Lawyers live in a world where performance is paramount. And as the old adage goes, you cannot manage what you do not measure.
Measuring and monitoring the performance of pivotal aspects of your law business can make a major impact on your firm’s revenue, growth, and overall success. But to succeed in the ever-evolving legal landscape, you must know what metrics need to be measured.
And this is where key performance indicators (KPIs) can help.
KPIs provide law firm partners and administrators with analytics that give an overview of how the firm is performing. With the help of KPIs, business owners can see what’s working, what’s not working, and what needs to be modified. In this post, we’ll discuss the 5 essential KPIs that every law firm needs to track.
1. Monthly Client Acquisition
Clients are the lifeblood of any legal business. That said, clients’ acquisition data is paramount as it helps to determine how the firm is performing in terms of acquisitions, revenue, and growth.
As a business owner, one of your top goals should be to identify the number of new clients you want to acquire each month. Luckily, there are many software solutions that will not only help you track client acquisition but also determine the client acquisition costs.
2. Client Satisfaction
Client satisfaction KPIs can provide valuable insights into how your firm is perceived by your current and prospective customers. Maintaining healthy relationships with your clients is paramount and helps to portray a positive image of your firm.
When designing client satisfaction KPIs, pay attention to things like turnaround times, your firm’s responsiveness to clients’ issues, and referrals—client referrals are a good sign that your clients are satisfied with your services.
To better satisfy your clients, it’s imperative to educate your team on the importance of quality customer service. Your team will likely consist of legal professionals, non-legal staff—law clerk, legal receptionist, and aspiring law students. Besides mentoring your team on the right business etiquette, you should also advise aspiring lawyers on the best LSAT prep courses to take.
Is your budget appropriate for your team? Do you know the cost of acquiring new clients? What about your firm’s realization rate? If you don’t have these metrics, you’re operating blindly—and this can have serious repercussions for your business down the road. Key costs KPIs that you should measure include:
- Client acquisition costs
- Where your wages stand in relation to benchmarking surveys
- The size of your external expenditure against industry averages
- Average net overheads
When you have a grasp of your operational costs, you’ll be able to determine the services that are taking a toll on your revenues and take the right measures.
4. Monthly & Annual Revenue
Analyzing revenue data is extremely important to law firms, but many firms shy away from this analysis because pulling statistical data together is a complicated process. Key revenue metrics to measure include:
- Revenue per employee
- Revenue per matter
- Net income as a percentage of revenue
- Revenue per square foot
- Revenue to cost ratio
Tracking down these metrics is important because it helps you to determine how your firm is performing and its position in the market. Moreover, you may need certain revenue metrics, such as, revenue per square foot, when making expansion and recruitment decisions.
5. Website Traffic
Your website is the first place individuals looking for legal services will visit. To that end, increasing your website traffic is the first step towards increasing your client list, making it an essential KPI to track.
You can measure your website’s traffic in a variety of ways. For instance, you may choose to track what visitors do on your site, how long users stay on your website or even the most visited pages on your website. These metrics can help you redesign your website in ways that will help to increase traffic and provide a seamless browsing experience to users.
What other KPIs do you think are essential for law firms? Share with us in the comments section below.