10 Analytics Law Firms Should Care About: How to Measure Success
As a lawyer, you don’t have any time to waste. Every minute costs valuable dollars, so you don’t have time to spare on things that don’t produce results and profits. Simply put, you need to know what’s working and what isn’t working, so you can focus your time on getting the most favorable outcomes for clients.
Thanks to data, your practice can save time by accessing accurate insights that provide opportunities for improvements. With a CRM for lawyers, you can monitor and measure your law firm's performance and, in turn, make data-driven decisions to grow your profits.
There are endless possibilities of what you can measure to make valuable changes where needed. Once you know what to measure, you can use that information to make improvements in your business's performance. Though, it goes without saying that you can't measure anything that you're not tracking first.
The first step to overall improvement and streamlining your law firm is knowing the most important metrics to track. Once you collect the appropriate data, you can determine where the holes are and what changes need to be made.
Before the word, “data-driven” starts to conjure images of numbers coming from all directions like a scene out of The Matrix, rest assured that it’s really not that complicated.
Think less complex graphs and pie charts, and more simple reporting insightslike how many hours you’ve billed in a month or how many website conversions you’ve had. The right CRM for attorneys includes an easy-to-read law firm dashboard that helps you better understand where you stand with your leads and clients and make improvements where necessary— all by observing metrics.
These law firm metrics are known as key performance indicators, or KPI’s, and they’re the key to targeting the unique goals of your law firm and implementing necessary changes.
Get the most out of KPIs by setting goals for your law firm
A KPI is useless unless you have the right goal set in place. Without goals, how can you truly determine your success? A lot of lawyers assume that they already have the right goals in place. Unfortunately, many of their goals are vague and lack clarity.
So, How can you determine what the right goals for your practice are?
Create a long-term vision
The first step is seeing where you want to be down the road. Take a good look at your vision and specify what you see. How big is your practice you see in your mind? How many clients do you have? Where is your practice located? What kind of practice areas do you specialize in? How many open matters do you handle a month? What is your average bill rate? The more specific you are, the more clarity you'll have about whether you're making progress or not.
Be S.M.A.R.T.
Chances are, you've probably heard of the handy acronym SMART. SMART stands for Specific, Measurable, Attainable, Relevant, and Timely.
Being SMART when setting your practice’s goals helps you pursue them even more effectively.
Specific
Vague ideas of what you'd like to accomplish will only create limitations. Consider all of your goals in fine detail, and include any resources, like a legal CRM, that you'll need in order to achieve them.
Measurable
The only way that you can hope to achieve your goals is to measure them. By measuring them with KPIs, you can break your goals up and take an inventory of how well you're performing as you go. Otherwise, it's impossible to know whether you're making progress if you can't measure where you are as a law firm.
Attainable
It's vital that you're realistic when setting your goals. That's not to say that you shouldn't shoot for the stars, but you should also make sure that what you're setting out to do is genuinely attainable.
You'll only get frustrated if you set goals for yourself that aren't practical. Empower yourself by creating intentions that are within your reach.
Relevant
When choosing your objectives, ensure that they tie into your overall long-term vision. Don't get distracted by what everyone else is doing if it doesn't relate to your vision. It's easy to fall victim to the noise surrounding you, especially in the legal industry.
Keep your eye on the goal and avoid following the behavior of others just because everyone else is doing it. Stay true to what you hope to accomplish and how your goals are relevant to that, and you can't go wrong.
Timely
Goals are great in and of themselves—but they're not worth much unless there are deadlines attached to them. Every goal and objective that you define for your law firm should have a time stamp.
Creating time-bound goals increases your accountability and helps you stay on top of your achievements. They also help you make changes where needed.
The SMART method can be applied to setting goals for every area of your practice. From client satisfaction to an effective intake process, SMART goal setting will better help you hit your objectives and choose the right KPIs.
Communicate them with your team
While writing down your goals can be incredibly effective, they're not worth much unless you share them with the rest of your team. By sharing your vision with the rest of your team, you won't just be increasing your accountability, but you'll also be sharing the load. Together, your team can lay out specifics of how they hope to achieve your objectives step by step.
Remember, when creating your goals for your KPIs, you should also attach a “why” to each—this makes your goals much more motivating to accomplish. Now that you’ve got an idea of what your objectives are, let's break down how to use key performance indicators to measure your progress.
What is a KPI?
You can think of a KPI as a quantity that indicates how well your law firm is achieving its goals. While traditional input metrics may seem like enough, KPIs can much more accurately demonstrate your overall performance as a law firm. They provide a quantifiable measure of how well your processes are going on an overall level as well as individual levels.
General data can only help you so far. However, the succinctness of a KPI makes it much more realistic to take in and act on.
Once you have the right law firm reporting at your fingertips, your firm will be in a position to improve overall client satisfaction, earn repeat business, new referrals, and ultimately skyrocket your profits.
Step by Step Guide: Using Data to Drive the Success of Your Law Firm
5 benefits of tracking your law firm’s KPIs
1Better assessment of your performance
Data helps you measure into your progress by assessing whether you’re reaching your goals. You’re not just collecting data, you’re using it to evaluate how well you’re performing to make changes where necessary. Simply put, KPI’s provide knowledge to be the best version of your firm that you can be.
For example, can you say for certain who your top performing attorney is? What percentage of your clients come back for repeat business? How many open matters do you have and how many of them were referrals?
KPI’s provide a precise answer rather than an estimate arming you with the information you need to track your firm’s progress.
2Improved planning
Without the right insight, you have no idea why things may be going unfavorably at your practice. You can make educated guesses, and maybe you’ll even get lucky, but there’s no guarantee you’ll be able to make improvements. It's safe to say that you’re shooting in the dark towards an unclear future. With KPI’s however, you’re armed with specific indicators that don’t only tell you why things aren’t going well, but what results you can expect in the future.
By tracking the right numbers, make predictions and strategize based on solid data.
3Improved client experience
It’s easy to assume your clients are happy, but can you really say for sure? Measuring indicators like how many client referrals you have, or how many clients give you favorable scores through your firm’s surveys will give you concrete feedback on how happy your customers are after working with you
4Simplified process
Tracking data saves you time you may have otherwise spent on lengthy meetings brainstorming and speculating what’s going wrong. It eliminates any guesswork and gives you solid analytics that pinpoint where you can make improvements. It's as simple as monitoring your KPI's once or twice a month, by running a report in Lawmatics. The reports are so easy to understand that anyone in your office can be assigned the task of relaying what areas need work
5 Increased revenue
The most profitable law firms are the most efficient ones. Performance indicators help your firm evaluate where you can make improvements in your performance by supplementing your understanding. The more insight you have, the more results you’ll produce, the more results you produce, the more revenue you'll make, it's really that simple!
Now that it’s clearer why a data-driven approach is critical for your law firm’s success let’s explore the ten types of law firm KPIs you should be tracking.
10 Valuable KPIs your firm should be measuring
1Marketing
Why it matters
Your legal practice doesn’t have time or money to waste on marketing strategies that don’t get results. It’s critical to measure the efficacy of your law firm marketing investments so that you can make improvements and adjustments where they’re needed.
How you can measure it
You can identify the successes or failures of your marketing strategies by studying KPIs like, how many landing page conversions you had, how well your email marketing performed, and how many marketing actions were carried out.
Best practice and tips
Many law firms get it wrong when the amount they pay on marketing is greater than the revenue they bring in. Valuable legal metrics will help you appropriately determine whether your current marketing strategies are worth the investment and where changes need to be made to turn leads into clients.
Lawmatics custom reporting allows you to see where all of your leads are coming from, what actions have been taken so far, and what further steps you need to take. Tracking and setting new goals is as simple as a few clicks with the right law firm marketing software.
2Client acquisition
Why it matters
Client acquisition KPIs give you the power to see what you’re doing that effectively gets leads to become clients. Seeing it all laid out helps you assess the overall effectiveness and ineffectiveness of your lead conversion pursuits.
How you can measure it
You can see what's working for your firm by looking closely at analytics like how many new cases and matters you’ve opened, the total number of new clients, what sources clients are converting from, the number of client no-shows, and the value of each case.
Best practice and tips
Many firms realize that once they examine the data, their lead-to-sale conversion rate is not anywhere that it should be. In many cases, the data reveals that too many leads are falling through the cracks, and a systematic client intake process like Lawmatics offers is called for.
3Client development
Why it matters
Converting a lead to a client is only the first step. Doing an efficient job for your clients is your most important responsibility as a lawyer. Resolving cases effectively is how you build a positive reputation for your firm and win repeat business. Client development KPIs can help you track your performance with clients and identify where you can make positive changes.
How you can measure it
To get a birds-eye view of where you stand as a whole with your clients, you should be looking at data like how many cases have been closed, the average value of each closed case, and the number of matters per client.
Best practice and tips
By assessing analytics like these from each case, you can gain a better understanding of where your law firm can improve its efficiency.
4Client satisfaction
Why it matters
It goes without saying that client satisfaction is the backbone of any business's success, and your legal practice is no exception. Yet, despite being such an important metric for success, almost half of law firms don’t bother collecting client feedback.
How you can measure it
You can measure and improve client satisfaction by looking at KPIs like your number of client referrals, scores from client surveys, and your client retention rate.
Best practice and tips
Don’t make the mistake of focusing all of your energy on new clients instead of recognizing the value of clients you already have. Client loyalty is one of the most worthwhile goals that your firm should aim for. The key to repeat business is making your customers happy, and KPIs can help you measure that.
5Revenue
Why it matters
Tracking your revenue may be arguably the most important metric for your law firm. It helps determine how well your position is compared to the competition and helps decide whether or not you're in a position to expand your law firm. Many lawyers shy away from analyzing their revenue, assuming that as long as they have money left over after their expenses, their law firm is turning a profit. Unfortunately, there's so much more to cover.
How you can measure it
Running your total amount of revenue over a specified period can help you see where your revenue is coming from and what improvements you can make to increase it. Revenue KPIs provide more than just a simple number— They offer a total picture of where your practice stands in its total profitability.
Best practice and tips
Having a clear picture of where you are can help you better understand where you'd like to be. Once you have that information, it's much easier to not only reach your profit objectives but even exceed them.
6Billable hours
Why it matters
While running a successful law firm doesn't ride solely on all things billable ( a positive customer journey for example is more profitable than a few billable hours in the big picture), your billable work is still an important metric to analyze. Your long-term success rides on bringing in more than you pay out— so, having a clear idea of how many billable hours you're bringing in is an integral part of understanding your firm's monetary situation.
How you can measure it
Retrieve your total billable hours to calculate only what you've earned but also your potential earnings. By comparing how much billable work, you have collected over a specified period compared with what your available hours were, you can set realistic targets for where you can make improvements.
Best practice and tips
Your firm can start performing better almost instantly by looking at the total amount of billable hours you’ve logged compared to your availability. Many firms are in for a rude awakening when they realize how much time they lost on administrative tasks that could have been automated.
Your primary objective should be practicing law — analytics can reveal why you don’t have enough time for what matters most. By using Lawmatics reporting feature combined with its legal intake software, you’ll be able to see immediate improvements in the amount of time you have to devote to your clients cases.
7Website traffic
Why it matters
Most lawyers think of their law firm's website as a brochure for their services. It's an opportunity to showcase how they can provide excellent service for their clients and why they should choose them over the competition—bla bla bla.
News flash. The mentality that your legal website is nothing but a brochure is outdated. The truth is that it's so much more than a digital brochure— it's a lead magnet. If you can bring web visitors to your website, then you'll produce more leads. You don't have to go to business school to know that more leads equal more clients—more clients equal more revenue.
You get the idea.
How you can measure it
One of your primary goals as a law firm should be driving your website traffic. The number of visitors alone isn’t enough. The best way to start is knowing how many website visitors you have now and how many of them convert into clients.
For example, recent case studies have determined that the average legal website conversion rate is somewhere between 2 and 4%. By taking your total number of converted visitors and comparing them with industry standards, you can determine whether your numbers are where they need to be or not.
Best practice and tips
By devoting time to identifying how well your website is performing you can significantly increase your leads. In addition to your website you should be focusing on other ways to market your law firm to get the most out of your marketing efforts.
8Average bill rate
Why it matters
It's vital that you take an inventory of what you're bringing in each month on each case. Instead of speculating what your average bill rate is, you should get serious about finding the exact numbers. Doing so will help you identify whether your profit margin is where you need it to be and why some bills are higher than others.
By measuring how much your average rate is per month, you'll not only increase your accountability, but you'll be able to pinpoint where you should focus to reach your financial goals. It can also be incredibly useful for measuring the individual performance of each of your team members. You might find that some are dramatically outperforming others after looking closer.
How you can measure it
Average bill rate matters because you need to fully understand the total impact of your firm's profitability and what the contribution from each of your attorneys is. By completing and analyzing your average bill KPIs, you can take corrective action wherever needed.
Best practice and tips
You may have an idea of who your best performing staff members are, but you can’t say for sure without solid data. The only way to make improvements where needed is to identify where your strongest and weakest links are and act accordingly. Bill rate KPIs create accountability amongst your staff, and motivates everyone to push harder.
9Open matters
Why it matters
Part of your firm's goal-setting process should be deciding how many matters you’d ideally like to take on each month. By tracking the number of open versus closed matters your firm has per month either individually by attorney or as a whole, you’ll be able to determine how close you are to your goals.
How you can measure it
By using a practice management system that tracks open matters metrics your firm will have an exact number of whether you need to make changes or whether you’re pretty close to where you’d like to be.
Best practice and tips
If you’re not keeping track of your open matters, then you’re not reaching your full potential as a law firm—it's that simple. The only way to be as efficient as possible is to have a clear understanding of how much profit you’re making versus how much potential profit you could be making, and that starts with how many matters you’re currently handling.
10Completed tasks
Why it matters
Think of your law firm as a machine. The only way to keep the machine running is if everyone is doing their share. Every tiny element that goes into keeping the motor running needs to be taken care of. Otherwise, even just one glitch in the process could cause everything to fall apart. For this reason, you must track whether your tasks are being handled.
How you can measure it
If you're like most law firms, everyone in your office is wearing multiple hats throughout the day. From meetings to deadlines to follow-ups, there's a lot of pressure to complete it all. The key to ensuring that you maximize your efficiency is to keep close track of all of the tasks.
Failing to do so won’t just result in losing sight of the bigger picture.—failing to complete all of your tasks will lead to lower customer satisfaction. This is where Lawmatics steps in to help you manage the tasks in your practice through automation.
Once you recognize what tasks are being neglected when looking at your metrics, you can use our attorney intake software and CRM to automate it for you, so you can focus on winning more cases for your clients.
Best practice and tips
The key to an organized and focused practice comes down to breaking projects into actionable tasks. A law firm CRM makes it easy to track and report each task as it gets done ensuring that nothing gets left behind.
How to get the most out of your KPIs
Set goals
The first step to knowing what corrective action to take is understanding what your goals are. Be as specific as possible when creating your law firm's objectives.
You can only effectively apply what you learned from your KPIs by setting precise and realistic goals. Perhaps you'd like to take on more matters per month—or maybe you'd like to better streamline your intake process. The more specific you can be about what your aims are, the more useful your KPIs will be.
Choose KPIs appropriate for those goals
Now that you have an idea of some of the best KPIs to monitor, choose the most relevant ones for your firm's objectives. Don't track just for the sake of tracking. Ensure that you know exactly what each KPI is saying and how it applies to your firm's current goals.
Measure the results monthly
In order to get the most out of your KPIs you need to make sure that you measure your results every single month. Letting it go too long between reading your insights can cause holes in your firm to get even bigger.
The idea is to catch problem areas early on so that you can rectify them immediately. Reports help you spot problems promptly so that you can make the appropriate changes when you need to.
Make changes
Once you have the right data at your fingertips, it will be easy to make changes where necessary. Corrective action starts with knowing what needs to be done— and legal reporting software will tell you exactly where the changes should be.
Update your KPIs as needed
Your practice is constantly evolving, so your KPIs should too. If you chase the same KPIs constantly, then you risk wasting your time on objectives that aren't relevant for your law firm anymore. In addition to reporting monthly, you should also decide which ones can be gotten rid of altogether.
Analytics are critical for the efficiency of your law firm
The only way to ensure your law firm's success is to carefully consider and analyze the bigger picture.
By analyzing KPIs, you can gain better insight into how well you are reaching your goals, meeting your clients' needs, and what changes you need to make for the future success of your practice.
Without a reliable client-attorney platform, important legal data is nearly impossible to gather and report. By using a centralized platform like Lawmatics, you can monitor how many leads you’re generating and how many you’re converting into actual clients with law firm custom reports.
However, knowing where you need to make improvements without having the right tools under your belt isn't enough. You'll need to have a solution in place once your KPIs show you the areas of your practice that need improvement. The right law software is the only way that you can get organized and make improvements in the specific areas where it counts most.
A legal practice management software like Lawmatics will transform the way you run your practice and track your tasks for you so you can focus on practicing law.
Automated documents, client self-scheduling, a simplified intake process, and e-signatures are just a few of the ways that Lawmatics can equip you with everything you need to reach your firm’s unique goals.
Are you ready to get more insight into your law firm's performance and make improvements where it counts most? Sign up for a product demo to learn how The Lawmatics Client-Attorney Relationship Management Platform can help!