KPIs and Reporting for Law Firms

#ClioWeb
Measure3
A ClioWebinar
Joshua Lenon– Clio
Mary Juetten – Evolve Law & Traklight
Bille Tarascio – Modern Law & Access Legal

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

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
Identify innovation. Safeguard success.

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

1. WHY MEASURE

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

(FEB 2015)
SNAPSHOT OF MODERN LAW’S CLIENT DEVELOPMENT PROCESS
ST
EP
1
ST
EP
2
ST
EP
3
ST
EP
4Book 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

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

MEASURE AND ACT TO ENSURE PROFITABILITY
BILLINGS COLLECTED
Includes Marketing, Rent,
Admin Salaries
FIRM OVERHEAD FIRM FAILURE
$ $ $

- Knowledge is power
- Car goes faster downhill with brakes
- Data driven decisions
- Not just cranking out billable hours
- NEED TO CREATE VALUE FOR CLIENTS
Measuring Results vs. Guesswork/SWAG

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

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

BORROWING FROM CLIO’S 2014 PRESENTATION:
a Jessica Pearson works60 hoursin a
week.
b She was in meetingsand talkingto
potentialclientsfor10 hours.
c Jessica billsat $250.
d She billed $10Klast week.
e Firm collected $7K.

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
<50% - $7K/$15K True Potential

- Focused on supply ofbillable hoursnot demand
for services
- Therefore not focused on the value ofservices,
client needs,orsatisfaction
- What about fixed fees???
- What about targets???
- Charging correct rates?
Need to focuson return on investment,contribution
margin,and cost ofclient acquisition,plusclient
and form satisfaction.All with targets.
Traditional KPIs...

3. WHAT TO MEASURE?

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

- Client Satisfaction
- Client Development
- Company Culture
- Cost of Client Acquisition
- Throughput & Productivity
- Profitability & Margins
- Individual Performance
WHAT TO MEASURE

SEVEN AREAS OF KPIs
a Net PromoterScore (%)
b
CLIENT SATISFACTION
SalesConversion Rate (%) CLIENT DEVELOPMENT

c Average Work Climate Satisfaction
d
COMPANY CULTURE
Cost of client acquisition-CAC ($)
Life-time orAnnual customervalue – CVorLTV ($)
LTV to CAC ratio (ratio)
COST OF CLIENT ACQUISITION
e
Revenue perMatter($)
Contribution Margin perMatter($)
Attorney Leverage ($)
Paralegal Leverage ($)
THROUGHPUT & PRODUCTIVITY

f
Billable HoursPaid by AttorneygINDIVIDUAL
PERFORMANCE
Return on OwnerEquity (Investment)(%)
Profitability Margin(%)
PROFITABILITY & MARGINS
What to Measure KPIs for Modern Law Firm Success

4. MEASURE AND COMPARE

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

One Question aspart offollow-up:
“On a scale of0-10,how likely are you to recommendedour
firm?”
0- 6 Detractors
7-8 Neutral
9-10 Promoters
Modern LawTarget is90
Measureshowhappy clientsare with Modern Lawand
providesopportunity forcorrective actioneven aftermatter
is closed?
Very important for“one and done” type lawpracticesto
have the referrals and not the usual follow-onmatters.
CLIENT SATISFACTION

Take Aways:
• All detractors had same
attorney
• Many neutral responders
also had that attorney
• Evidence based decisions
Total Responses67
Promoters: 51
Neutral: 13
Detractors: 3
To Get Score:
51/67=76%
Subtract
3/67=5%
Total Score: 71
Calculations

5. WHERE FROM HERE?

GOAL: Understand the action required after measuring and comparing to targets.
5. WHERE FROM HERE?
CASE STUDY: Modern Law’s Client Development ProcessPart II

a Our clientsare happy with ourservices
b
CLIENT SATISFACTION
We are effectively converting leadsto sales CLIENT DEVELOPMENT
Billie

c Our employeesfeel safe,positive,and comfortable
d
COMPANY CULTURE
We understand ourcost ofacquiring newclients.
We understand the long termrevenue fromclients.
Revenue coverscostsofeffortsto acquire clients.
COST OF CLIENT ACQUISITION
e
We are seeing the most profitable typesofcases.
We have the right staffing levels.THROUGHPUT & PRODUCTIVITY

f
Are Attorneysmanaging Clientswell enough?gINDIVIDUAL
PERFORMANCE
Businessismeeting industry profitabilitystandards.
We meet profitabilityexpectations.
PROFITABILITY & MARGINS
Where from Here? KPIs for Modern Law Firm Success

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
RESULTS

NEXT STEPS
1 Create a KPI workbook ordashboard
2Revisit yourPractice Management &CRM to mine Data
3 Set Targetsand Time to reviewresults
4Knowledge isPower

ANY QUESTIONS ON THE
OTHER KPIs ON THE
WORKSHEET?

1
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$New$FullPScope$Clients$/#$of$Potential$Client$Intakes ≥$X% We$are$effectively$converting$leads$to$sales Monthly
FIRM'CULTURE
Average$Work$Climate$Satisfaction$(#) Total$Work$Climate$Survey$Score$(Scale$1P5)$/$#$Surveys ≥$X Our$employees$feel$safe,$positive$and$comfortable Quarterly
COST'OF'CLIENT'ACQUISITION
Cost$of$client$acquisitionP$CAC$($)
$$sales$and$marketing$+$opportunity$cost$of$staff$or$lawyer/#new$
clients ≤$$X We$understand$our$cost$of$acquiring$new$clients Monthly
LifePtime$or$Annual$customer$value$P$CV$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$P$CV$P$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

CONTACT US
602 882 6287
mejuetten@traklight.com
Billie@mymodernlaw.com
@maryjuetten @mymodernlaw
480 649 2605

Thank You
Joshua Lenon
joshua@clio.com
@JoshuaLenon
Linkedin.com/in/joshualenon

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