How to Become a Data-Driven Law Firm
At first, the idea of combining data and law may seem entirely out of context. After all, when you think of practicing law, probably the last thing that comes to mind is a series of numbers or data-packed graphs. Yet, as new as the concept may seem, data analysis can be one of the best tools you have in your law firm to stand out against the competition. Advancements in data and analytics have made it more possible than ever to grow your law firm and become the most sought-after law firm in your area.
More and more law firms are turning towards a data-driven approach to the way they do business. Because of the insight gained by looking at specific patterns in their practice, a data driven law firm can improve their performance, increase efficiency, and address any bottlenecks in their practice that come up in the legal data reports.
And although the idea of deciphering data may sound intimidating initially, becoming a data-driven law firm is much simpler than it sounds. By using the right software, you can run data reports that are extremely easy to generate, and even easier to understand. By using visual analytics, you can observe valuable patterns in your practice and compare them to the competition. Visuals make it easy to process and understand your law firm's patterns from a glance, making it easy to guide your law firm towards growth.
Running reports regularly can help you increase your referrals, encourage repeat business, and ultimately skyrocket your revenue. So, what exactly does being data-driven entail?
What is data-driven
A data-driven law firm prioritizes measuring its performance and addressing any issues by making use of data. A data-driven approach means examining any inefficiencies in your practice and where you have opportunities to grow. For example, you may choose to compare the amount of revenue that you're bringing in this year compared to last and find out what the cause is behind it. You may use data to identify where your most valuable leads are.
Data can often help you find problems in your client intake process that you didn't even know were happening. It may also reveal that operations you thought were efficient may actually be hurting your law firm in reality. By arming yourself with the knowledge that data provides, you can better plan for the future and ultimately generate more business.
How Your Law Firm Can Benefit From Being Data-Driven
Better planning
The only way to set yourself up for success is to think far beyond into the future. However, it's much more difficult to anticipate the future of your law firm without the help of data to go off of. Law firm reporting software can help you anticipate and plan for things that might have otherwise caught you off guard.
For example, examining your data can reveal that certain times of the year are often slower than others. By observing this dip in your reporting software, you can better prepare for these less-than-profitable moments.
You can also better understand your clients' behavior and plan accordingly. For example, you may notice that certain marketing campaigns have been more effective amongst a specific demographic of clients in the past. By using audience segmentation software, you can target and tailor your marketing emails based on demographics to get the best possible results based on past behavior.
Clear assessment of where you stand
Many law firms aren't producing the kind of numbers that they'd like to see; however, they have no idea where to begin when it comes to addressing the problem. Data can take the guesswork out of where your firm can make improvements and help you determine precisely what you need to do to reach your goals. What's more, you can stay accountable for how close you are to achieving your goals. By using goal tracking for law firms to track and assess your performance you can reach your objectives sooner.
Time gained
Statistics show that law firms spend a considerable amount of time each week on tasks that aren't billable. Between following up with leads, drawing up complex paperwork, answering phones, and all of the other administrative work that it takes to run a law firm, it's no wonder why lawyers feel like they never have enough time left for their clients.
In fact, many lawyers don't even realize how much time they're spending on administrative tasks compared to working on their clients' cases. Often, data can reveal the shocking reality that they're losing a considerable amount of time on things that could have otherwise been automated.
When you start to see where your firm's productivity stands, thanks to data, you begin to realize how much room for improvement you have. By implementing a CRM for attorneys and attorney intake software, you can save a considerable amount of time for your law firm and, in turn, create happier clients.
Improved client experience
Data can play a significant role in improving your clients' experience. By identifying the areas that you have to grow in, like your client intake process, you'll be able to make things as efficient as possible and, in turn, delight and retain your customers.
Taking a look at metrics like what percentage of your clients come back for repeat business and how many referrals you're getting can help you determine whether your client's journey is where it needs to be or not. The more information you have, the better you can fine-tune the experience you provide for your clients.
Increased revenue
Efficiency and revenue go hand in hand. The faster and more efficient you can handle each client, the more revenue you'll be able to bring in. Key performance indicators like which parts of your firm are generating the most revenue and which aspects of your practice you're losing time on can help you maximize your workday and make the best possible use of your time— in turn generating more money for your law firm.
Step by Step Guide: Using Data to Drive the Success of Your Law Firm
Signs you can benefit from tracking your law firms data
Losing track of leads
The minute that a law firm gets contacted by a lead, whether through a legal client intake form or by phone, it's essential to follow up. Without a reliable client intake process, there's no way to keep track of each interested prospect. If your firm often has issues knowing whether leads have been followed up with or not and what stage of the intake process they're in, then chances are you could definitely benefit from data and analytics.
Better insights into where the problem areas are can help you track each stage of your client's journey and deliver the best possible experience, pinpointing where you need to improve your process. From improved communication to a better idea of who your best leads are and where they stand, data-tracking can help you grow your practice and tackle challenges.
Dip in revenue
It goes without saying that profit is the ultimate goal at your law firm. Even though you may have a passion for getting your clients the best possible results for their case, ultimately, you're there to make money. However, if you find that you're not generating as much as you would like to despite how hard you're working, data can help you identify where the problem areas lie.
By looking at your numbers under the magnifying glass of data and analytics, you can adjust the way you do things based on what the data is telling you. From knowing where your time is going to how much of your day is dedicated to client intake, key performance indicators can help you track the essentials and get your numbers back to where they need to be.
No idea where your leads are coming from
If you start to look at your law firm as a business (which is what it is), then you should have a clear understanding of your marketing efforts. Since marketing can be a significant investment, it's crucial that you have proof that your hard-earned dollars are giving you a return on your investment. If you have no idea where your leads are coming from or how they're finding your firm, then you most certainly will benefit from using data and analytics.
Once you know exactly where your best leads are coming from, you can focus your energy and resources on those sources and spend less time putting your time and money towards efforts that aren't getting you any results.
Unhappy clients
The truth is that your job as a lawyer is much more than just getting the best possible outcome in your client's case. You should be focusing on the overall experience that you provide your clients throughout the time you work together. If you're producing unhappy clients, you're not going to get many referrals or positive online reviews.
Data can help you identify holes in the client lifecycle that may be leading to their dissatisfaction. In turn, you can deliver the best possible experience that leads to repeat business and plenty of referrals.
Spending the majority of your week on administrative tasks
Regardless of what size your law firm is, it takes a lot of administrative work to keep your law firm running. A recent report revealed that lawyers spend nearly 50% of their workweek on administrative tasks. If you're losing your time on tasks that could have otherwise been used for your paying clients, then you could certainly benefit from data insights. Sometimes you may not even realize how much time you're losing in reality on menial tasks that could have efficiently been completed with tools like automated email workflows for law firms.
Thanks to technology like law firm client intake software, you can take control of your workweek and let technology handle tedious administrative work so you can focus on what matters most— getting your clients the best possible results
Lacking goals
No business can expect to grow if they don't have clear goals set in place, and a law firm is no exception. In order to expand as a law firm, you should have a clear idea of what it is that you hope to do.
The more specific that you can be, the more likely you are to reach success. If your law firm has no idea of the specifics of what it hopes to achieve, then data can help you identify the areas of your practice that need to improve. Thanks to the information provided by data analytics, you can pinpoint where your goals should be focused.
How to become data-driven
Now that you have a better idea of some of the benefits of being a data-driven law firm, it's time to start putting things into action. If you're ready to start making data-driven business decisions at your firm, then here are some of the best ways to get started.
1Set clear objectives
The best way to get started with using data is to decide what you're going to use it for. Be as clear as possible when setting your objectives in order to get the best results. Where do you hope to see improvements in your law firm? Is your primary concern your clients' experience? Would you like to see an increase in referrals? Maybe you'd like to see an improved email marketing performance. Perhaps you'd like to make your client intake process as efficient as possible with fewer errors. Whatever objectives you decide on, make sure that you are as specific as possible. Specifics are vital to the success of using data to make improvements.
2Run regular reports
Running a data report once isn't enough to make improvements. You'll need to run regular reports to stay on top of whether you're meeting your targets. Checking your data is a repetitive cycle that involves revisiting your data repeatedly until you see the results you want to see.
Depending on what metrics you're tracking, you may need to run the numbers weekly, monthly, or in some cases, even yearly. Get to know the frequency for each to make sure that you're staying accountable. By regularly repeating the reporting cycle, you'll ensure that your efforts are really making an impact.
3Embrace change
Often technology and the business side of law firms are severely overlooked. In order to make the most out of what data can do for your firm, you'll have to embrace change. It's not uncommon for lawyers to resist changing the way they do things. Introducing things like technology into their practice can be an uncomfortable change from what's familiar. Yet, if you hope to keep up with the competition, you must switch your mindset and embrace evolution at your law firm.
Although change can be uncomfortable and often completely alter the way that you do things in your practice, particularly when it comes to marketing and onboarding clients, the only way to reach your goals is to challenge yourself. Instead of allowing yourself to believe that just because your business model worked up until now that it will continue to work, focus on becoming more efficient. By embracing innovative new methods like becoming data-driven and constantly striving to innovate, you won't just stay ahead of the competition, but you'll downright thrive.
4Prioritize efficiency
Any lawyer can tell you that there never seems to be enough hours in the day for everything that needs to get done. From accounting to marketing to administrative tasks like billing, there's a lot that goes into keeping a practice running. Unfortunately, far more often than they would like, lawyers are forced to choose between administrative work over tasks they can bill for. The end result is often a law firm dragging in efficiency and pulling their attention away from what matters most at their law firm.
Running regular data reports can identify where most of your time is being lost and show you opportunities where you can be more efficient. From individual performance to tracking how many open matters you have, you can learn to manage your time better and use technology to your advantage to automate tasks instead of losing time doing them manually.
5Adjust fees accordingly
Although the pandemic has changed the way that law firms will operate forever, many law firms were already moving towards a different law pricing model before COVID hit. The reality is that traditional law firm data pricing doesn't appeal to all budgets, and in many cases, doesn't prioritize client satisfaction. Now more than ever, clients want to see value-based pricing that focuses on the client's needs above all else.
If you don't offer a flat fee system, many people will turn elsewhere to a firm that does because flat fees are much easier to understand and are perceived as better value.
However, many lawyers are hesitant to move towards a flat fee system because they fear that they may not be fairly compensated for the amount of work that they put into a case. With the help of data, you can look at your previous cases and estimate the total value based on how much work was involved depending on the case type and client.
By having actual numbers in front of you from prior cases, you can develop a fair pricing system for you and your clients and keep up with the competition in your area.
6Readjust goals regularly
Data-driven law firms know the importance of measuring, repeating, and adjusting their goals accordingly. Over time, your goals will likely change as you make improvements in different areas.
As you collect data and make improvements along the way, change your goals accordingly. It makes no sense to run data reports on areas of your firm which are no longer a concern. Keep things simple and only focus on data that is relevant to what you hope to make improvements on. Get to know each KPI and make sure that it's pertinent to your firm's current goals. Otherwise, there's no point in wasting your time including that in your reports.
7Keep it simple
One of the biggest reasons why lawyers are resistant to incorporate data into their practice is because it seems overly complicated. However, by using law firm data analytics, you can digest data in an easy-to-read format that keeps things simple.
By using law firm performance management software that anyone in your firm can understand, you'll lighten the load and keep things easy to digest and easy to make changes with.
Lawmatics CRM for lawyers reporting and insights software makes it easy to glance at the key metrics at your firm that make it easy to strategize growth and room for improvement. From seeing where your best clients are coming from to how close you are to reaching your monthly revenue goals, legal reporting software simplifies your processes and makes changes in your law firm's performance easy.
Best tips for running data and analytics reports
Create S.M.A.R.T. goals
The best way to follow your law firm's progress is by being as specific as possible about what it is you're tracking. To get the best results out of data, you should create goals using the SMART system.
Specific
It helps you stay focused on your progress by setting clear and specific objectives that are relevant to your firm. In addition to specifying precisely what your goals are, you should also include what it will take to get there. What will you need? What are you set out to do? Most importantly, how can this goal help you achieve your overall vision as a law firm?
Measurable
In order to make sure that your goals can be met with the help of data, you need to ensure that they are measurable. How can you hope to keep up with your progress if you don't have a goal that can be measured? Ensure that any goals you set include quantifiable details, such as how much of something you'd like to create or achieve within a certain amount of time.
Achievable
Any goals that you set for your law firm should be realistically achievable. Ultimately, anything that you set out to do that isn't an attainable aim will only frustrate you in the end. Set goals with your data reports based on where your firm currently stands and set out to achieve daily or annual targets that can realistically be accomplished with the resources you have.
Realistic
Make sure that any goals you set out to are reasonable and realistic. For example, setting out to eliminate all administrative work at all in your law firm probably isn't realistic. Although you can rely on features like marketing automation for law firms to free up a considerable amount of your law firm's time, eliminating administrative tasks altogether isn't a reality.
Instead, create a realistic goal that includes streamlining and automating your processes to reduce the amount of time you spend on administrative work rather than setting out to remove it altogether.
Time-bound
Any goal that your law firm sets needs to have a target date. Deadlines help you stay focused on working towards what you set out to achieve. Always attach a date or period of time to your goals. That way, you know how close you are to your deadline and whether or not you're going to achieve what you set out to do.
Run a report on a schedule
Data can be incredibly valuable for improving and streamlining your law firm's operations. However, running a report once isn't enough to make a difference. You'll need to run reports on a schedule to get the most out of data. A data-driven firm is laser-focused on running reports frequently to ensure that they're on the right track. From billing targets to productivity targets, running reports on his schedule will help you better form your strategies.
Act immediately
Gathering data for your law firm to better understand your clients and any holes in your processes can only make a difference if you take action on it. The key to becoming a data-driven law firm is to be agile and reactive. You're not fully taking advantage of the value of your data unless you act immediately to make changes.
Data has the power to help you improve your strategies from drip email marketing to client delight and reduce lost time and money, and can improve your bottom line— but only if you act right away!
Become a data-driven law firm with Lawmatics reporting and insights software
Becoming a data-driven law firm means gathering information about your law firm's patterns that can help you make better decisions for your growth. Taking advantage of data can improve your relationships with your clients and significantly increase your law firm marketing efforts.
Despite data being relatively new in the legal world, the truth is that the best-run law firms in 2021 are data-driven, and because of this, they set themselves apart from the competition. If you're ready to see how Lawmatics legal reporting software can help you track, manage and improve your law firm's performance, then sign up for a free demo today.