What Three Key Performance Indicators Best for Tracking in a Profitable Law Firm

Hi there, Linda Artesani, Artesani Accounting. So this week I'm going to do a little bit more about some of the higher-level things that we can address with our legal clients. A lot of times we'll work with the larger firms, maybe the mid-market size firm, multiple partners, and maybe the contingency firm, and there's some KPIs that we can really look at To help the client grow their firm and see what direction it should take. So it's part of our way of working hand in hand with the client. I like to call it partnering with the client. So I'm not really just their accountant who just hands off and doesn't do— just does the numbers, the after the fact. No, in our firm, we tend to work closely with the client to try to help them grow and become more profitable and grow in the right way. So a lot of firms are growing, but you want to make sure that you're not growing in the wrong direction. Um, I've had a story that— worked with a client many years ago, and she was doing really well, and she decided to expand herself in multiple directions, multiple locations, and it ended up being really disaster because she didn't have the right people in place, and it had some inventory things happen, and ended up not ending up in a really good way. So this is what we're trying to make sure you grow smart and know your numbers, know where you're at. So I'm going to move on to the first KPI that I think is a great one to track if you work with matters that you can win or lose the case, whether maybe it's some insurance or maybe it's you do contingency work and you want to track that. We can actually create a KPI that will have a little dropdown. Did you win it? Did you lose it? Did you settle? And we can just make that in QuickBooks. I'm going to take you to QuickBooks and show you how we can do that. If this is only in QuickBooks Online Advanced that you can do this. It's the product— I just don't even bother with the other ones. This is the one you want to be in because this is the one that'll give you that flexibility with being able to customize it using the custom fields to be able to track some of these data metrics and data points that you need to know when working in your law firm practice in the accounting side. Let me share my screen. I'm going to show you what I mean. So we'll take you over to here to the gear, and then we'll go into custom fields. And this is where you're going to want to create that KPI for your client. So once it populates here, you can see I've already got a few set up. I'm going to add a field, and this is not going to be client-facing. This is really more for yourself. So, um, you can name it whatever you'd like to name it. It can be just, um, Matter, uh, win-win-loss ratio. So I can just create something like that, and it can just be win-loss Win/Loss Settled. I can just do that. So I'm going to come over here and I'm just going to create the data type, and it's going to be a dropdown list. And because this is going to be customer, uh, transactional, basically be customer side, I'm going to make it a customer category type. I don't need it to be transactional, I don't need to be on every line. I want it to be on the highest level, and then I want it to be able to be on— it wouldn't be so much on the sales receipt, but mostly on an invoice. I want to track it there. It's really the only place I need to track this particular field. So it'll be, uh, won the case, lost the case, settled the case. That's it. I'm going to create it. Now, do I want this— I want this to be on an invoice. So if I come over here, let's just create a new invoice. So I'll come over here and go New Invoice. And then it should populate the Win-loss. See, it's right here. Win-loss settled. So I'd create the invoice, and B, you'd be creating the invoice to the client as you go along. And this would more be on the last invoice, but you probably want to have it on all the invoices. And usually with contingency, it's— there's not really even an invoice here. So you will create the invoice to kind of show the flow through of how the money comes in and how you delegate it out. This would be the part that you would show where you receive the revenue, your piece. So if it's 33% or 30% or whatever your deal is, you would want it on this invoice because you're going to create that invoice to show that you've received and earned the legal income. And then on this invoice, obviously it's an— it's a paper invoice only. You're going to apply that money that if you won the case. If you lost it, you're still going to have to create it and just make a credit memo to wipe it out, but show that you lost the matter and how much you lost. So you're going to have to put that in there. And if you settled it, you're going to show what you settled it down for. And you can get creative. Here's the amount I thought I was going to win. Here's the reduced amount. Here's a settlement. So you can put it right on this one invoice and show it that way. So that's my first KPI. I think that's a good one to have if you have those kind of cases that you may win. You might even want to create a category for the opposing attorney. So you might, if you do a lot of, you know, if you're doing, um, work where you're, you're a criminal lawyer, maybe you want to start to track, did you win, lose, or settle? And who was the opposing attorney? Now you can find those 2 data metrics to track and see if there's one or 2 attorneys that you do a lot better or against. So that's just a thought, but that's one way that you can track win-loss or settled. So the next KPI that we like to do here is the quality of the client. How— what kind of quality was the client? Was it a quality client that you would like to see more of in your firm? And if so, we'll track back to how did we gain this client? What avenue of marketing brought this client to you? If it was not a great client, maybe you'd start not targeting the market towards those. And then maybe directing even your blog posts or however you're getting your clients, because referrals are king when we talk about working with attorneys. That's how they get the majority of their clients. Attorneys get— depending on the practice area, you do get a lot from referrals. And you want that referral base to be open and pretty well. But you also want to know, how well did you like the client? What kind of quality services did you provide? Especially if you're a bigger firm and you have attorneys on staff, you're looking to see what What kind of a quality service did the attorney on your staff provide to this client? And this is a score of 1 to 5. I like to do it, not make it too broad of a scope, but you could do 1 to 10 as well. And then you're just going to create a field. And this again would be a field that's going to populate on the invoice, but not really— it's not client-facing. You've already maxed out the client-facing with the ones that are here, and you just want this for in-house. They'll never see it. If you print an invoice, it doesn't show. So that's an important piece to remember. So let's go over here, we'll add another field, and this would be more of your quality of your client score. And again, you could do 1 to 10, um, and then you can do data type. And again, uh, you could do— I like to do a dropdown because then you're not like someone puts 14 and you only wanted 1 to 10. So Same thing. You're just going to go 1, 2, 2, and then you can keep going. 3, you know, it's up to you how far down you want to go. And then you want to make it on that invoice again and then save it. So you will give the attorneys a little list of what 1 means, what 2, 3, 4, and 5 mean. 1 might mean spectacular. I did a great job with this client. I provided the best quality of services. Couldn't have been better. And then maybe 5 was I did a terrible job and I should have done this, this, or this better. And you can have them expand on it, maybe with a Google Form that would go out after you send maybe a Zap and get a trigger here. But at least this way you can have something to— black and white numbering system that will help us be able to analyze the data, analyze this particular KPI. This one's a little bit more fuzzy, but it's also a way that you can do this. You could even do this just in a Google Form and not attach it to the accounting, but it's nice to have that rating system here. And this is great for staff, maybe staff attorneys, or even the partners. Everybody can have it. I recommend maybe making a Google Form. So once the matter is closed, that can trigger the admin to send out a Google Form with somewhat of a rating system. You can have it all built out what 1, 2, 3, 4, and 5 means. 1 could mean I did the best job I could possibly do, and this is the most spectacular services I could have provided to the client. And then maybe 5 is like the complete opposite. It's this job could have been done, handled better, it really went poorly. And so you have an idea of what this could be, and then the admin can go back in, or the bookkeeper on staff could go back in here and just tag the invoice with that rating. And we're able to pull those metrics out and really analyze them for you. And this last, absolute last one is the client satisfaction score. It is the same exact thing. You're going to create that custom field, and you only are allowed to have 12 on a customer, and I have way too many to actually show you. I'd have to Get— it makes them inactive on my file. But you would have client satisfaction score, again, a rating 1, 2, 3, 4, 5. And then you just have that person call the client at the end of the matter and say, hey, how did it go? I would create even another Google Form and create something with questions. So when you make that phone call, when that person makes the phone call, they're asking the same exact questions of the clients, taking notes, taking in information so that you're able to see if there's a bad apple in your staff, or maybe somebody that's just outstanding that maybe in your partner meetings or in your staff meetings, you could bring that person in and share with the other ones what that person is doing to help everybody work together as a cohesive unit and help each other learn and grow. If you're getting one attorney that's just getting amazing ratings, find out what that person is doing so that the rest of the staff can continue on the same way. So I hope this was helpful. If you have any questions or comments, or maybe you're an attorney on a law firm and you want to get these kind of metrics and data and, and some, some statistics out of your file, you want to grow and you've got multiple partners and multiple staff members and you just want to find a way to make things flow more easily and get a great workflow involved, we can help you with that. Just reach out. We have a full accounting team, so we can actually do the accounting as well, but we can also work at this kind of a level where we're really analyzing your data for you and helping you grow smartly. Thank you. Bye now.