KPIs for Lawyers, Why Do You Need Them

Hi there, Linda Artesani, Artesani Accounting and The Proper Trust. Today we're going to talk all about attorneys and KPIs and why you need them. So businesses use key performance indicators to measure how well they're doing, and they also provide an objective view of how well a business is performing. And it's also helpful in planning for the future financial strategy. Those are all the reasons why You really want to grab a few KPIs, maybe 1, maybe 2. I kind of recommend starting out with no more than 3. You can go up to 5. Try not to be the KPI kid in the candy store because that's actually probably less helpful than you would think. I mean, I've seen some attorneys ask us to run like 20 KPIs. It's just too many KPIs and you really can't make sense out of your business trajectory if you're analyzing every single little minutia of your business. One of the ones I like to look at is client management. So it's really the key component of a legal service model. And with the rising number of new law firms, you have a lot of competition, and effective client management is increasingly important. Just came back from doing a webinar, a conference on client experience. It's so critical. It's gonna set your firm above the others. I think of the old days where we used to have clients come to our office, and it was very relationable, kind of a relationship kind of process. We, we knew their families. We had this close-knit— we knew all about their lives. And then now we get to this new way of doing business where we're on Zoom, or we don't actually ever meet our clients in person, and it loses some of that hometown feel. So having a great client experience is gonna definitely elevate your practice and make it more the firm that people will wanna refer to. So one of the KPIs that I recommend looking at is how many clients. So client count is an important measurement. It's a straightforward measurement. You just— a good point of comparison. How many did you have in 2021 as opposed to 2022? That's how you test your— if your firm is growing and the growth of the firm. So it's an important one to track. It's definitely an interesting question from a macro perspective, as it provides a baseline for both progress and sustainability. You don't want to be going from 10 clients to 50. If you are, I'm sure you're feeling it without even counting and measuring it, because you're gonna feel that overwhelm in the expansion of the firm. You want to have controlled growth so you can keep that good client experience. I've, I've seen firms that have just grown exponentially, and then they're sitting here and they're not able to manage their client base in a good way because it gets lost in the shuffle of all the clients. So that's definitely one of the ones you want to take a look at. And then really think about what you're looking for next year and start to put that in your, your purview of where you're going. And if you can start to look at it in smaller bites, maybe next year, how many clients you'd like to have, and then 3 years and 5 years, it's a good measurement to have. The next one is average billings per client. It's the second measurement I like to look at. It's an important thing to measure concerning profitability. You want to find out if you find that you're billing less, then you're— it's likely that you're not managing your clientele effectively. You wanna make sure that everybody on your staff is billing in a proper manner, and it's happening every month, and you wanna check on those things. attorney productivity. So those are the things you want to look at. It's definitely many ways to measure it. So the common way is the average billings per client. It's a simple— it's a simple metric, but it's a way to check maybe average billings per hour if you're doing hourly billing, to look at your bottom line. So it's something you really want to take a look at for sure as a good KPI to track. The next measurement for firm growth is definitely percentage of new clients. So this 3rd measurement is how many clients are new to your firm this year? How many? This measurement assesses your success. It's looking at how many, how your firm is growing. If your new client numbers are increasing, it's a good sign that you're growing and becoming more effective in your marketing. And that's always a KPI you want to keep an eye on is marketing. These measurements show you trends that you can leverage to help your marketing efforts. Marketing is a big one that we always track for clients to see how effective they are. If these measurements show the numbers are gaining, you know, that's a great sign that you're having an effective marketing program. If your clients have been there with you for years, that's also a great metric to track because repetitive clients great clients. It's a lot less expensive to track and maintain a current client than to find new ones year over year. It's expensive when you bring on new ones. Onboarding is always expensive, and it's expensive with labor. It's labor-intensive. So in finding out how to make that a smooth progression is also important. So these are definitely ones you want to look at with client tracking. Also time tracking. So if you want to look at an easy way to track how much time you spend on each project or matter, time tracking software is what you need. Don't try to do it without it or try to do it with some free app. It just doesn't work. It's gonna allow you to see very, very much on a daily basis where you need to improve. It's an efficient recordkeeping system is important. It's essential to a successful law firm. So you need to have a well-defined system that allows you to effectively manage your day-to-day tasks. And so time management software, especially if you're doing hourly billing, obviously that makes it really important. But you want to have a really good, effective one that everybody's using successfully. So you want to look at your team, your staff, how they're using the product, and also look at how it's being used in your, in your day-to-day methods of working, your workflow, to make sure that it's being used in a proper way. And that sometimes can be really time intensive to look at it, but you really want to look at it to make sure that the billable hours are, are there if you're doing hourly billing. And if you're not doing hourly billing and doing fixed fee, you still want to track the hours to see how the jobs and the matters are moving along. So case management is also a nice place to look. Good case management software is important to manage your cases effectively. This type of software is going to help you organize your work by creating a central location for your entire staff to To jump in, and it's also a place that you can store your documents. It's a place that you can have your notes on your files. It's a place you can track your timelines. It's just critical for a law firm that's forward-ready, future-forward, looking forward, keeping track of things in a— it's just the software is there. Why not use it? I know there's an expense to it, but you will save money by using this and save money with mistakes or missed dates. So, and keeping all the documents in one place is important. Documents and any information pertaining to the case, you keep them housed underneath the client. So it's very easy to find. You're not using— you're not trying to use Google Docs and manage it that way. You have it right inside a legal case management software. Really important. There's some good ones out there. I can think of— well, Clio has it baked right in, so it's part of their system. But there's other ones out there that I think are really effective for helping law firms run properly. There's also, um, see, those are the— probably those are the most KPIs that you want to look at on the get-go at the highest level. Start with just maybe one and see how that looks in your firm. This is a great time of the year to kind of slower into summer, start to look at what, uh, you know, almost into fall actually. We're probably into fall now. So start to look at These numbers and looking forward towards 2023 and see what's gonna work for you by taking a look at what you have, where you're at, where you wanna move towards. It's what KPIs are all about. So I hope that was helpful information. We obviously do this for our clients. It's one of the services we provide. So if you're interested in finding a good accounting firm that will help you, reach out. And on that note, I hope you all have a wonderful, wonderful week. Bye now.