5 minsWhy does your car have a dashboard? What would you really lose if you drove a car that had no indicators, dials, or meters?
You'd be able to drive from your house to the store, but could you drive across the country? Maybe, but certainly not safely or predictably. Those dials exist for a reason.
Why Have an Operations Dashboard?
A car has a dashboard to display critical data for the vehicle’s safe and predictable operation. It offers insight into how the components that make up a car are operating. One of its most important features is alerting the owner/driver when there is an issue, before that issue causes catastrophic failure. A driver will be able to understand what the problem is and implement a solution or contact a mechanic for help. Similarly to a car having a dashboard, law firms that utilize a dashboard will be able to:
- Track law firm operations metrics
- Predict the direction and velocity of income production
- Understand speed of growth at the practice
- Identify problem areas impeding firm growth
After taking a look at hours billed and matters worked, law firm management will make decisions on whether or not they should hire more staff. The fundamental issue with that common practice is that hiring decisions, or who should work at the firm in the future, are made based on what work was done in the past. Those numbers are often months old, and don’t predict what the firm’s workload will look like in the future. Some firms don't even look at the numbers, deciding on "gut feel" alone that another hire would make their firm more productive. Making operational decisions on-the-spot without using real data as a clear indication of the health and vitality of your firm will lead to questionable short-term results and long-term headaches. The best way to stay informed of the most vital numbers in your firm is with a proper dashboard.
Modern Law Firm Dashboards
Law firm dashboards are at-a-glance custom displays of real-time firm data, providing financial, operational, and forward-looking data that enables law firm partners to make proactive business decisions around their legal practice.
Implementing a dashboard for a law firm’s management will increase understanding of how efficiently a firm is organized. “Efficiency” is an inexact term, but refers to maximizing profitability and minimizing waste. A highly efficient firm has a high return on marketing spend, a fully utilized staff with increased productivity, performs higher-value work, has improved margins, and an above-average intake conversion rate from leads to signed clients. Dashboards are meant to gather all of the relevant operational information of a law firm and display it in one central location for leadership to view at-a-glance.
For Plaintiff firms, tracking your line of credit against a forecast of likely settlement values allows your firm to hire staff before you're overwhelmed with work.
A dashboard offers a visual representation of a firm’s key performance indicators to firm leadership. A well-designed dashboard not only gives a quick overview of the firm’s performance in real-time, but also overlays goals, achievements, and current business strategies so law firm partners can track how well their firm is progressing towards strategic goals. Well implemented dashboards are able to connect to case management systems, intake systems, accounting platforms, and other core pieces of your law firm's technology to pull information in real time with minimal manual data entry. Dashboards enable partners to make data-informed decisions, increase efficiency and allow for benchmarking, and offer improvements in a firm’s performance.
Benchmarking for Law Firms
If you knew a marketing campaign would fail to bring you new clients, would you still spend the money to launch it? Benchmarking is the practice of using a firm’s data history and industry analytics to measure the success or failure of operations. Any part of a law firm can be measured using benchmarks, but only if a firm has data readily available and accessible. By having easy access to a firm’s historical performance in marketing, intake, staff utilization, use of credit, and other metrics, firms now have the ability to set goals based on their past performance.
Forecasting Fee and Retainer Income
Most firms are not able to predict how much fee income or retainer income they will generate for the rest of the year because they do not have clear visibility into the bottom line profit that their matters produce. While many firms may have an idea of their top line profit, they often assume margins are consistent across billing staff and have very little visibility, if any, of how their writedowns and writeoffs affect the firm’s profit. Now, predicting the future and forecasting revenue are not the same thing. While a weather forecast may never be completely accurate, it does tell you if you need an umbrella. When firm management looks at a forecast report, they’re able to predict approximately how much fee income or retainer income the firm will receive from current matters and forecast future costs. By having a clearer understanding of the financial future of the firm, law firms are empowered to take preventative measures to ensure more predictable and secure growth.
Improvements in Law Firm Performance
With often unprecedented visibility into their firm’s metrics, partners are able to understand how their team members prioritize their work, which will easily open a conversation regarding potential avenues to collaborate or streamline caseloads. Conversations around the distribution of leads, clients, and caseload can now be backed by visible data, leading to better decision making as well as improved buy-in from attorneys involved.
When our team at Practice Alchemy is working with a law firm to create an effective dashboard for them, we design a board to include monthly metrics for every key area from business development to Google Ads, social conversions, direct mail, website traffic, payroll, finances, staff utilization, caseloads, projected fee and retainer income, and dozens of other possible metrics. As we organize a new dashboard for our clients, we work with them to ensure we have an all-encompassing history to include in their dashboard as well. Creating a layout that includes historical data in addition to new incoming data allows law firms to compare progress and set targeted goals for success and growth.
Our goal in implementing dashboards for firms is to improve their overall efficiency and productivity. We use dashboards to enable a firm’s management to be proactive, predict the future, and grow the firm sustainably for the long-term. We have noticed a direct correlation between implementing a dashboard system for a firm and an immediate increase in strategic planning followed by strategic growth.
Interested in seeing an operations dashboard in action? Watch a video on how law firms use their dashboards. Want to talk about what your firm's custom dashboard would help you accomplish? Request a free dashboard assessment with our team.
