What KPIs should my law firm be measuring?

CosmoLex Team

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Law-Firm-KPIs

Key Performance Indicators (KPIs) provide valuable data law firms can use to make strategic business decisions, evaluate trends and determine opportunities for growth[1].

There are many metrics law firms can track, but the following are the most critical.

FINANCIAL & OPERATIONAL

These KPIs can give you insight into the firm’s financial health:

 

  • Revenue billed by matter
  • Fixed/contingency fee profitability ratios
  • Work in Progress (WIP – what’s due to be billed)
  • Profitability by case, practice area and partner
  • Accounts Aging by Receivable (what’s owed to the firm)
  • Realization rate: ratio of fees collected to fees incurred

 

 

 

 

Also be sure to look for any overall financial trends. Increases or decreases over short periods of time may not have significant meaning, but when there is a consistent upward or downward trend the firm should take note and react accordingly.

PERFORMANCE & PRODUCTIVITY

These KPIs can help you determine if your firm’s resources are being allocated appropriately and where they may be room for improvement or budget cuts:

  • Utilization rate: ratio of fees billed to fees incurred 
  • Ratio of billable to non-billable hours
  • Administrative vs. overhead cost proportion

 

CLIENT RELATED

These KPIs can help you see what’s working and what isn’t when it comes to making current clients happy and getting new ones:

 

  • Percentage of repeat and referred business
  • Business development effort & cost analysis
  • Percentage of leads converted to clients
  • Average fee per client
  • Trends in client growth/retention rates

 

 

Client satisfaction can also be measured through the use of surveys.


References

1. Examine KPIs on a Micro-Level to Boost Profitability