Taking a look at Key Performance Indicators
- Subtitle: Soul and Small Practice
Are you as productive as you would like to be? For sole or small firm practitioners, stagnating productivity can creep up on you quickly. We are often too busy and focused on resolving our clients’ problems to dedicate proper time to improving the way we practise.
To become a better lawyer, one needs to take a step back and look at the fishbowl from the outside in. Retreats can be useful means to that end. But for sole practitioners, that is not always feasible as there may be no one to retreat with. This does not, however, prevent one from setting performance benchmarks or standards for one's practice, and measuring progress toward them.
Using metrics to understand how your firm is functioning can enhance how you practice. The data can be used to identify areas of inefficiency and growth potential. This will help you create strategies for improvement, adjust resource allocation and develop long-term plans.
What is a KPI?
Businesses use key performance indicators to determine how effectively they are achieving key targets. KPIs are objective measures of performance to assess progress toward goals. Anything can be measured. For sole and small firms, KPIs can measure anything from the growth of your firm to your time away from the office.
What to Measure?
Your firm’s goals and what is important to you will determine what you measure.
A common KPI for lawyers is billable hours. With a little creativity, this KPI can be expanded to include even more useful information. You can measure billable hours per legal assistant, per practice area or per season, and thus assess productivity over time. In the same vein, measuring a partner’s hours against associate hours can also be useful in understanding partner and associate performance. It will keep the partner performing while helping the associate understand what performance standards are required to be a partner.
Another useful KPI is the ratio of how much you are billing to how many total hours of work are put into the matter. This may help you identify areas of resource allocation. For example, if a large portion of the time you spent on a file was administrative tasks, then it is time for you to delegate. This data helps justify hiring an assistant or putting more assistants on similar files.
If your staff doesn’t docket time, you can measure its performance by tracking the number of letters sent per day against all the letters sent by clerks. For a clerk who constantly struggles with numerous corrections to his or her letters, measure the number of errors per letter. Then establish performance incentives to reduce those errors, such as a bonus, a day off, a gift card or a lunch on you. This idea can be expanded to measure absenteeism and punctuality.
Using KPIs, a firm’s growth can be measured in various ways. The ratio of the number of new clients in the past 12 months to the total number of active clients will reveal the firm’s ability to generate new business. You can break this down further into practice areas to identify new trends or needs for legal services in your region. This data will tell you if you need to increase community engagement, advertising or other business-generating efforts.
The list of KPIs is extensive and always growing. Every type of firm, be it transactional or litigation, can find a KPI suitable to its practice. A simple Google search for KPI will give you a good start for building your own list.
Key performance indicators can help you strategically improve efficiency and productivity. It gives you the data you need to tackle areas of weakness. When shared with staff, it allows everyone to know the standards you expect them to strive for.
It is important for sole and small practitioners who do not have the benefit of a business management team to use KPIs. The information discovered can change the way you run your firm and energize the business side of your practice.
Written by Kevin Cheung in collaboration with Pascale Daigneault
Published in Web exclusive content