Linda Artesani walks small law firms through the KPIs that matter: cash flow first, then accounts receivable health, marketing funnel metrics, and client satisfaction via Net Promoter Score. Most attorneys juggle too many hats to see the numbers clearly. Delegate accounting and AR work so you can focus on legal work and actual growth.
Chapters
Hi there, Linda Artesani, Artesani Accounting and The Proper Trust. This week we're going to talk about small law firm KPIs. So key performance indicators, what should you be measuring? The thing I see most often with smaller law firms is that the attorneys have to wear all hats. They are the marketing department, they are the accounts receivable department, they may be the accounting department. So they do a lot of hands-on work inside the business besides just doing the legal work. So it's easy to get caught up in the day-to-day working of your business at your law firm, and then you don't have a chance to really step back. You don't have that chance to step back and really design a financial strategy. So with smaller firms, it's a little more challenging. We have many small firm clients, and it's a lot more challenging even to pin down the attorney so we can start to work with them to get them to that place. They're just really busy, and sometimes we have to resort to even creating videos and sending them videos, because the only time they can really sit down and think about this stuff is at night, because they have a lot of different tasks that they have to manage inside their own firm. But I'm gonna give you tips on just a few of my favorite for small firms. There is differences between a small firm and a large firm, obviously, and different KPIs that we would typically track for the firm. We work with mid-market for the most part, and totally different set of KPIs that we would track. And sometimes it goes by practice area. But for the most part, with a small firm, and probably now, as we start to see the economy shrinking a bit and things starting to stall, cash flow. You should really look at your cash flow. We're recommending all our clients start to put away that little cash cushion if they haven't already done so, to save for that rainy day in case things do kind of turn upside down, or the leads kind of shrivel away, you've got that money for payroll if you have payroll at your firm, or just to run the firm itself. And the other is, do you have enough clients? So we'll just sit and talk with an attorney to say, ask those couple of questions to see where their firm lands. And then it usually lands in either one of those, or typically both. So how do we implement a plan to strategize It's a little bit easier with small law firms. We don't have a lot of players involved. We can just work directly with the, with the attorney. But a lot of times we'll set maybe a 3-month goal, like a short-term goal, maybe a 6-month or a 9-month or 1-year or 5-year. We can go through any of those goals to design what we're trying to head towards. So it's really important aspect of setting up these KPIs for tracking is You want to have a goal. A KPI is not just tracking, you know, like a profit and loss from last year to this year. That is not what a KPI is. A KPI is you're gonna set a goal, you're gonna try to achieve it, you're gonna analyze the data to figure out and figure out a pathway to achieving it. So my top KPIs generally land in accounts receivable. Take a look at your accounts receivable. Even though you wear all these hats, sometimes that kind of falls away. Nobody wants to make the phone call to say, hey, you're behind and you haven't paid your invoices. It's kind of why we like to take that off of our, our clients' back and we take over that particular task. So you wanna look at that. You don't wanna have accounts receivable that's just sitting there stale. The older it gets, the harder it is to collect. And we have a few ways we can help you collect it, whether you invite in the ability to pay by credit card. We highly recommend that. We recommend Gravity Legal for that particular scenario. It's very helpful. They can pay by ACH. Or by credit card. Opening the door up to credit cards will get that cash flow flowing for you. Marketing, we look at as well. How are the clients coming in? But not just how are they coming in the door, where are they coming in the door, how are they coming in the door, and then are they becoming a client itself? So tracking that lead, we want to do that as well. We want to look at your net promoter score and see how are people feeling after they've hired your firm. Or even when they're first being onboarded, how would— what's the feeling around that hiring and working in your firm? So these are things we track. You know, now that the leads are clients, you wanna know how are they working out? How happy are they with your firm? How likely are they to really refer you to others? And this is a couple of places we like to look at with KPIs. And some practice management tools actually have these KPIs built right into their system. I know Clio does, especially if you buy the Grow. Segment. But there are some packages that do that. You can track it in good old Excel if you want. You don't have to have a fancy product. But remember the fact that with a KPI, you're looking at not just setting a goal for maybe X amount of revenue dollars coming in the door, or X amount of new leads, or X amount of happy clients. You want to be able to say that I want to get from this point to this point in this segment of time, and then activate a plan with the people who are involved in working on those, those goals and get them there at the end of the day. So that's kind of where we can come into play and help you at your firm. We can actually do some of this financial strategy with you, check in with the goals. We'll track the metrics. We'll help you figure out a way to financially grow in a smart way. That's why you really want to delegate, because that's the thing that most small law firms— they don't want to let go of doing all the tasks. It might have been manageable when they had 1 or 2 clients. Now they have 10, 20, 30, and they're like, I don't have time for this. They're doing their accounting at 10:30, 11 o'clock at night when you're really not at your best. That's when you want to really look towards hiring an outside firm, something we do at our practice. So if you'd like to reach out to us, we'd be more than happy to help you. And hopefully this article helps you as well to maybe set your own financial goals and strategy. And on that note, I hope you all have a wonderful, wonderful week. Bye now.
