The document discusses key performance indicators (KPIs) for measuring success at modern law firms. It begins by explaining why measuring KPIs is important for ensuring profitability and making data-driven decisions. Traditional law firm metrics like utilization and realization rates are discussed alongside recommended business metrics like cost of client acquisition, lifetime client value, and various profitability and productivity measures. The document provides examples of how one law firm measured and analyzed their client satisfaction, development, and profitability metrics to identify areas for improvement and adjust their processes. It emphasizes that regularly measuring, comparing to targets, and taking action based on the results of KPIs is key to continued law firm success.
3. Measure3 KPIs for Modern Law Firm Success
Billie Mary
Practicing Attorney – Modern Law
Access Legal
Mom
Law Degree | Canadian and US Professional
Accountant
Traklight | Evolve Law
Mom
ABOUT US
Identify innovation. Safeguard success.
5. MEASURE3
1. WHY MEASURE
2. BUSINESS INTO LEGAL
3. WHAT TO MEASURE?
4. MEASURE, COMPARE, & ACT
5. WHERE FROM HERE?
Measure3 KPIs for Modern Law Firm Success
See the conference application for KPI Worksheet | Slides.
9. GOAL: Understanding that measuring and acting upon KPIs will impact your Firm’s
profitability
WHY MEASURE
CASE STUDY: Modern Law’s Client Development KPI Measurement Part I
Measure3
KPIs for Modern Law Firm Success
10. (FEB 2015)
SNAPSHOT OF MODERN LAW’S CLIENT DEVELOPMENT PROCESS
ST
EP
1
ST
EP
2
ST
EP
3
ST
EP
4Book Potential
Client Calls
42 phone calls
scheduled
30-minute calls
40 Phone Calls
Completed
Done by Attorney
Billing @
$250/hr
New Clients
7 New Clients
One Referred
6 from Phone
Calls
Measure
18% Conversion
Rate
$5000 Billable TIme
Why Measure KPIs for Modern Law Firm Success
11. WHAT DOES THIS 18% MEAN? WHAT DOES THIS $5000 MEAN?
Nothing – if Modern Law
does not have a target cost
of customer acquisition.
Why Measure KPIs for Modern Law Firm Success
Nothing – if Modern Law
does not have baseline/target
conversion rate.
12. MEASURE AND ACT TO ENSURE PROFITABILITY
BILLINGS COLLECTED
Includes Marketing, Rent,
Admin Salaries
FIRM OVERHEAD FIRM FAILURE
$ $ $
Why Measure KPIs for Modern Law Firm Success
13. - Knowledge is power
- Car goes faster downhill with brakes
- Data driven decisions
- Not just cranking out billable hours
- NEED TO CREATE VALUE FOR CLIENTS
Why Measure KPIs for Modern Law Firm Success
Measuring Results vs. Guesswork/SWAG
14. 2. BUSINESS INTO LEGAL
Measure3
KPIs for Modern Law Firm Success
15. GOAL: View your Practice as a Business
BUSINESS INTO LEGAL
Step Back and look at Traditional Law Firm Measures
Business into Legal KPIs for Modern Law Firm Success
16. BORROWING FROM CLIO’S 2014 PRESENTATION:
a Jessica Pearson works60 hoursin a
week.
b She was in meetingsand talkingto
potentialclientsfor10 hours.
c Jessica billsat $250.
d She billed $10Klast week.
e Firm collected $7K.
Measure3 KPIs for Modern Law Firm Success
17. TRADITIONAL KPIs
1
Utilization Rate
83%
50 Billable/60 Available Hours
2
Realization Rate
80%
Potential to bill: $12.5K
50 Billable hours recorded @ $250
Billed $10K/$12.5K potential
3
Collection Rate
70%
$7K Collected/$10K Billed
4
NET Collection Rate
56%
$7K collected/$12.5K potential
<50% - $7K/$15K True Potential
Business into Legal KPIs for Modern Law Firm Success
18. - Focused on supply ofbillable hoursnot demand
for services
- Therefore not focused on the value ofservices,
client needs,orsatisfaction
- What about fixed fees???
- What about targets???
- Charging correct rates?
Need to focuson return on investment,contribution
margin,and cost ofclient acquisition,plusclient
and form satisfaction.All with targets.
Business into Legal KPIs for Modern Law Firm Success
Traditional KPIs...
19. 3. WHAT TO MEASURE?
Measure3 KPIs for Modern Law Firm Success
20. GOAL: Expand Traditional KPIs to include Business Concepts
WHAT TO MEASURE
Return on Investment, Contribution Margin, and FULL Cost of Client acquisition
Satisfaction Measures and Targets
Firm and Personal Level
Measure3 KPIs for Modern Law Firm Success
21. - Client Satisfaction
- Client Development
- Company Culture
- Cost of Client Acquisition
- Throughput & Productivity
- Profitability & Margins
- Individual Performance
Measure3 KPIs for Modern Law Firm Success
See the conference application for KPI Worksheet | Slides.
WHAT TO MEASURE
22. SEVEN AREAS OF KPIs
a Net PromoterScore (%)
b
CLIENT SATISFACTION
SalesConversion Rate (%) CLIENT DEVELOPMENT
23. c Average Work Climate Satisfaction
d
COMPANY CULTURE
Cost of client acquisition-CAC ($)
Life-time orAnnual customervalue – CVorLTV ($)
LTV to CAC ratio (ratio)
COST OF CLIENT ACQUISITION
e
Revenue perMatter($)
Contribution Margin perMatter($)
Attorney Leverage ($)
Paralegal Leverage ($)
THROUGHPUT & PRODUCTIVITY
24. f
Billable HoursPaid by AttorneygINDIVIDUAL
PERFORMANCE
Return on OwnerEquity (Investment)(%)
Profitability Margin(%)
PROFITABILITY & MARGINS
What to Measure KPIs for Modern Law Firm Success
See the conference application for KPI Worksheet | Slides.
25. 4. MEASURE AND COMPARE
Measure3 KPIs for Modern Law Firm Success
26. GOAL: See the Value of Measuring and Setting Targets
4. MEASURE AND COMPARE
CASE STUDY: Modern Law’s Client SatisfactionNPS
Measure3 KPIs for Modern Law Success
27. One Question aspart offollow-up:
“On a scale of0-10,how likely are you to recommendedour
firm?”
0- 6 Detractors
7-8 Neutral
9-10 Promoters
Modern LawTarget is90
Measureshowhappy clientsare with Modern Lawand
providesopportunity forcorrective actioneven aftermatter
is closed?
Very important for“one and done” type lawpracticesto
have the referrals and not the usual follow-onmatters.
Measure3 KPIs for Modern Law Success
CLIENT SATISFACTION
29. 5. WHERE FROM HERE?
Measure3 KPIs for Modern Law Success
30. GOAL: Understand the action required after measuring and comparing to targets.
5. WHERE FROM HERE?
CASE STUDY: Modern Law’s Client Development ProcessPart II
Measure3 KPIs for Modern Law Firm Success
31. a Our clientsare happy with ourservices
b
CLIENT SATISFACTION
We are effectively converting leadsto sales CLIENT DEVELOPMENT
Billie
32. c Our employeesfeel safe,positive,and comfortable
d
COMPANY CULTURE
We understand ourcost ofacquiring newclients.
We understand the long termrevenue fromclients.
Revenue coverscostsofeffortsto acquire clients.
COST OF CLIENT ACQUISITION
e
We are seeing the most profitable typesofcases.
We have the right staffing levels.THROUGHPUT & PRODUCTIVITY
33. f
Are Attorneysmanaging Clientswell enough?gINDIVIDUAL
PERFORMANCE
Businessismeeting industry profitabilitystandards.
We meet profitabilityexpectations.
PROFITABILITY & MARGINS
Where from Here? KPIs for Modern Law Firm Success
34. 1
Cost of Client Acquisition (CAC)
Refresh Memory from before:
$5K of billable time for 6 new clients
Need to add in sales & marketing costs: $5K
Total CAC = $10K/6 = $1.7K
2
Client Lifetime Value (LTV)
3 Limited Service Clients – average $1K
3 Full Service Clients – average $4K
3
Client Contribution Margin
Limited Service Clients = $1K - $1.7K = -$.7K
Full Service Clients = $4K - $1.7K = $2.3K
4
Modern Law Changes:
First, created in-person PAID consultations
Second, added in $12 per hour Intake Positions (non billable)
Third, added Flat Fee option
Fourth, use Access Legal for clients that cannot afford
5
Impact of Changes on KPIs
Conversion Rate increased by 59%
CAC dropped by the $5K of Billie’s time
& increased by $12 per hour person’s time
Where from Here? KPIs for Modern Law Firm Success
RESULTS
35. NEXT STEPS
1 Create a KPI workbook ordashboard
2Revisit yourPractice Management &CRM to mine Data
3 Set Targetsand Time to reviewresults
4Knowledge isPower
Where from Here? KPIs for Modern Law Firm Success
36. ANY QUESTIONS ON THE
OTHER KPIs ON THE
WORKSHEET?
Measure3 KPIs for Modern Law Firm Success
38. CONTACT US
602 882 6287
mejuetten@traklight.com
Measure3 KPIs for Modern Law Firm Success
Billie@mymodernlaw.com
@maryjuetten @mymodernlaw
480 649 2605