Key Performance Indicators & Technology

KPIs
Key Performance Indicators &
Technology – Oct 4th
MN State Bar TechStar
KPIs & Technology: Mary Juetten Oct 4, 2016 1

2KPIs & Technology: Mary Juetten Oct 4, 2016
Agenda
1:30 KPI Overview
1:45 Start with Clients
2:00 KPI Framework & Tech
2:20 Questions

5 Ws
KPI Overview

KPI Overview: Ws
Who
What
Why – billable hour
misconceptions
When
Where it worked – client
experience
Q&A at the end of the
presentation

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
Use small firm examples here

WHAT
Key Performance Indicators are
metrics for measuring all aspects
of business and are beyond the
traditional billable hour.
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.

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.

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.

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 accounting & practice management 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%)

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.

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.
Borrow from outside the law: Net
Promoter Score (NPS)

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.

KPI Examples
Start with Clients

Focus on Clients: Happy Clients: Profitable Practice
Value of delivery
Transparency
What input do the clients have into
your practice?
Borrow from outside the law:
• Client Pipeline
• Client Feedback
• Client upsell or referral rate
• Client conversion rate

Potential Client Pipeline
Help or support – outsource?
Targets – look backwards to
measure first history if possible.
Just get started with a listing of
potential clients & estimated
revenue.
Terms:
• Go | Get
• Suspect, Prospect, Lead, Paused

CLIENT DEVELOPMENT: Pipeline
Adjusted Prospect Pipeline ($)
Total dollar value of the Prospective Clients’ Matters on the
Pipeline adjusted for likelihood of success divided by total
Attorneys (and Paralegals in some cases*) to yield a dollar
value.
Technology:
Can start with Excel and move to Customer Relationship
Management (CRM).
Some Practice Management have CRM capability.
Targets:
Should tie into the monthly revenue in your budget.

Focus on Collections
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.

PROFITABILITY: WIP & A/R Lockup Days
Total days in the period divided by the
WIP Turnover Days.
WIP Turnover Days are the Unbilled
Time (WIP) for the same period divided
by the average outstanding WIP balance
at the beginning and end of the period.
Same formula for A/R, for example in a
month of 31 days using the numbers
here:
31/ ($500,000/(($125,000 +$531,250))
2

Workflow Options
KPI Framework & Tech

KPI FrameworkWorkflow Driven
1. Client Development
2. Cost of Client Acquisition
3. Productivity
4. Profitability
5. Performance
6. Client Experience
7. Firm Culture

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.

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)
www.evolvelawnow.com

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

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.
Targets depend on your circumstances!

KPI Framework:
40+ measures but start with 10 or less
Client
Development
Client,
Acquisition Cost
Productivity
ProfitabilityPerformance
Client,
Experience
Firm Culture

Dashboard: monitor frequently
Client Development
Client Acquisition Cost
Productivity
Profitability
Performance
Client Experience
Firm Culture

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

Questions

Small Law Firm KPIs:
How to Measure Your Way to Greater Profits
In print October 2016
Order your copy today:
http://legalsolutions.com/Juetten
Practical Guide to implement KPI
framework as a Dashboard requiring
only spreadsheets
Mary Juetten
@maryjuetten
mejuetten@traklight.com
Evolvelawnow.com

Key Performance Indicators & Technology

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