1. MEASURE3 Chicago, October 19, 2015
Clio Conference

2. MEASURE,
MEASURE,
MEASURE
Key Performance
Indicators (KPIs)
for Modern Law
Firm Success

3. Measure3 KPIs for Modern Law Firm Success
Billie Mary
Practicing Attorney – Modern Law
Access Legal
Mom
Law Degree | Canadian and US Professional
Accountant
Traklight | Evolve Law
Mom
ABOUT US

4. I LOVE WHAT I DO
My crew.

5. MEASURE3
1. WHY MEASURE
2. BUSINESS INTO LEGAL
3. WHAT TO MEASURE?
4. MEASURE, COMPARE, & ACT
5. WHERE FROM HERE?
Measure3 KPIs for Modern Law Firm Success
See the conference application for KPI Worksheet | Slides.

6. 1. WHY MEASURE
Measure3 KPIs for Modern Law Firm Success

7. FEELING LUCKY?

8. THE OVERWHELMING QUESTIONS

9. GOAL: Understanding that measuring and acting upon KPIs will impact your
Firm’s profitability
WHY MEASURE
CASE STUDY: Modern Law’s Client Development KPI Measurement Part I
Measure3
KPIs for Modern Law Firm Success

10. (FEB 2015)
SNAPSHOT OF MODERN LAW’S CLIENT DEVELOPMENT PROCESS
STEP 1 STEP 2 STEP 3 STEP 4
Book Potential
Client Calls
42 phone calls
scheduled
30-minute calls
40 Phone Calls
Completed
Done by Attorney
Billing @ $250/hr
New Clients
7 New Clients
One Referred
6 from Phone
Calls
Measure
18% Conversion
Rate
$5000 Billable TIme
Why Measure KPIs for Modern Law Firm Success

11. WHAT DOES THIS 18% MEAN? WHAT DOES THIS $5000 MEAN?
Nothing – if Modern Law
does not have a target cost
of customer acquisition.
Why Measure KPIs for Modern Law Firm Success
Nothing – if Modern Law
does not have
baseline/target conversion
rate.

12. MEASURE AND ACT TO ENSURE PROFITABILITY
BILLINGS COLLECTED
Includes Marketing, Rent,
Admin Salaries
FIRM OVERHEAD FIRM FAILURE
$ $ $
Why Measure KPIs for Modern Law Firm Success

13. - Knowledge is power
- Car goes faster downhill with
brakes
- Data driven decisions
- Not just cranking out billable hours
- NEED TO CREATE VALUE FOR
CLIENTS
Why Measure KPIs for Modern Law Firm Success
Measuring Results vs. Guesswork/SWAG

14. 2. BUSINESS INTO LEGAL
Measure3
KPIs for Modern Law Firm Success

15. GOAL: View your Practice as a Business
BUSINESS INTO LEGAL
Step Back and look at Traditional Law Firm Measures
Business into Legal KPIs for Modern Law Firm Success

16. BORROWING FROM CLIO’S 2014 PRESENTATION:
a Jessica Pearson works 60 hours
in a week.
b She was in meetings and talking
to potential clients for 10 hours.
c Jessica bills at $250.
d She billed $10K last week.
e Firm collected $7K.
Measure3 KPIs for Modern Law Firm Success

17. TRADITIONAL KPIs
1
Utilization Rate
83%
50 Billable/60 Available Hours
2
Realization Rate
80%
Potential to bill: $12.5K
50 Billable hours recorded @ $250
Billed $10K/$12.5K potential
3
Collection Rate
70%
$7K Collected/$10K Billed
4
NET Collection Rate
56%
$7K collected/$12.5K Potential
Business Into
Legal
KPIs for Modern Law Firm Success

18. - Focused on supply of billable hours not
demand for services
- Therefore not focused on the value of services,
client needs, or satisfaction
- What about fixed fees???
- What about targets???
- Charging correct rates?
Need to focus on return on investment,
contribution margin, and cost of client acquisition,
plus client and form satisfaction. All with targets.
Business into Legal KPIs for Modern Law Firm Success
Traditional KPIs...

19. 3. WHAT TO MEASURE?
Measure3 KPIs for Modern Law Firm Success

20. GOAL: Expand Traditional KPIs to include Business Concepts
WHAT TO MEASURE
Return on Investment, Contribution Margin, and FULL Cost of Client acquisition
Satisfaction Measures and Targets
Firm and Personal Level
Measure3 KPIs for Modern Law Firm Success

21. - Client Satisfaction
- Client Development
- Company Culture
- Cost of Client Acquisition
- Throughput & Productivity
- Profitability & Margins
- Individual Performance
Measure3 KPIs for Modern Law Firm Success
See the conference application for KPI Worksheet | Slides.
WHAT TO MEASURE

22. SEVEN AREAS OF KPIs
a Net Promoter Score (%)
b
CLIENT SATISFACTION
Sales Conversion Rate (%) CLIENT DEVELOPMENT

23. c Average Work Climate Satisfaction
d
COMPANY CULTURE
Cost of client acquisition- CAC ($)
Life-time or Annual customer value – CV or LTV ($)
LTV to CAC ratio (ratio)
COST OF CLIENT ACQUISITION
e
Revenue per Matter ($)
Contribution Margin per Matter ($)
Attorney Leverage ($)
Paralegal Leverage ($)
THROUGHPUT & PRODUCTIVITY

24. f
Billable Hours Paid by AttorneygINDIVIDUAL PERFORMANCE
Return on Owner Equity (Investment) (%)
Profitability Margin (%)
PROFITABILITY & MARGINS
What to Measure KPIs for Modern Law Firm Success
See the conference application for KPI Worksheet | Slides.

25. 4. MEASURE AND COMPARE
Measure3 KPIs for Modern Law Firm Success

26. GOAL: See the Value of Measuring and Setting Targets
4. MEASURE AND COMPARE
CASE STUDY: Modern Law’s Client Satisfaction NPS
Measure3 KPIs for Modern Law Success

27. One Question as part of follow-up:
“On a scale of 0-10, how likely are you to recommended
our firm?”
0- 6 Detractors
7-8 Neutral
9-10 Promoters
Modern Law Target is 90
Measures how happy clients are with Modern Law and
provides opportunity for corrective action even after
matter is closed?
Very important for “one and done” type law practices to
have the referrals and not the usual follow-on matters.
Measure3 KPIs for Modern Law Success
CLIENT SATISFACTION

28. Take Aways:
• All detractors had same
attorney
• Many neutral responders
also had that attorney
• Evidence based decisions
Total Responses 67
Promoters: 51
Neutral: 13
Detractors: 3
To Get Score:
51/67= 76%
Subtract
3/67=5%
Total Score: 71
Calculations

29. 5. WHERE FROM HERE?
Measure3 KPIs for Modern Law Success

30. GOAL: Understand the action required after measuring and comparing to
targets.
5. WHERE FROM HERE?
CASE STUDY: Modern Law’s Client Development Process Part II
Measure3 KPIs for Modern Law Firm Success

31. a Our clients are happy with our services
b
CLIENT SATISFACTION
We are effectively converting leads to sales CLIENT DEVELOPMENT

32. c Our employees feel safe, positive, and comfortable
d
COMPANY CULTURE
We understand our cost of acquiring new clients.
We understand the long term revenue from clients.
Revenue covers costs of efforts to acquire clients.
COST OF CLIENT ACQUISITION
e
We are seeing the most profitable types of cases.
We have the right staffing levels.THROUGHPUT & PRODUCTIVITY

33. f
Are Attorneys managing Clients well enough?gINDIVIDUAL PERFORMANCE
Business is meeting industry profitability standards.
We meet profitability expectations.
PROFITABILITY & MARGINS
Where from Here? KPIs for Modern Law Firm Success

34. 1
Cost of Client Acquisition (CAC)
Refresh Memory from before:
$5K of billable time for 6 new clients
Need to add in sales & marketing costs: $5K
Total CAC = $10K/6 = $1.7K
2
Client Lifetime Value (LTV)
3 Limited Service Clients – average $1K
3 Full Service Clients – average $4K
3
Client Contribution Margin
Limited Service Clients = $1K - $1.7K = -$.7K
Full Service Clients = $4K - $1.7K = $2.3K
4
Modern Law Changes:
First, created in-person PAID consultations
Second, added in $12 per hour Intake Positions (non billable)
Third, added Flat Fee option
Fourth, use Access Legal for clients that cannot afford
5
Impact of Changes on KPIs
Conversion Rate increased by 59%
CAC dropped by the $5K of Billie’s time
& increased by $12 per hour person’s time
Where from Here? KPIs for Modern Law Firm Success
RESULTS

35. NEXT STEPS
1 Create a KPI workbook or dashboard
2Revisit your Practice Management & CRM to mine Data
3 Set Targets and Time to review results
4Knowledge is Power
Where from Here? KPIs for Modern Law Firm Success

36. ANY QUESTIONS ON THE
OTHER KPIs ON THE
WORKSHEET?
Measure3 KPIs for Modern Law Firm Success

37. Measure3 KPIs for Modern Law Firm Success
KPI Worksheet
Measure, Measure, Measure
Key Performance Indicators (KPIs) How Calculated Target Tells Us…. Frequency
CLIENT SATISFACTION
Net Promoter Score (%) % of Clients who say they would recommend us ≥X% Our Clients are happy with our services Quarterly
CLIENT DEVELOPMENT
Sales Conversion Rate (%) # of New Full-Scope Clients /# of Potential Client Intakes ≥ X% We are effectively converting leads to sales Monthly
FIRM CULTURE
Average Work Climate Satisfaction (#) Total Work Climate Survey Score (Scale 1-5) / # Surveys ≥ X Our employees feel safe, positive and comfortable Quarterly
COST OF CLIENT ACQUISITION
Cost of client acquisition- CAC ($)
$ sales and marketing + opportunity cost of staff or lawyer/#new
clients ≤ $X We understand our cost of acquiring new clients Monthly
Life-time or Annual customer value - CV or
LTV ($)
Total Revenue per year by client (if not one and done, then
cumulative) ≥ $X
We understand the long term revenue from
clients Annually
LTV to CAC ratio (ratio) CV or LTV / CAC ≥ 1X Revenue covers costs of efforts to acquire clients Annually
THROUGHPUT & PRODUCTIVITY
Revenue per Matter ($) Gross Revenue / # New Matters in CLIO (same period) ≥ $X We are seeing the most profitable types of cases Monthly
Contribution Margin per Matter ($) Gross Revenue - CV - Variable Cost ≥ $X We are seeing the most profitable types of cases Monthly
Attorney Leverage ($) Total $ Billings of All Attorneys / Total ($) Billables ≥ X% We have the right staffing levels Quarterly
Paralegal Leverage ($) Total $ Billings of All Paralegals / Total ($) Billables ≥ X% We have the right staffing levels Quarterly
PROFITABILITY & MARGINS
Return on Owner Equity (Investment) (%) Owner Compensation / Gross Revenue ≥ X% Business is meeting industry profitability standards Annually
Profitability Margin (%) Total Net Operating Income / Total Income ≥ X% We meet profitability expectations Monthly
INDIVIDUAL PERFORMANCE
Billable Hours Paid by Attorney (%) Total Collected $ by Attorney / Total $ Billings by Attorney ≥ $X Are Attorneys managing Clients well enough? Monthly

38. CONTACT US
602 882 6287
mejuetten@traklight.com
Measure3 KPIs for Modern Law Firm Success
Billie@mymodernlaw.com
@maryjuetten @mymodernlaw
480 649 2605