How to Set Goals and Metrics for a Law Firm

Without goals, your law firm is unlikely to grow at a significant pace, and without ways to measure your progress against goals, you are unlikely to reach them. Fortunately, metrics provide a quantifiable way to track progress and make informed decisions. Here are 7 tips for setting and reaching the metrics that will enable your law firm to grow.

1. Internalize the Importance of Metrics

Playing a game without a scoring system is not likely to demonstrate a clear winner. Metrics are essential for measuring the effectiveness of your law firm’s strategies and operations. They can help you with:

• Evaluating your law firm’s performance against objectives
• Identifying bottlenecks and areas for improvement
• Making data-driven decisions
• Providing for client satisfaction
• Increasing profitability

If you don’t fully commit to having metrics, you risk living in a never-ending haze of incomplete goals.

2. Identify Your Key Performance Indicators (KPIs)

There are an infinite number of metrics you could use to score your law firm’s performance, but a lot of them will end up being noise. By identifying the KPIs that align with your firm’s strategic objectives, you can actually measure what matters. Some common KPIs for law firms include:

Total Billable Hours: Track the number of hours billed by attorneys to ensure that their time is generating revenue. 

Utilization Rate: Of the total number of potential or target billable hours, how many billable hours is each attorney recording?

Revenue per Attorney: Understanding how much revenue each attorney is contributing to your firm will help you identify your strongest and weakest players as well as potential cost-sinks in your practice areas. 

Client Acquisition Cost (CAC): Calculate the cost of acquiring a new client to manage marketing and sales expenses.

Closed Without Fee Ratio (CWF %): For contingency based practices, how many of your retained cases are closed without collecting any fees.

Client Retention Rate: Monitor the percentage of clients who return for additional services, indicating client satisfaction and loyalty.

Average New Matter Value: What is the value of a new matter by case type and considering other variables.

Average Time on Desk / Case Length: What is the average length from the time a client retains the firm for a matter to when revenue is collected and/or the case is closed?

Marketing Return on Investment (ROI): Your law firm should be ensuring that marketing dollars are generating effective returns.  A simple ROI multiple can be calculated by dividing revenue by marketing expenses.

3. Set SMART Goals

A classic way to set proper goals is to ensure that they are SMART: Specific, Measurable, Achievable, Relevant, and Time-bound.

Specific: Goals with ambiguity can result in team members pulling in different directions. Clearly articulate exactly what the goal is meant to achieve. For example, “Reduce the amount of time that .”
Measurable: Returning to the idea of KPIs, your goals need a measuring stick to compare against.  “Improve attorney output” could mean many things, while “Increase demand letters sent per attorney per month to 15” gives an item that can be measured a numerical item to score against.  Use metrics like hours, percentages, dollar amounts, or specific numbers.
Achievable: Set realistic goals that are attainable given your firm’s resources and capabilities.
Relevant: Your goals should all build to a growth strategy and each identified goal should play a larger role within the broader objectives of the firm.
Time-bound: Any goal without a deadline is just a suggestion. Create urgency and force action by setting deadlines, at the month, quarter, or annual level. 

4. Break Down Goals into Actionable Steps

Large, broadly defined goals can be overwhelming for a law firm and lead to team members spinning wheels trying to do too much at once. By breaking large goals into smaller, concrete steps, team members can allocate the appropriate amount of time and achieve more progress and victories. As an example:

Goal: Reduce the time from inbound lead to signed contract to be fewer than 4 days by end of year.
Steps:

1. Reduce time from inbound lead to first phone conversation to less than 24 hours (Sales Manager).
2. Reduce the time from contact to appointment set by fewer than 48 hours (Sales Manager or Legal Assistant).
3. Use text reminders to increase appointment show rate to above 75% (Sales Manager or Marketing Lead).
4. Conduct sales training with attorneys to increase the rate of retainers signed during initial appointment to 25% of appointments (CX Lead for training, Attorneys for execution).

5. Assign Responsibilities

As noted in the parentheses above, each step should have a defined owner who is responsible for meeting the goal.

Critically, this person should have the authority to take actions, and the responsibility for their success or failure.

If the “owner” of a metric does not control any of the levers or personnel to effect change, they will be doomed to have their success relegated to chance.  Conversely, if the “owner” does not bear the responsibility for success or failure, then there is a risk that they will not be as committed to the goal as required to meet the intended outcome.

6. Monitor and Publicly Share Progress

Dashboards; Scorecards; Scoreboards.  As uncomfortable as it can be for progress to be publicly reviewed, it is far worse for a team member to be silently struggling then utterly fail at the deadline.

By promoting a culture of transparency around metrics, you can develop a team of accountable and driven individuals to build your law firm.

If a team member is uncomfortable having their performance shared with other team members, how can you expect them to ever be accountable?

By conducting weekly or monthly reviews of progress, you can ensure that no one is surprised when the deadline comes around, and there is time to adjust course in the meantime.

7. Celebrate Achievements and Learn from Failures

Most people, particularly in demanding fields like legal work, enjoy reaching goals and being on a winning team.  By celebrating your team’s victories, you can build a culture of positive momentum. 

On the flipside, by publicly acknowledging shortcomings, everyone can learn how to improve.  Sometimes the goals were unreachable with the resources provided; sometimes two goals pulled in opposite directions.  Rather than discounting reasons for failure as “excuses”, take a genuine look at what happened.  Did the owner have the resources they needed to accomplish the goal? Was there a black swan event that genuinely could not have been anticipated?

The best team members will be those who can use failures to improve their performance in the future.

8. Leverage Technology to Track and Prioritize.

Your attorneys should be focused on performing good legal work and building their network. Your sales team should be focused on improving profitability and enabling growth.

Don’t take away their valuable time to put numbers in spreadsheets, or paste graphs into powerpoints.  Let computers do the computing and data presentation, and keep your best minds on their biggest problems.  Legal BI’s dashboarding and practice growth recommendation solutions can help you understand your performance without needing to add a lot of labor to the team’s workload.