More from Litify
March 11, 2019
5 min read
Law firms accumulate and hold a tremendous amount of data, but the majority have limited access to this information. With the help of technology, firms are unlocking deep insights about their practices to improve client outcomes, maximize staff efficiency and financial performance, and grow and scale like never before.
By using technology to streamline your firm’s business processes, you can easily enable firm leaders to access the data needed to improve operations, business development and intake, performance and efficiencies, and client satisfaction.
Key Performance Indicators. As the old saying goes, you cannot manage what you do not measure. To understand your firm’s performance, it is essential to collect data on Key Performance Indicators (KPIs). Firm KPIs can be very specific, based on characteristics of the type of practice and should objectively measure what is important. There is no one-size-fits-all list of KPIs, rather, the most valuable KPIs are designed specifically for the individual firm so as to truly paint a picture of how the firm is performing. Litify has spent the time to consider many of the KPIs firms need most and offers an integrated data visualization application that makes your data work for you.
Firm Operations. Do you know the cost associated with acquiring a new client? Marketing, pitching work, intake processes, and consultations all involve monetary and time expenses and in legal, time is literally money. Developing a deep understanding of what matters are worth and what time and budgetary expenses are involved with bringing in work can result in significant gains for your firm. Does your firm regularly bill? Billing is among every lawyer’s least favorite tasks, but assuming your practice is not taking all clients on pro bono, do you know what makes billing painful? Do you end up haggling with clients over fees and end up reducing your fee regularly? To this question, what is your firm’s realization rate?
Many firms are unable to track these metrics and miss out on developing a deeper understanding of the strengths and weaknesses of their practices. By identifying KPIs that focus on specific data points such as billable hours per timekeeper, billing rates, staffing ratios and leverage, cost recovery, percentage of hours by attorney role (e.g., partner or associate), you can paint a picture of your firm’s operation performance and identify areas to improve. Without the key data, finding solutions to problems is nothing more than a guess-and-check process. The right data can help to pinpoint a problem and then track how changes might be improving outcomes.
Business Development and Intake. Efficiently and effectively bringing in new clients is essential to firms of all kinds. Developing KPIs that provide insight into what matters best fit your practice can help firms establish a strategy for pursuing new work and engaging the best-fit clients. KPIs can track the cost of marketing and business development per client. Other KPIs can track client growth (top-end client growth year-to-year), cross-selling opportunities (practice area utilization within the firm), and active clients, year-to-year.
For example, for some firms, developing a clear picture of who to engage can be critical. Using KPIs that track billing and outcomes (e.g. damages awards), a firm can develop a profile of a profitable matter and use this profile when deciding on which clients to take on during the intake process. Litify’s intake app includes a client quality rating scale and using outcome data, firms can determine during the intake process if the matter is worth taking on. This action can potentially save time and money for the firm.
Performance and Efficiencies. Delivering effective legal service to clients is important to client outcomes and to the firm’s bottom line. Delivering quality services inefficiently hurts the firm, while delivering low quality services quickly puts clients and the firm at risk. Measuring firm performance with the right set of KPIs can help firms deliver services better, faster, and cheaper.
For example, KPIs focused on matter outcomes can track the time it takes, on average, to resolve certain types of matters. Over time, tracking this data may reveal that some matters are not worth taking on as they require significant time and are not cost-effective for the firm’s business model. This same data may help firm leaders identify practitioners who take significantly longer than others to resolve certain types of matters, and can address issues that may be causing these delays.
Here, as in other areas, the best-fit KPIs depend a lot on the type of work a firm. That said, all firms should consider including KPIs focused on work product quality. Leaders can use this data to improve client outcomes, identify efficiency gains, better evaluate technology solutions, improve profit margins on types of work, identify practitioner strengths and weaknesses, among many other purposes.
Client Satisfaction. Client satisfaction KPIs can provide a window into how your firm is perceived by your current clients and prospective clients. Maintaining quality relationships with clients is a focus of every firm, but developing data around what clients think about things like your firm’s responsiveness, focus on their issues, and whether or not you are meeting your clients’ expectations can help identify areas where your firm can improve relationships and better serve clients. Learning about your clients’ needs and desires can open up opportunities to engage in new ways, allowing your firm to deepen your relationship and potentially grow it by identifying or anticipating issues, leading to additional work (e.g., through cross-selling opportunities).
The suggestions for KPIs discussed here is not meant to be exhaustive, but rather to help generate ideas for what firms need to consider. Many of these data points will be KPIs for every firm, but many of the most important KPIs must be identified by each firm individually. To get to this layer of firm-specific KPIs, firms should look at the data they presently collect and use these data points as an initial guide to what is important. From there, identify what else should be tracked. For many firms, where the data is housed could be an initial barrier to implementing KPIs. As a fully customizable platform, Litify is designed to allow firms to do client work, while it does the data collection for you for the entire life-cycle of your cases. Data scattered in many places will inhibit a firm’s opportunity to leverage that information. Litify provides a single practice management platform, allowing lawyers to focus on client work but still realize the benefits of a comprehensive data management program.
For example, the Litify intake app captures data about your firm’s client intake pipeline and can provide key data related to the types of matters your firm is taking on. This app can integrate with lead generators providing insight into effectiveness of these services. Based on data collected from past matters, firms can determine the quality of a specific matter and can make business decisions about what work to take on.
Benchmarking. Any KPI development plan should include identification of benchmarking data. This can be internal data (e.g., the first month or quarter of data collected) or can come from external sources (e.g., the ABA, bar associations, and other legal associations may have surveys available on certain data points). It is important to identify this benchmark data early on so that as new data from KPIs becomes available, reasoned comparisons can be made. Like other parts of the KPI development process, the benchmark data may not be perfect, especially at the outset of the project, improving over time as more KPI data is added to the dataset.
Dashboards and Visualization. Humans are by nature visual beings and can more easily perceive differences in size than discern what data in a spreadsheet might indicate. For this reason, Litify has established a suite of visualization tools within each of its apps and in the Litify Insights app. In the current legal technology landscape, tools that help attorneys identify trends merger deal terms, tendencies in decisions from specific judges, even evaluate the quality of court filings made by law firms are readily available. Few tools offer a window into a firm’s own operations. By using Litify to organize intake and matter work, your firm can benefit from the powerful Insight app that provides a true look into how your firm is operating and will enable you to make data-driven decisions to improve firm operations, client satisfaction, and profits. The Insight app has customizable dashboards and powerful reporting functions designed to provide firms with the tools they need to understand their performance quickly and easily.
Get Started. For firms, the hardest part of developing a data-driven business approach is determining what to measure in the first place. To start, consider firm operations, performance and efficiency, business development, and client satisfaction and focus on what KPIs paint a true picture of your firm. It is important to remember that this initial set of KPIs does not need to be perfect. In fact, KPIs will evolve as firm managers develop a deeper understanding of how the firm is performing and action is taken to address areas of concern and grow areas of strength. More critical than the KPIs themselves is what action is done once firm leaders have these insights in hand. Litify’s apps are ready to help firms organize their practices and matter life-cycle from beginning to end and to harness the data generated to provide you with the tools you need to efficiently make informed, data-driven decisions for your firm.
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