Legal TrendsDecember 01, 2023

What They Didn’t Teach You About Running a Business in Law School Series: Key Performance Indicators

In a compelling webinar, Hamid Kohan, CEO of Legal Soft, a legal staffing and marketing firm, and McKay Ferrell, VP of Product at Assembly, provided an invaluable discourse on the business side of running a law firm. This blog post series turns their insights into a comprehensive roadmap for law firms to function and excel as thriving business entities in the ever-evolving legal realm.

This article will cover the criticality of implementing key performance indicators (KPIs) to drive firm growth and efficiency, particularly in the legal industry where traditional practices may not suffice in today's competitive landscape, starting with continuous improvement.



Continuous improvement and evolution

If you’re not improving, you’re stagnant. Hamid advocates for the implementation of Key Performance Indicators (KPIs) at every level of the firm, from receptionists to senior litigators, to incentivize staff to exceed expectations and drive better results. Additionally, he underscores the importance of setting clear business measurements and goals, emphasizing that success should be defined and quantified to guide the firm's growth and development.

He emphasizes the need for ongoing improvement and automation, stating that firms are never truly “done” and should continuously strive to improve everything they have set forward. Moreover, he discusses the concept of turning a law firm into a "factory" and the importance of compartmentalizing tasks and using case management software to streamline processes.

But what KPIs should a law firm track?



Cost of client acquisition

Knowing the exact cost of client acquisition rather than a broad range is imperative, as it allows businesses to accurately assess the return on investment (ROI) for acquiring new clients. By understanding the precise cost involved in acquiring a new client, law firms can make informed decisions about their marketing and business development strategies. (Neos Pro allows you to calculate cost of acquisition!)

This knowledge enables them to allocate resources effectively and focus on the most cost-effective methods for acquiring new clients. Additionally, it helps in evaluating the overall profitability of the firm and making strategic decisions for future growth.



Case value

Calculating the net profit per case and dividing it into monthly profits is one way to measure case value. Hamid also talks about using dollar value metrics based on hourly rates for specific activity codes and tying them back to the individuals performing the activities. This approach allows for a deeper understanding of the financial performance of the firm and the ability to make informed decisions based on historical performance and average value. Analyzing case value will help a firm identify its sweet spot for case types, leading to better client-firm alignment.



Staff performance

KPIs are critical for measuring staff performance. Having measurable goals ensures both employees and managers have the same expectations for what is considered acceptable performance. Below are some examples of staff KPIs law firms can use to measure productivity and value to the firm.



Secretaries/Assistants

  • Timeliness in opening the office every day
  • Percentage of calls answered versus going to voicemail
  • Timely scanning and documentation of all paperwork into the case management software
  • Accuracy and efficiency in completing administrative tasks



Case Managers

  • Monthly settlement targets
  • Number of cases closed out within a specific period
  • Client retention rates
  • Timeliness in handling and processing cases



Intake Staff

  • Successful intake completion rates
  • Client retention rates
  • Accuracy and completeness of client information gathered during intake, which can be greatly improved by the dynamic intake fields available with Neos Pro



KPIs should be tailored to align with the specific goals and objectives of the organization and the responsibilities of the staff members.



Bonuses

He mentions that every single person in his staff has a key performance indicator (KPI) with a bonus attached to it. For example, he gives a $25 bonus to virtual staff in certain countries for successful intakes, which motivates them to retain as many clients as possible. Additionally, he discusses setting quotas for case managers and offering extra bonuses for meeting those quotas. Overall, he strongly advocates for using bonuses as a means to encourage staff to excel in their roles.



Customer Health Score

Hamid describes the customer health score as a metric used to measure the overall health of a business based on customer satisfaction and other related factors. He mentions using NPS scoring and customer effort score as part of this measurement and emphasizes that these goals don't have to be solely financially driven but should ultimately result in a positive financial impact. Higher NPS scores are desirable because they mean clients are more likely to stay with a law firm and recommend it to friends.



Customer Effort Score

The customer effort score is a metric used to measure the ease of customers' interactions with a business. The higher the customer effort, the less value a customer feels they derive from the business relationship. Aim to make the customer effort score as low as possible and keep monitoring it over time.



Setting and monitoring KPIs are critical for sustaining and growing your law firm. You can use Neos to track several of these metrics, including accuracy and efficiency in completing administrative tasks (via the Checklist), cost of client acquisition, number of cases closed out within a specific period, and more.

Watch the full webinar on demand. 



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