It is critical for law firms to (a) set goals, and (b) measure their progress towards those goals. In order to do that, you must track your firm’s key performance indicators (KPIs). A KPI is a measurement that shows you how well you are achieving your primary goals. For example your client acquisition cost is the KPI that tells you how much it costs for you to acquire a new client, including time spent networking, money spent on advertising, etc.
Keeping track of your KPIs helps you get the most out of limited resources and discover problems in your firm’s business practices.
This spreadsheet helps you calculate five commonly used KPIs:
- Client development. The total adjusted value of prospective client matters.
- Client acquisition costs. The sales, marketing, and opportunity costs spent per client acquired.
- Profitability. The total amount of money your firm has collected in the last 60 days.
- Performance. The total amount of money collected by each attorney.
- Client experience. The percentage of clients who are willing to promote you and your services to other people.
There are over 40 KPIs applicable to small law firms. For more on how to use them, listen to the creator of this spreadsheet, Mary Juetten, on The Lawyerist Podcast, or get her book, Small Law Firm KPIs: How to Measure Your Way to Greater Profits.