Why do we measure our progress? Primarily for two reasons: accountability and adaptation. In order to keep your legal practice on an upward growth trend, it’s important to stick to your goals and monitor outcomes. By continually analyzing their performance, attorneys can tell if their growth strategies are on the right track and whether they need to be adjusted. Remember, we don’t want to work harder, we want to work smarter. We can only uncover that through analysis.
Before we look at the specific key performance indicators (KPIs) that tell us about law firm performance, let’s point out three benefits that regular reporting can bring to your practice:
- It can tell you if you’re working too hard (or not hard enough). Are you spreading yourself too thin, and focusing on busy work? That stuff can be delegated. Your role is to focus on the development of the practice and lead your firm.
- It helps you identify what your clients really want. If you have the right clients, but they’re not biting (which you can only discover through analysis), you need to try another communication approach. If you’re sending messages that are true to your practice but are regularly ignored, you’re probably chasing the wrong crowd.
- It helps you become more cost-effective. Drop the campaigns that aren’t working, or are making you spend too much on incoming clients. Narrow your message production to only the most effective media and delivery method.
Now that you know why measurement is so important, it’s time to set a bar for yourself. That bar comes in the form of KPIs for your legal practice.
Your Law Firm KPIs
There are two avenues that you need to travel down in order to get a complete picture of your law firm’s performance. The first will concern your practice’s marketing efforts - namely, how visible is your firm’s brand and how effective are your messages at generating inquiries. The metrics for every practice will be somewhat unique, but here are your goals, in broad strokes:
- Website Visits: 25% minimum increase MoM
Tip: If you haven’t been working on SEO for your law firm’s website, you’d better get started. Make sure you’re using keywords that most closely relate to your practice.
- Email Opens: 15-20% per message
Tip: Open rates hinge mostly on the quality of the recipient list and the subject line of your messages. Examine these first if you’re looking to improve.
- Inquiries Made: 5% visitor conversion rate
Tip: If you want to get new inquiries, you need to actually send visitors somewhere that they can make one. Build a web contact form if you haven’t got one. Alternatively, use a tracking phone number (a unique phone number that so you know where your calls are coming from).
The other metrics avenue has to do with what happens post-inquiry. Can you actually take on those potential clients?
- Contact to Opportunity Rate: as high as you can get it
Tip: This is a secondary qualification stage for your contact (you already partially qualified them via marketing). Not every inquiry is the right fit for your firm. Keep yourself honest with this number or you’ll be forecasting off of terribly inflated numbers.
- Time to Close: 2 meetings (give or take)
Tip: You may need one meeting to get acquainted and familiar with the prospect, and a second meeting to close your engagement, but this is a soft number. Find the sweet spot for your practice that keeps up momentum without sacrificing service quality.
- Cost to Value Ratio: The lower, the better
Tip: Keep track of how long a typical client engagement lasts and the fees you charge for the client (in total, and each month), then you can estimate a given client’s Lifetime Value (LTV). A good ratio is a higher profit margin per client, and you’ll want to replicate your acquisition process for clients with that ratio.
I know you’re probably excited to get out there and start measuring, but there are a few steps you have to take first - like actually launching a marketing campaign. You’re going to need to develop your law firm’s marketing messages, figure out a delivery system, set up a platform to manage your client work, and of course, put tracking codes in place to actually record activity. If you’re second-guessing taking on that challenge, stop right there - Practice Alchemy is here to handle all of your marketing communications for you. Schedule a practice assessment today and we’ll work together to make sure your firm’s performance is green across the board.