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About KPIs

Certain performance measurements can give your law firm the information it needs to make proper business decisions and adjustments in direction. But no one number tells the story—instead, the data must be viewed collectively so you can measure progress toward the firm’s goals. Context is critical.

The struggle for most firms is figuring out which elements management should absolutely pay attention to and why. The answer: Focus on your key performance indicators, or KPIs.

What is a KPI? It is any measurement or statistic that a law firm tracks that meets all three of these characteristics:

  1. It reflects the firm's goals.
  2. It is seen as key to the firm's success.
  3. It is quantifiable.

The chart below gives a sampling of possible KPIs to track based on what elements a firm may be trying to measure.

Element KPIs
Productivity

• The ratio of associates to partners (i.e., leverage)

• The ratio of partner hours worked to the total hours worked by all timekeepers

• The number of new matters opened in the past period

Financial Progress

• The ratio of unbilled work-in-progress to average fee billings for the past year

• Charge-off percentage of fees billed

• Cost-recovery revenue per matter

Of course, law firms are as unique as the lawyers who work in them, so different firms should look at different KPIs depending on their current situations and the goals they have set. In other words, all that can be counted may not count.

The most successful firms identify what counts for them so they can track the KPIs most relevant to their operational performance and financial health. They also use liberal doses of common sense and judgment in assessing what matters most in leading the firm forward.

For examples of meaningful law firm KPIs, go to the Sample Reports page.

 

About KPI

 

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