Today we welcome our friend Joseph E. Fournier of Fournier Legal Services as a guest blogger. Fournier Legal Services is a modern, client-centric law firm that utilizes the most recent and best-in-class technology to service its clients efficiently. The firm is located in New Haven, CT and Boston, MA, and focuses on three primary areas: Business, Estate Planning, and Law Firm Consulting. The firm’s founder, Joseph Fournier, received his law degree from the University of North Carolina–Chapel Hill School of Law and his Accounting degree from the University of Rhode Island, is admitted to practice law in Connecticut, Massachusetts, and Rhode Island, and is a CPA.
We hope you enjoy this blog.
Four Law Firm KPIs You Should be Watching
As you may know from prior posts, we believe strongly in the proper use of business analytics to help you run your business. There are many articles on this topic. KPIs (Key Performance Indicators) are important for many reasons and may be used in different areas of your company, e.g., in HR, measuring, employee turnover or compensation metrics; in Finance, measuring profit margins or balance sheet ratios; and in Sales, measuring conversion rates. Although there are many KPIs you could be measuring, we think these four are essential for most law firms.
- Intakes, including referral sources. It is essential to know how many new clients you are getting, and where they are coming from. You can then track both of these over a period of time to give your firm excellent insight into client sources and, importantly, client acquisition costs. This takes on even greater importance if you are spending a lot of money on a particular advertising medium, i.e., television or radio. Additionally, tracking intakes closely will help you identify daily or seasonal trends, if any, and therefore help you budget and staff properly at certain times of the day or year.
- Average Case Fees (“ACF”). Knowing your average case or client fees is helpful on many levels. For example, it may provide insight into different areas of your business. If is helpful to know whether certain case types, attorneys, or geographies yield better values, and/or whether your business is affected by seasonality or some other factors that you may not be able to control or for which you may be able to plan. Additionally, it gives you and your team a baseline from which you can work and try to improve your ACF.
- Cycle time (Time on Desk “TOD”). When managing the operations of your firm, it is helpful to know how long you have a case – or certain case types – in-house before resolution. For example, knowing the intake date through settlement date, or case open date through trial date, may give you significant insight into the underlying costs associated with different cases. Also, you and your team can break the cycle time down into segments, and then measure and tackle those segments individually, in an attempt to decrease the overall TOD.
- Profitability. Profit is the ultimate measure of an owner’s return on investment. Profitability measures the income or operating success of an entity over a given period of time, and can be measured in different ways, including for example, net operating profit, overall net income, or net income per attorney. This information is useful when measured over time as part of a trending analysis or in comparison to others in the industry.
For assistance with KPIs, or with any other legal needs related to your business, contact Fournier Legal Services at firstname.lastname@example.org or 860.670.3535 now for a free consultation and planning session.