Law firms accumulate a tremendous amount of data. With the help of legal technology like business intelligence, firms can unlock deep insights about their practices to improve client satisfaction, maximize both efficiency and financial performance, and grow like never before. By using legal technology to streamline your firm’s business processes, you can easily enable all members of the firm to access the data needed to improve operations.
Let's dive into some valuable points on how to use Key Performance Indicators to pinpoint, measure, and leverage metrics to make your law firm even more successful than it is today through legal business intelligence applications. For more on what is necessary to use BI effectively, read our blog 4 Rules for Effective Law Firm Business Intelligence.
Key Performance Indicators
To understand your firm’s performance, it is essential to collect data on Key Performance Indicators (KPIs). There is no one-size-fits-all list of legal KPIs, rather, the most valuable KPIs are designed specifically for each firm to paint a picture of how the firm is performing.
BigSquare has considered the KPIs firms need most to offer the best legal BI application that is customizable to make your data work for you.
What Metrics Should Law Firms Should Measure?
There are tons of KPIs and no firm uses all of those available. But why should you care about one performance indicator over another? An indicator must be key to your firm’s success, strategies and goals. The specific KPIs your firm is looking at may slightly change based on what is important to the success at a particular time. For example, new firms or firms that are trying to get a boost in new business will most likely be monitoring different KPIs than a firm that is well established. Similarly, firms that bill by the hour will be looking at different metrics than firms that charge fixed prices.
KPIs are both industry and firm specific. What matters to one firm may not matter to another, and what matters to the legal industry may not necessarily matter to the construction industry. It is not a one-size-fit all tool. Finding legal specific BI company to help you measure and track your KPI's is most important because what you measure will be evolving and changing and a technology vendor in the legal industry will know the trends. As your firm goes through it's professional life cycle, the focus on specific KPIs will change based on the shifting of priorities for the firm.
Billable-related KPIs can provide important insight into financial matters, such as net income as a percentage of revenue, average net overhead, revenue per employee, revenue per matter, etc. Digging deeper into KPIs, you can determine which processes aren’t working, and you can also discover which processes do work and why. That gives you the ability to apply that knowledge to the ones that need attention. By turning data into knowledge, you can transform the effectiveness of your business. Here are some KPIs to look at:
Firm Operations KPIs
Business Development KPIs
How Do Law Firms Leverage Key Metrics?
The traditional and "old school" way that many law firms measure key metrics is by running monthly KPI reports. Modern technology like BI applications allow firms the ability to look at these metrics daily, and on demand to keep a better view of how their firm is doing. Based on these reports you can see where improvements are needed.
Measuring without action will not add value to your law practice. Without interpretation, analysis, and action, KPIs are just numbers. Your firm should leverage the key metrics to improve effectiveness utilizing something similar to these five steps as an action plan:
- Set goals
- Review KPI's and develop a plan for improvements
- Review and fix
- Monitor results and determine any follow-up tasks
Most people can more easily perceive differences in size and interpret data with visual tools rather than what a spreadsheet full of numbers show. For this reason, BigSquare has established a suite of Law Firm BI tools with modern visualizations, customizable dashboards, and powerful reporting functionality designed to provide law firms with the tools they need to understand their performance quickly and easily.
For firms sometimes the hardest part of developing a data-driven business approach is determining what to measure in the first place. Consider some of the KPI groups listed above: firm operations, performance, and business development, but also, think about which KPIs paint the most accurate picture of your firm. Utilizing a law firm business intelligence tool like BigSquare's Attorney Analytics will provide you with industry specific and relevant KPI's for your firm to choose from. Remember that this initial set of KPIs does not need to be perfect, and your list will evolve. When you use KPIs to turn data into knowledge on an ongoing basis, you can effectively improve the running of your firm so that it is as successful as possible. To learn more about what is necessary for Business Intelligence to be successful for your law firm, download our free viewpoint document below!
BigSquare is the leading provider of Business Intelligence for law firms and professional service organizations. We focus exclusively on law firm reporting, law firm BI, law firm profitability and law firm analytics. Talk with us today to learn more about how BigSquare is uniquely positioned to help you track and leverage your firm’s KPIs.