As a law firm owner, you’re running a business — whether you like it or not.
Breaking news: you are the CEO of your law firm.
As such, you may have heard the KPI buzzword floating around before — but what does it mean? What are KPIs and why should you care?
In order to run a successful law firm, KPIs are an absolute must. We’re breaking it down to the essentials for a law firm owner here.
What are KPIs?
Key performance indicators (KPIs) are strategic data used to measure success within an organization. According to KPI.org, this critical data indicates progress toward an intended result.
To put it simply, a KPI is a measurement of progress toward a particular goal. Take, for example, client cases closed.
If your firm needs to bring in $X of revenue in a year, and — based on previous case data — you know to meet the revenue goal it will require you to close Y number of cases in that year, you might measure the number of cases needed to close on a monthly basis to meet the overall annual goal.
That monthly case goal is a KPI — key performance indicator. You’ll know if you don’t have enough cases closed by the end of January to be on track for your annual goal, your team will need to make up for it later on.
So, if we break it down:
Key = crucial to success
Performance = level of progress
Indicator = the way in which it’s measured
Make sense? If it’s as simple as cases that bring in revenue, why measure or track these things on a deeper level?
The reality is there are more KPIs worth tracking for your law firm than you might realize. KPIs are a useful tool not only in case management and revenue, but also in marketing, client service, hiring, and many other departments of your firm.
If you don’t want to end upside down in your firm’s investments, you must start tracking data. Compiling this data shows trends — and the numbers don’t lie. Use it to your advantage to get leaps and bounds ahead of your competitors and surpass your previous revenue targets.
Why Should You Track KPIs for Law Firms?
If you’re not already tracking KPIs for your law firm, you might wonder why it’s necessary in the first place.
Consider this: without clear direction, how will your team know what’s important, what they should focus on, and what the end result of all their hard work should look like?
Here’s why KPIs for law firms are essential to your team’s success.
The Right KPIs for Law Firms Measure Progress
Tracking the appropriate KPIs for your firm shows team members how they’re progressing toward long-term goals. This gives you the ability to manage with the future in mind. When indicators are low, you’ll know where the team needs to pick up the slack to improve the future outlook.
Not only do you know if your firm is on the right track to success, but each member of the team knows too.
KPIs for Law Firms Focus Team Attention on What Matters Most
KPIs provide a central focus that empowers your team to improve strategically and operationally based on analytical and informed decisions.
When each team member knows what KPIs they should own, why they are important to the organization, and how everyone contributes to overall team success, the result is an aligned team working toward a common goal.
KPIs Improve Overall Team Performance
Using KPIs as a quantifiable measurement to gauge performance will result in natural improvements within the team. When individuals understand the reasoning behind their roles, they can work toward a clear vision for the future — together.
Additionally, when KPIs are made public to the entire team, not only is there a clear sense of direction, but it motivates individuals to enhance their performance.
Ultimately, what gets measured gets improved. What gets measured and made public gets drastically improved.
If you’re not tracking KPIs in your law firm, it’s time for you to start. Especially if your firm is not growing as fast as you would like — this is your solution.
Final Thoughts
Now that you’ve answered the question: “What are KPIs?” hopefully it’s obvious why you should be tracking them for your law firm.
Utilizing these quantifiable, outcome-based indicators will ultimately empower you and your team to determine if you’re on track to meet your goals and objectives at any given time.
Don’t miss out on the value that KPI tracking provides your firm by waiting to implement these systems to monitor and measure effectiveness.
