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May GLSA Mary Juetten Law Practice Management Key Performance Indicators Simplified

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Small and Solo General Practice Attorneys need simple metrics to run their firms and create satisfied clients and profitable results. KPIs are trending but can be over complicated by technology. Keep it simple!

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May GLSA Mary Juetten Law Practice Management Key Performance Indicators Simplified

  1. 1. Law Practice Management Key Performance Indicators Simplified GP Solo GLSA May 2017 KPIs Simplified 1
  2. 2. 2GP Solo GLSA May 2017 KPIs Simplified Agenda 10:30 KPI Overview 10:40 Start with Clients 11:00 Next Focus on Cash 11:10 Getting Started at your Firm 11:20 Questions
  3. 3. 5 Ws KPI Overview GP Solo GLSA May 2017 KPIs Simplified 3
  4. 4. 4GP Solo GLSA May 2017 KPIs Simplified KPI Overview: Ws Who What Why – billable hour misconceptions When Where it worked – client experience Q&A at the end of the presentation
  5. 5. 5GP Solo GLSA May 2017 KPIs Simplified WHO Law firms are businesses Accounting, payroll, KPIs are in addition to the practice of law & can be overwhelming Outsource or use technology KPIs are for all size firms because use the same principles; just add zeros
  6. 6. 6GP Solo GLSA May 2017 KPIs Simplified WHAT Key Performance Indicators are metrics for measuring all aspects of business and are beyond the traditional billable hour. KPIs are not “check the box” and are not like financials – they are actionable Law can borrow from other professional services and industries for KPIs & Technology. Focus on outputs, client experience, collections rather than inputs such as hours billed. Move from Profits per Partner.
  7. 7. 7GP Solo GLSA May 2017 KPIs Simplified WHY Number one reason for business failure is lack of cash flow. Cash is King Clients bring Cash & repeat business Develop KPIs that support positive client experience and collections. Don’t dwell on billable hours; focus on happy clients and collections. Record all hours regardless of fee structure. Use the KPI data for creating pricing and billing models.
  8. 8. 8GP Solo GLSA May 2017 KPIs Simplified PEFORMANCE KPI: Misplaced Focus on Billable Hours. Allan focused on billing, not collecting At the end of the year, Allan was a billing machine at 116.25% utilization but 86.22% collected. For one month he was at 88% using Billings Collected KPI Align your KPIs with firm goals: Cash is King. Have timekeeper’s focus on collections, not billing. 160 hours does not matter if only 120 hours are collected.
  9. 9. 9GP Solo GLSA May 2017 KPIs Simplified Thomson Reuters Small Law Firm KPI and Benchmark Survey Participants: • 690 surveys sent out to customer panel June 2016 • 62 Firms Responded: 10 Solos & 50% under 10 Attorneys Stats: • 81% use technology (however time & billing (34%) & practice management (44%) included) • 58% do NOT use KPIs beyond traditional billable hours • Only 6 or <10% use more than 4 KPIs • 19 use Collected Billings by Attorney • 15 measure overdue Accounts Receivable (A/R) • 14 track Matter Profitability • 3 measure client satisfaction (less than 5%)
  10. 10. 10GP Solo GLSA May 2017 KPIs Simplified WHEN 58 responses to TR Survey, 31 firms reported using either of the two profitability metrics: Take-home dollars Bank Balance KPIs need to be timely to allow for corrective action. Matter profitability was an option on the survey.
  11. 11. 11GP Solo GLSA May 2017 KPIs Simplified WHERE IT WORKED Positive and Predictable Cash Flow comes from Clients. Satisfied clients tend to pay and it’s easier to upsell or have happy clients refer friends and associates. Start with client development KPIs, including pipeline and cost of client acquisition and measure firm culture and client experience.
  12. 12. KPI Examples Start with Clients GP Solo GLSA May 2017 KPIs Simplified 12
  13. 13. 13GP Solo GLSA May 2017 KPIs Simplified WHY FOCUS on CLIENTS Clients bring cash & repeat business; Cash is King and critical to firm survival Clients are demanding more for less and lawyers must pay attention to their needs Avvo’s “Sink or Swim: How to adapt to the new Legal Consumer”* • Informed, Connected (online), Picky • 1 in 5 believe can figure out what lawyers know • Shop for legal like other purchases (online) • 95% use reviews *http://go.avvo.com/new-legal-consumer-download
  14. 14. 14GP Solo GLSA May 2017 KPIs Simplified Happy Clients; Profitable Practice What: KPIs, metrics& Data Driven decisions When: Throughout the Matter Where it’s worked – client experience – net promoter score (NPS) but it is more: - Client needs: expert systems, like Traklight for business; WeVorce for divorce; and Neota Logic for others. Hint: Your firm must be open to change in terms of process.
  15. 15. 15GP Solo GLSA May 2017 KPIs Simplified CLIENT EXPERIENCE: Net Promoter Score (NPS) Net Promoter Score (NPS) (%) The percentage of total clients responding to the survey question who are promoters less the percentage of total clients responding who are detractors. Q: On a scale of one to ten (with one being not at all likely and ten being extremely likely), how likely are they are to recommend your firm to their friends, family, and colleagues? Why or Why Not?” as an optional question Allow for feedback, good and bad. Survey must be tracked, not anonymous. Technology: Google Documents or Survey Monkey, Excel for responses. Follow-up emails or calls.
  16. 16. 16GP Solo GLSA May 2017 KPIs Simplified CLIENT ACQUISITION COST: CAC BEYOND ADVERTISING AND MARKETING • Advertising, sales, marketing spend • Client development time @ the billing rates, not the cost • Technology or automation costs • Traklight example to reduce the client development time. TRIAGE AND INTAKE AUTOMATION Client does the heavy-lifting Survey must be tracked, not anonymous. Technology: Google Documents or Survey Monkey, Practice Specific Automation
  17. 17. 17GP Solo GLSA May 2017 KPIs Simplified Final Thoughts on Clients Lawyers are dependent on referrals and our reputations. Define your IDEAL client Do not be afraid to end bad client relationships Monitor relationships throughout the matter and beyond.
  18. 18. Next Focus on Cash GP Solo GLSA May 2017 KPIs Simplified 18
  19. 19. 19GP Solo GLSA May 2017 KPIs Simplified Cash is King Profitability on paper only if you never collect the cash. Stats show that small law firms collect cash from 90 to 150 days after recording the hours. If you have to pay all your bills within 30 to 60 days, you have a problem. Focus on lowering the days that your cash is ”locked up.” Important to calculate lock-up days for both WIP and A/R. Check on percentage of ”old” A/R. Deeper dive depending on results.
  20. 20. 20GP Solo GLSA May 2017 KPIs Simplified PROFITABILITY: Aging Tolerance Profitability (f) Aging Tolerance (%) Total collections within 60 days divided by total billings. Set deadline for recording WIP by month-end & payment terms. Policy to bill out all WIP each month (where practical) or at end of each engagement, regardless of timing. Investigate factoring or other services if necessary. Use e-billing and consider accepting credit cards. Unbilled( Time Billed( Time Collected Time
  21. 21. Getting Started GP Solo GLSA May 2017 KPIs Simplified 21
  22. 22. 22GP Solo GLSA May 2017 KPIs Simplified KPI FrameworkWorkflow Driven 1. Client Development 2. Cost of Client Acquisition 3. Productivity 4. Profitability 5. Performance 6. Client Experience 7. Firm Culture
  23. 23. 23GP Solo GLSA May 2017 KPIs Simplified Make a Plan • Pick your biggest pain point • Design your survey or feedback - make it easy for clients (WPLG ex) • Test it on a small group (McCarthy Tetrault) • Don’t be afraid to make changes (Modern Law)
  24. 24. 24GP Solo GLSA May 2017 KPIs Simplified Time is finite; Technology is not Infinite possibilities: Potential client calendaring Client Development – automation Practice Management including time & billing Accounting Client Feedback Excel Document Signing & Storage Legal Research E-discovery Customer Relationship Management (CRM)
  25. 25. 25GP Solo GLSA May 2017 KPIs Simplified Choosing Tech Simple to use Demand Metrics | Case studies Measure Return on Investment (ROI) Trial or free demo Less is more Feedback Evaluate Client Experience Start small and build Interoperable tech Be open to change
  26. 26. 26GP Solo GLSA May 2017 KPIs Simplified Systems & Data Systems – from manual to high tech, define your workflow. Pick the appropriate technology. Garbage In; Garbage Out. Check the data sources and set up as many links as possible. For example, QuickBooks data to automatically populate your spreadsheet.
  27. 27. 27GP Solo GLSA May 2017 KPIs Simplified KPI Framework: 40+ measures but start with 10 or less Client Development Client, Acquisition Cost Productivity ProfitabilityPerformance Client, Experience Firm Culture
  28. 28. 28GP Solo GLSA May 2017 KPIs Simplified TargetsJust Get Started Go back to the Previous Year or Years for a LIMITED number of KPIs. Measure more often at the start, start monthly or weekly depending on KPI. Do a first quarter review and make adjustments. Look for industry benchmarks but also outside to other professional services. This is not a check the box exercise or like financials which are historical info – KPIs are actionable Targets depend on your circumstances!
  29. 29. 29GP Solo GLSA May 2017 KPIs Simplified Dashboard: monitor frequently Client Development Client Acquisition Cost Productivity Profitability Performance Client Experience Firm Culture
  30. 30. 30GP Solo GLSA May 2017 KPIs Simplified Continuous Improvement Dashboard Approach Like the workflow and matching KPIs, improvement requires constant monitoring. Change and experimentation mentality. Learn to delegate and outsource. Budget should not be just revenue divided by 12, build up costs and revenue, including pricing. Enhance your Practice with enabling technology. Measure KPIs regularly on Dashboard. Review and Act upon the results, adjusting targets, workflow, resources, & technology. Budget Practice Measure Act
  31. 31. Questions GP Solo GLSA May 2017 KPIs Simplified 31
  32. 32. 32GP Solo GLSA May 2017 KPIs Simplified Small Law Firm KPIs: How to Measure Your Way to Greater Profits Order your copy today: http://legalsolutions.com/Juetten 20Juetten for 20% discount Mary Juetten @maryjuetten mejuetten@traklight.com Evolvelawnow.com Free Starter spreadsheet will be emailed to participants

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