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:
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.
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:
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.
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.
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?
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.
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.
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.