Headline: You know how to practice law, but do you know what other factors influence your firm’s success?
Key Performance Indicators (KPIs) have become commonplace in today’s business landscape, so much so that some may think of it as merely a buzzword. While the term may sound like nothing but jargon, it essentially refers to the business metrics that evaluate a company’s performance.
Why is it important to track law firm KPIs?:
Tracking KPIs takes time and effort, but the rewards are worth it when you see a big difference in your revenue and client acquisition processes. Law firm KPIs should be measurable, specific, and targeted to the particular goals of your business to give you relevant data and information.
It is important to note – no firm uses ALL possible KPIs to measure their success. There are literally thousands of data points you can measure when assessing your business; however, trying to quantify every aspect of your firm will likely lead to frustration and burnout. If you’re unsure where to start tracking data in your firm, there are general KPIs every firm can benefit from keeping an eye on.
We believe your firm can use four specific metrics to gauge and build on its success.
Client and matter development KPIs
What is your approach to developing a relationship with a client? How efficiently are you resolving their cases? Tracking these client development KPIs will help you gain a deeper understanding of your client base:
- The average number of cases closed
- The average fee per client
- Number of lawyers per client
- Active clients
- New client acquisitions
- Number of matters per client
Marketing your firm will help you to generate leads and capture interest from your target audience. If you’re spending money to acquire as many new clients as possible, you’ll want to track your effort to ensure that you’re not simply throwing cash at a strategy that isn’t creating optimal results. Here are some law firm marketing metrics to keep a close eye on:
- Number of website visitors per month
- Landing page conversion rates
- Email marketing performance
- Cost per customer acquisition
- Traffic from referrals
- Lifetime customer value
- Social media engagement
Every law firm strives to maintain healthy finances and profitability. You don’t need an accounting degree to strategically assess financial performance to improve your decision-making. Keep these KPIs in mind to ensure your business meets its financial goals:
- Monthly billed revenue
- Total firm debt
- Collection rate
- Length of accounts receivables
- The current estimate of operating costs
- The current estimate of annual revenue
- Net income as a percentage of revenue
- Net overhead
- Which payment methods clients prefer
Lead Analysis KPIs
Acquiring new clients is crucial to your law firm’s success, but finding them can be challenging. Check which channels bring the highest number of leads by recording how visitors or prospective clients find your firm.
- Cost of acquiring a new client
- Number of new cases/matters opened
- Number of new clients
- The number of new clients by source (referral, website, review site, etc.)
- Estimated average value of each new case
- Number of consultation appointments set
- The number of potential new clients who showed up to their consultation appointments
- Number of potential clients converted into clients
Hopefully, you now have a better understanding of KPIs and why you should be tracking them for your law firm. However you measure success, LawPay has the tools to help you achieve it.
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