine when it’s time to hire help, setting a KPI for average number of open matters per lawyer, notary, or paralegal can give you good insights into your team’s workload and whether they need more assistance on matters. Or if you’re wondering if it’s time to devote more resources to client acquisition, a KPI like average lifetime client value can help you budget for sales and marketing activities.
KPIs can help you determine which areas of your firm are money-makers and which areas are cost centers. By setting a profitability KPI for your various services, you can easily see which practice areas are making you the most money – and which ones are costing you money. With that kind of insight, you can devote time and effort toward overhauling processes that are dragging down your profits without worrying that you might be undermining your firm’s most profitable practice area.
Your KPIs can even help you determine if it’s time to adopt new software. If your productivity suddenly drops or your costs suddenly increase, it could be a sign that it’s time to digitize.
Key Performance Indicators are an important method for measuring your firm’s success. They’re also a highly effective decision-making tool that can enable you to make data-driven decisions. With the right KPIs in place, you can track your firm’s efficiency, your profitability, your team’s performance, and, ultimately, your success as a law firm or notary office.
Are paper-based processes weighing down your firm’s productivity? Book a demo to unlock your free trial of Appara and discover how you can save time and cut costs with AI.
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