Metrics Driven Law Firm. Let’s think about “Moneyball.” “Moneyball” has forever changed the thought process, not just in Major League Baseball, but now everywhere in Corporate America. Moneyball used analytical, evidence-based, approach to assembling a competitive baseball team despite Oakland’s small budget. Corporate America is, and should be the same. If you want to drive your law firm with metrics based data, here are 6 KPI’s your law firm should be measuring.
With data being so accessible and price competition at the forefront of law firms, the question to be asked right now is are you growing or stagnating? Yes, the almighty measure of this is still Net Profit. But understanding these key metrics can change that net profit dramatically:
The List of Six KPIs:
- What is the cost of servicing a client? Knowing your firms overhead and where it is allocated is key to understanding the cost (Salary cost, Direct Cost)
- Profitability by Firm, Practice Area, Partner, Client and Billing Staff. If we don’t measure this how will we know where our best growth is or could be?
- Client Development/Marketing as a % of Total Revenue. We need to know how we gain clients and we need to understand if we are spending money in the right areas with our marketing $$
- Tech spend as a % of Total Revenue. We can use the tools that are out there to get better. We need to understand the gaps and fill them with technology. This will make us more efficient and reduce overhead.
- Realization. This speaks directly to process. This is all in your control. How much are you working vs billing? Do you write-down before you bill? Do you write-off after you bill? Are you collecting it all? And what does A/R look like?
- Budgeting/Benchmarks. What gets measured gets improved. We need to understand our history and measure against it to grow. We also need to compare ourselves to other firms with intelligence our markets provide us.
These six might be high-level items, but they are critical to growth vs stagnation. In short, use your data. Be the next Moneyball! Data is YOUR intellectual property, your analytical, evidence based property that will improve your business. Your metrics driven law firm should be following these KPIs. And at 9DOTS, we even, help you to tell you what metrics will be the absolute best for your bottom line. As a result, the analytics that can be derived from your data is astounding. “Moneyball” helps you make actionable decisions quicker and gets your firm agile and ahead of the curve. Get more information on data visualization for law firms here.
Finally, contact us here if you are interested in learning more about how we can solve your problems.