{"id":27732,"date":"2025-01-15T04:01:35","date_gmt":"2025-01-15T04:01:35","guid":{"rendered":"https:\/\/peraltafinancing.com\/accounting\/measuring-success-key-performance-indicators-for-mid-sized-law-firms\/"},"modified":"2025-01-15T04:01:35","modified_gmt":"2025-01-15T04:01:35","slug":"measuring-success-key-performance-indicators-for-mid-sized-law-firms","status":"publish","type":"post","link":"https:\/\/fivemor.com\/?p=27732","title":{"rendered":"Measuring Success: Key Performance Indicators for Mid-Sized Law Firms"},"content":{"rendered":"<p> <br \/>\n<\/p>\n<div>\n<p>You know the feeling, staff numbers are up, everyone is busy and you\u2019re hearing lots about the new work being won. Then you look at the financials and profit is static. You ask the finance team, the marketing team and the equity partners and no-one has a clear understanding of why.<\/p>\n<p>The answers are in the <strong>Key Performance Indicators (KPIs)<\/strong>.<\/p>\n<p>This is an extreme example of course, I\u2019m sure everyone reading this is aware of what KPIs are and keep track of at least a few, but they can, and should be, an extremely valuable tool in driving the growth of business. Understanding the why (and why not) means you have better information to make decisions.<\/p>\n<ul>\n<li><strong><em>Should we stop this service line?<\/em><\/strong><\/li>\n<li><strong><em>Is this department pulling its weight?<\/em><\/strong><\/li>\n<li><strong><em>Should we make these promotions?<\/em><\/strong><\/li>\n<li><strong><em>Is this client actually making us money?<\/em><\/strong><\/li>\n<\/ul>\n<p>KPIs are individual for every business, for example: there is no point in tracking a marketing budget ratio if you rely on word-of-mouth; and client satisfaction scores can\u2019t be your KPI if you aren\u2019t obtaining this data. There are some consistencies though and with a bit of thought (and maybe advice) there are KPIs that can benefit every company. They can become a useful metric at the monthly partners\u2019 meeting rather than a number at the bottom of another report you only scan.<\/p>\n<p>Let\u2019s explore these a little further. I\u2019ve listed a few examples of typical KPIs in each category and then for one of each I\u2019ve explained a potential benefit:<\/p>\n<h2 class=\"wp-block-heading has-menzies-blue-color has-text-color\" id=\"h-financial-kpis\">Financial KPIs<\/h2>\n<div class=\"wp-block-image\">\n<figure class=\"alignright size-full is-resized\"><a href=\"https:\/\/www.menzies.co.uk\/wp-content\/uploads\/2022\/11\/Icons-Branded-15.png\"><img decoding=\"async\" fetchpriority=\"high\" width=\"591\" height=\"591\" src=\"https:\/\/www.menzies.co.uk\/wp-content\/uploads\/2022\/11\/Icons-Branded-15.png\" alt=\"\" class=\"wp-image-14705\" style=\"object-fit:cover;width:125px;height:125px\" srcset=\"https:\/\/www.menzies.co.uk\/wp-content\/uploads\/2022\/11\/Icons-Branded-15.png 591w, https:\/\/www.menzies.co.uk\/wp-content\/uploads\/2022\/11\/Icons-Branded-15-300x300.png 300w, https:\/\/www.menzies.co.uk\/wp-content\/uploads\/2022\/11\/Icons-Branded-15-150x150.png 150w, https:\/\/www.menzies.co.uk\/wp-content\/uploads\/2022\/11\/Icons-Branded-15-68x68.png 68w, https:\/\/www.menzies.co.uk\/wp-content\/uploads\/2022\/11\/Icons-Branded-15-490x490.png 490w\" sizes=\"(max-width: 591px) 100vw, 591px\"\/><\/a><\/figure>\n<\/div>\n<ul>\n<li><strong>Fees per partner \/ fee earner<\/strong><\/li>\n<li><strong>Profit per partner \/ equity partner \/ department<\/strong><\/li>\n<li><strong>Utilisation rate<\/strong> (% of an eight-hour day put towards billable work)<\/li>\n<li><strong>Realisation rate<\/strong> (% of billable work that gets invoiced to clients)<\/li>\n<\/ul>\n<p>Consider the utilisation rate, if you know how much time your fee earners are spending on actual billable work you can incorporate direct costs relating to them (e.g. support salaries) and see who is performing well. It helps with rewarding employees and with making decisions on where expansion is likely to be successful.<\/p>\n<h2 class=\"wp-block-heading has-menzies-blue-color has-text-color\" id=\"h-efficiency-kpis\">Efficiency KPIs<\/h2>\n<ul>\n<li><strong>Lock-up days<\/strong> (WIP days + Debtor days)<\/li>\n<li><strong>Total salary costs as a percentage of fee income<\/strong><\/li>\n<\/ul>\n<p>Lock up days is an oldie but a goodie, some firms may not have this issue, but most practice managers will say that they could always do with a little more cash. One of the easiest ways to do that is reduce the amount of days between doing the work and receiving payment for it.<\/p>\n<p>Once you have a starting point (and there is plenty of data out there to let you know if this is good or not) then in theory monitoring and reducing this shouldn\u2019t be hard. Don\u2019t wait for month-end to raise the fee and follow up on overdue payments \u2013 its your money for the hard work you have done so don\u2019t be afraid to chase!<\/p>\n<div class=\"wp-block-image\">\n<figure class=\"alignright size-full is-resized\"><a href=\"https:\/\/www.menzies.co.uk\/wp-content\/uploads\/2023\/11\/Handshake-Icon.png\"><img loading=\"lazy\" decoding=\"async\" width=\"142\" height=\"142\" src=\"https:\/\/www.menzies.co.uk\/wp-content\/uploads\/2023\/11\/Handshake-Icon.png\" alt=\"\" class=\"wp-image-17915\" style=\"object-fit:cover;width:125px;height:125px\" srcset=\"https:\/\/www.menzies.co.uk\/wp-content\/uploads\/2023\/11\/Handshake-Icon.png 142w, https:\/\/www.menzies.co.uk\/wp-content\/uploads\/2023\/11\/Handshake-Icon-68x68.png 68w\" sizes=\"auto, (max-width: 142px) 100vw, 142px\"\/><\/a><\/figure>\n<\/div>\n<h2 class=\"wp-block-heading has-menzies-blue-color has-text-color\" id=\"h-client-related-kpis\">Client related KPIs<\/h2>\n<ul>\n<li><strong>Number of new clients<\/strong><\/li>\n<li><strong>Client retention rates<\/strong><\/li>\n<li><strong>Client satisfaction scores<\/strong><\/li>\n<\/ul>\n<p>Its an oft quoted \u2018fact\u2019 that the cost of acquiring a new client is 8 to 12 times that of acquiring new work from existing ones. But I suspect that a lot of firms would agree that more focus goes on winning new work than working closer with the ones we know.<\/p>\n<p>Client retention rates can be tracked in many ways, but how many of your residential conveyancing clients have been referred to wills and probate? And how many employment law cases have you introduced to the corporate law specialists for potential future needs? Collaboration should be your firm\u2019s best way to win \u2018new\u2019 work.<\/p>\n<h2 class=\"wp-block-heading has-menzies-blue-color has-text-color\" id=\"h-marketing-and-business-development-kpis\">Marketing and Business Development KPIs<\/h2>\n<ul>\n<li><strong>Marketing budget ratio<\/strong> (total marketing spend to total fees billed)<\/li>\n<li><strong>Cost of acquiring a new client<\/strong><\/li>\n<li><strong>Number of new clients won<\/strong><\/li>\n<\/ul>\n<p>Knowing the average cost of a acquiring a new client makes decisions on future marketing campaigns easier. If you spent \u00a350k on Google ads last year and it increases the cost of acquiring a new client, without a large bump in the number of new clients won and with no overall increase in fee per client, then you know it\u2019s time to try something new this year.<\/p>\n<div class=\"wp-block-image\">\n<figure class=\"alignright size-full is-resized\"><a href=\"https:\/\/www.menzies.co.uk\/wp-content\/uploads\/2023\/03\/Icons-Branded-303.png\"><img loading=\"lazy\" decoding=\"async\" width=\"592\" height=\"591\" src=\"https:\/\/www.menzies.co.uk\/wp-content\/uploads\/2023\/03\/Icons-Branded-303.png\" alt=\"\" class=\"wp-image-16464\" style=\"object-fit:cover;width:125px;height:125px\" srcset=\"https:\/\/www.menzies.co.uk\/wp-content\/uploads\/2023\/03\/Icons-Branded-303.png 592w, https:\/\/www.menzies.co.uk\/wp-content\/uploads\/2023\/03\/Icons-Branded-303-300x300.png 300w, https:\/\/www.menzies.co.uk\/wp-content\/uploads\/2023\/03\/Icons-Branded-303-150x150.png 150w, https:\/\/www.menzies.co.uk\/wp-content\/uploads\/2023\/03\/Icons-Branded-303-68x68.png 68w, https:\/\/www.menzies.co.uk\/wp-content\/uploads\/2023\/03\/Icons-Branded-303-490x490.png 490w\" sizes=\"auto, (max-width: 592px) 100vw, 592px\"\/><\/a><\/figure>\n<\/div>\n<h2 class=\"wp-block-heading has-menzies-blue-color has-text-color\" id=\"h-staff-related-kpis\">Staff-Related KPIs<\/h2>\n<ul>\n<li><strong>Employee satisfaction scores<\/strong><\/li>\n<li><strong>Employee turnover rates<\/strong><\/li>\n<\/ul>\n<p>Knowing these KPIs won\u2019t stop every fantastic associate from finding another opportunity, but knowing how the team feel can certainly reduce attrition and help you to keep the ones you want to stay. Benchmarking your staff turnover rates and considering feedback can alert you to a need to make changes that enhance the attractiveness of your firm.<\/p>\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n<h2 class=\"wp-block-heading has-menzies-grey-color has-text-color\" id=\"h-summary\">Summary<\/h2>\n<p>There are a lot of KPIs, this is just a sample and the trick is identifying the ones that are \u2018key\u2019 to your firm. These may not be the same each year, but by identifying what matters and tracking them you can see what works to move your firm in the right direction.<\/p>\n<p>Let us know if you want to talk about how we can help you look at this and other ways of driving growth.<\/p>\n<div class=\"flexBox alignCenter justifyCenter flexDirColumn\">\n<h2 class=\"modTitle\">Contact Our <span class=\"yellow\">Experts<\/span><\/h2>\n<div class=\"author author-100 flexBox alignCenter justifyCenter p-b-medium\">\n<div class=\"author-image-wrapper fadeInUp animationDelayone animatable\">\n<div class=\"author__image\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<img decoding=\"async\" src=\"https:\/\/www.menzies.co.uk\/wp-content\/uploads\/2016\/08\/mike-ayres-582x582-1.jpg\" alt=\"\"\/>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/div>\n<\/p><\/div>\n<\/p><\/div>\n<\/p><\/div>\n<p class=\"flexBox justifyCenter p-t-small\"><a href=\"https:\/\/www.menzies.co.uk\/insights\" class=\"readon solid blue\">Back to Insights<\/a><\/p>\n<\/p><\/div>\n\n","protected":false},"excerpt":{"rendered":"<p>You know the feeling, staff numbers are up, everyone is busy and you\u2019re hearing lots about the new work being won. Then you look at the financials and profit is static. You ask the finance team, the marketing team and the equity partners and no-one has a clear understanding of why. The answers are in [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":27733,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11759],"tags":[10918,11648,1088,12685,18903,18904,5786,11260],"dealstore":[],"offerexpiration":[],"class_list":["post-27732","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-accounting","tag-firms","tag-indicators","tag-key","tag-law","tag-measuring","tag-midsized","tag-performance","tag-success"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.4 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Measuring Success: Key Performance Indicators for Mid-Sized Law Firms - Som2ny Network<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/fivemor.com\/?p=27732\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Measuring Success: Key Performance Indicators for Mid-Sized Law Firms - Som2ny Network\" \/>\n<meta property=\"og:description\" content=\"You know the feeling, staff numbers are up, everyone is busy and you\u2019re hearing lots about the new work being won. 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