Lynda ArtesaniLegal Accountant and Data Migration Specialist at The Proper Trust

What are KPIs and why are they valuable for law firms?

1 Sept 2023 · 1 min

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1:00

In this segment, the presenter explains that Key Performance Indicators (KPIs) become valuable only after a law firm’s financial records are fully organized and balanced, including books and trust ledgers. She describes the typical client request for immediate insights such as cash flow and the “monthly nut” (the essential operating cash needed), and suggests that cleaning up the books provides an opportunity to introduce KPI discussions. Once the firm is accustomed to clean financial statements, KPIs can be introduced as metrics that evaluate the organization’s performance and success, serving as tools to measure what matters most to the business.

Chapters

Why are KPIs valuable? They become valuable when you reach the point that you need them. And in order to reach the point to need them, your books have got to be clean and in balance. Your trust ledgers have to be in balance. Everything has to be ready. And during that process, because, you know, so many— so often we get people that we have to clean up their books and they're right away, they're like, well, I want to know what my cash flow is. I want to know what the monthly nut is to run the business. I want to know This, I want to know that. And you can make notes along that path to start preparing you to lead them into KPIs. So once you get them used to their books being clean, then you can start the dialogue with them. And they're so important because they're metrics that, you know, evaluate the organization's performance and success. That's the basics of KPIs. They are tools that you're going to use to measure things that are important to you in your business.