Personal injury attorneys have historically focused on flashy statistics, like the all-powerful claimed amount or billable hour to measure success; however, this limited focus completely ignores the efficiency of legal services, much to the detriment of your clients, employees, and the PI law firm’s bottom-line.
It’s similar to the way baseball used to focus on fun stats like home runs and RBIs before analytics stepped in and revolutionized the way the game is played.
Luckily for you, the law firm version of Moneyball is already here and ready to play ball for your practice…
Enter Key Performance Indicators (or “KPIs”).
KPIs measure efficiency in a tangible way. They are metrics you can use to really get under the hood of your firm, allowing you to diagnose what’s working and what’s not... and they can be critical to your firm’s success; after all, you don’t want to think you’re running the Yankees of the legal world, when you’re really the Bad News Bears of the courtroom.
Below are a few crucial KPIs you can use to measure the efficiency of your personal injury law firm. It’s important to know not only how to measure them, but also how to interpret them, so you can continue to keep your firm in the win column.
New Matters Per Month
This one’s pretty straightforward: you can’t sustain if you don’t grow. That’s why most firms set specific quotas for new matters each month. Unfortunately, tracking new matters can take a lot of time and lead to more errors than your neighborhood delivery place.
One solution is to use a practice management system, so all your new matters are in one place. That way, you can easily identify patterns and areas of growth…and look really smart at your firm’s holiday party.
Closed Matters Per Month
Matters are like bread: the longer they sit there, they go stale; meanwhile, you watch the green pile up and go in the garbage.
Therefore, tracking closed matters per month with a legal management system is important; it can help you identify where you need more resources or support, so you can successfully close cases…and put all that bread in your pocket, instead.
Stalled Matters/Bucket Age
Like sharks, matters need to keep moving or else they’ll die in the sea of papers that is your desk. That’s what these 2 KPIs seeks to prevent.
Stalled matters seek to identify when a case has hit a wall (typically, no movement in 90 days); whereas, bucket age deals in specificity…it tells you exactly how long a case has been in a particular status. Like the KPIs above, they help with the proper allocation of resources and support.
We don’t have to tell you that tracking your firm’s expenses is a good idea, but simply writing “Expenses” and then a number is not enough. You need specificity, from the Benjamins down to the Lincolns. But categorization is hard, just ask anyone that’s tried to explain what a Kardashian does.
A practice management system can help—it can identify areas where spending is too high or, on the contrary, if you’ve been neglecting certain areas that can improve your firm’s performance.
Client Acquisition Cost/Conversion Rate
Without new clients, there aren’t old firms. Every successful firm needs new clients, but at what cost? That’s what these two KPIs seeks to explore.
Client acquisition cost asks, “how much are we spending on sales and marketing to land a new client?” Whereas, conversion rate wants to know, “how much effort are we putting in (the calls, the meetings, the open bars…)?” These two KPIs focus on results…after all, what good is getting a number at the bar, if you never make it to the date?
Building on the dating analogy, what good is the 1st date if your potential suitor doesn’t want a 2nd? Likewise, it’s important to satisfy your clients, so they give you continued business and refer to their friends.
An easy way to measure a client’s satisfaction is through a simple survey called a Net Promoter Score, or…on a scale of 1-10, how likely are you to tell your buddies about us? 9-10: expect a call; 7-8: you’ll probably get a call; 1-6: don’t hold your breath.
On the flip side, employee satisfaction is just as important. A good firm should constantly be asking their attorneys and staff for feedback.
Unhappy employees take longer breaks, spend more time on Facebook, and lose harder for the company softball team; all leading to decreased efficiency increased costs and unhappy clients. Remember, employee turnover is very expensive, but buying your employees turnovers from the bakery is cheap!
Revenue Collected Per Month
Retaining clients is vital to a law firm’s success, but client retention is meaningless if they’re not paying their bills. Billing and collection are like going to the dentist, no one enjoys it, but it’s better than losing your teeth…or in this case, your shirt.
It’s important to keep good billing records and stay on top of accounts receivables so your firm can work more efficiently and identify problems with specific matters before they happen.
If you’re not measuring profitability by now, it’s probably too late. But just knowing whether your firm is in the red or black is not enough…you need to get more specific with it.
Profits should be broken down by categories like practice area, attorney, and client; otherwise, you may never discover that superstar practice area carrying the firm on its back, or the underperforming attorney not pulling his or her weight.
Having a legal practice management system in place can help your firm capture this type of data seamlessly…so you can focus on things like making more profits.
Speak of the devil, if you want a front row seat to see how CloudLex can help you measure some of the above KPIs in your sleep, feel free to schedule a demo. We promise it will meet two very important KPIs: good value and worth your time.