What are the KPIs we need to hit for our business?
Today’s episode is a small overview of the presentation I shared at the ABA Tech Show in early March. In that talk, I discussed how we need to think about different questions we ask to optimize our business. We often dive into solving problems without creating a comprehensive list of items we really have to master. As such, we often fix marginal problems while leaving greater problems, which present much greater opportunities for business growth, on the table.
Let’s find the right solution to the problems which are facing your business.
In This Episode We Discuss:
- Questions we need ask ourselves to optimize our business.
- The benefit of diving in a little bit deeper to find the right solutions to the problems that are facing your business.
- Becoming so fixated on solving today's problems that we oftentimes miss opportunities.
- How to shift our focus into an area where we can make more money and create more free time.
Allison Williams: [00:00:05] Hi, everybody, it's Allison Williams here, your host of The Crushing Chaos with Law Firm Mentor podcast, Law Firm Mentor is a business coaching service for solo and small law firm attorneys. We help you to grow your revenues, crush chaos in business and make more money.
Allison Williams: [00:00:30] Welcome to another episode of The Crushing Chaos with Law Firm Mentor podcast, where this week I'm going to share with you guys some KPIs that we talked about at a recent presentation I did for the ABA Tech Show. So for those of you that are not familiar with the tech show, the American Bar Association has been putting this on for many, many years. And it really is a legal tech conference where the speakers present information about how to use technology effectively and efficiently in the ever-evolving business of law. So today I want to share with you pieces of that presentation that I gave. It's not going to be a complete replica, but I'm going to share with you one of the foundational pieces of information that I shared at that conference because I think it is very helpful for us as lawyers to always be thinking about the different questions that we need to be asking in order to optimize our business. So often we dive into the meat and potatoes of solving problems without creating a comprehensive list of those things that we really have to master. And as a result, by the time we get started, we are oftentimes fixing things that are marginal problems while we leave bigger things that are much greater problems and present much greater opportunity for business growth on the table.
Allison Williams: [00:01:54] So today is going to be really just a list of different KPIs that I want you guys to be looking at in your business on a regular basis. First, just make the list and then ultimately you can go back and see where you may have some gaps in information and where you would benefit from diving in a little bit deeper to get yourself the right solutions to the problems that are facing your business. Ok, here we go.
Allison Williams: [00:02:18] Ok. First, in the area of our marketing, the KPIs that you need to understand, that you need to be looking at, and by the way, I should probably pause to say KPIs are key performance indicators. These are the metrics that you're going to look at in your business to know whether or not you are on track to meet your goals, exceed your goals, or if there is a shortfall. Ok, so in the area of marketing, you need to know how many funnels are in your marketing plan. How many different tributaries of marketing activity do you have going out and coming into your law firm? The number of impressions that are available per funnel. The number of leads that are generated per funnel. The number of leads that are viable in each of your funnels. The number of calls fielded in your law firm every day. The number of total talk time minutes you have per call. In other words, how long does it take to get someone on the call and then ultimately off the call? The number of scheduled appointments that result from every call to your office seeking representation. The percentage of calls resulting in scheduled appointments, this is typically referred to as your scheduling rate. The number of objections that are presented by those who seek to have representation and ultimately do not schedule or resist scheduling an appointment. The number of objections that are successfully overcome, in other words, your success rate with overcoming objections. The number of scheduled appointments who show up for your consultations. The number of potential new clients that convert from prospects into paying clients at the initial consultation, and then of course, you want to track it beyond the initial to any subsequent consultation. The number of prospects that convert ultimately, so in other words, not just the number that convert at the beginning, but the number that ultimately convert from the time you start engaging with them, to the time they get to know if they ultimately get to know. The number of follow-up touchpoints needed to convert a prospect into a paying client, in other words, how many times do you have to transmit a marketing message in order for a person to become a client from simply being a prospect?
Allison Williams: [00:04:52] The average case value per consultation, how much money are you making off of each sale that you generate in your law firm? The average case value per new client, in other words, sometimes clients will come in and they will hire you for more than one matter. What is the average that you're generating across every human that is hiring your business? The average retainer per new client, right, we know that we distinguish between the retainer and the total value of the case because sometimes people pay us up front or they pay us in stages, but they don't pay us everything all at once. The number of new client fails, in other words, how many times did you bring in a client and then ultimately you realized after starting to represent them that they weren't appropriate, that they didn't fit your ideal client avatar, that there's something in the case that precludes you from representing them like a conflict?
Allison Williams: [00:05:46] Things like that. The number of hours billed in a defined billing cycle. Hours billed, if you're a billable hour firm tells you how much work, ultimately in production is going to be required to move a case from start to finish. The number of flat fee cases turned in a billing cycle, so in other words, how many cases can any given particular attorney and or paralegal handle of the cases that are generated? The amount of time on desk for your for your contingency cases, in other words, how long before you take a case from start to finish and move it through your pipeline to get to that settlement? The average number of cases per case list. The effective rate, which is the percentage of the hourly rate that is realized by the attorney. The dollars collected per month. The percentage of fees written off per matter type. So if you're writing off in certain practice areas or you're writing off certain types of cases, obviously you can start making some financial plans around that. The collection rate per matter type. Are you collecting one hundred percent of your fees in certain types of cases and only seventy five percent in other types of cases? The aforementioned members write the collection rate across the aggregate per manager, so as your firm is growing up dollars of responsibility per manager, you need to know that what are they actually doing versus what they are required to do? And then moving into the area of finance, here are some KPIs, some some documents that you need to be looking at on a regular basis in order to ensure that you are moving things fluidly through your pipeline. So your income statement also known as your profit and loss statement. Your budget to actual comparison report, what did you plan to spend versus what you actually spent? And by the way, there should be an over under on your profit and loss statement, rather on your budget to actual report on a regular basis. Your balance sheet, your assets, liabilities and equity. Your cash flow projection report and that should be every six to eight weeks out, right?
Allison Williams: [00:08:11] So what are you projecting to bring in over a predetermined period of time in the future so that you can start adjusting your spending if, in fact, your projection is trending for you to have less money than you require? Your rolling revenue report, right? Where do we expect money to come in, even if you have an average amount that you bring in every month? We know that there are some months where you're going to have some annual purchases or quarterly purchases, and they're going to be some months where you don't incur purchases at all in certain categories that you'll pay for later in the year. Your expense report, you know what are dollars and cents going out for? Your labor efficiency rate, how many hours of productivity are you able to receive from each employee that is producing in your law firm? And should there be more efficiency for that person, for each individual, there should be a general normative value that you could expect some people more than others. But how efficient is your labor force?
Allison Williams: [00:09:21] Now, of those different areas that we just went through, I know I rattled them off pretty quickly. We started with marketing, we kind of shifted into sales and then we started talking about people productivity and then ultimately we got to finance for each of these. There is a sweet spot for your law firm, right? Over the course of the next several months, we're going to be going into more detail about each of these key performance indicators. But I wanted to start here with just a magic list because oftentimes, as I said earlier, we are so fixated on making sure that we dive in to solve today's problems that we oftentimes miss opportunities to shift our focus into an area where we can make more dollars and cents and create more time sooner rather than later. Instead, we just kind of dive into the first problem that we see and we go all-in on solving that problem. And while I definitely promote us going all-in on solving our problems, we need to be solving the problems that are going to move the needle the fastest.
Allison Williams: [00:10:24] In fact, one of the questions that comes up a lot in our Chrushing Chaos Masterclass, which is the step-by-step process that we teach absolutely free of charge to lawyers all across the country on how to create a fully systematize law business and we teach you that in 10 days or less. Right. And oftentimes what comes up in there when we're starting to talk about how to create systems and where to start is that people will say, I've got problems in lots of different areas, right? I've got sales problems because I can't convert the people that come in or I've got marketing problems because I don't generate enough leads or enough of the type of lead that I want to work witt but I'm generating clients, but not people that I actually want to serve.
Allison Williams: [00:11:02] Or, you know, I've got people issues. I've got people in the I've got butts in seats, if you will, but I don't have people that can do the work at the quality I require without taking a lot of my time and energy. So what do we say to that person? Where do we tell you to start? Well, almost invariably we want you to first start with what is causing the most friction in the business, because where you have the greatest amount of friction is typically going to be where your time, your energy, your effort, and your stamina go. And we don't want you exhausting yourself on today's problem because you're spinning around it rather than just going ahead and solving it. However, a very close second, especially for people who say I've got problems everywhere and I don't know where to start. We tell you you should start where the money is, because the more money you make, the faster in your law firm, the easier you're going to be able to buy yourself solutions. And economies of scale will tell you that there's only so many hours in the day, only so many different places you can focus, only so many different tasks that you can ever become truly, truly proficient at. And if you don't get other people in their zone of genius helping you in those areas that are not your zone of genius, typically you're going to wear yourself out long before you create anything of any magnitude, size, and high level of profit.
Allison Williams: [00:12:23] So where to start almost always goes to where the money is so that as you're generating more money, you can start buying yourself more convenience, more efficiency, and just a greater experience in your business overall.
Allison Williams: [00:12:36] All right. Today on the Crushing Chaos with Law Firm Mentor podcast, we have been talking about the KPIs, the key performance indicators that you need to focus on in your law firm in order to create the strategically sound, highly profitable business that you desire. Now we're going to go into a lot more detail about these, but today I just wanted to give you the list so you can start thinking about where you need to be asking better questions in your law firm. I am Allison Williams your Law Firm Mentor everyone, and I'll see you on the next episode.
Allison Williams: [00:13:13] Thank you for tuning in to the Crushing Chaos with Law Firm Mentor podcast to learn more about today's show and take advantage of the resources mentioned, check out our show notes. And if you enjoy today's episode, take a moment to follow the podcast wherever you get your podcast and leave us a rating and review. This helps us to reach even more law firm owners from around the country who want to crush chaos in business and make more money. I'm Allison Williams your Law Firm Mentor, everyone. Have a great day!
Allison C. Williams, Esq., is the Founder and Owner of the Williams Law Group, LLC, with offices in Short Hills and Freehold, New Jersey. She is a Fellow of the American Academy of Matrimonial Lawyers, is Certified by the Supreme Court of New Jersey as a Matrimonial Law Attorney, and is the first attorney in New Jersey to become Board-Certified by the National Board of Trial Advocacy in the field of Family Law.
Ms. Williams is an accomplished businesswoman. In 2017, the Williams Law Group won the LawFirm500 award, ranking 14th of the fastest-growing law firms in the nation, as Ms. Williams grew the firm 581% in three years. Ms. Williams won the Silver Stevie Award for Female Entrepreneur of the Year in 2017. In 2018, Ms. Williams was voted as NJBIZ’s Top 50 Women in Business and was designated one of the Top 25 Leading Women Entrepreneurs and Business Owners. In 2019, Ms. Williams won the Seminole 100 Award for founding one of the fastest-growing companies among graduates of Florida State University.
In 2018, Ms. Williams created Law Firm Mentor, a business coaching service for lawyers. She helps solo and small law firm attorneys grow their business revenues, crush chaos in business and make more money. Through multi-day intensive business retreats, group and one-to-one coaching, and strategic planning sessions, Ms. Williams advises lawyers on all aspects of creating, sustaining, and scaling a law firm business – and specifically, she teaches them the core foundational principles of marketing, sales, personnel management, communications, and money management in law firms.
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My Favorite Excerpt From The Episode:
TIME: 00:11:17 (38 Seconds)
Well, almost invariably we want you to first start with what is causing the most friction in the business because where you have the greatest amount of friction is typically going to be where your time, your energy, your effort, and your stamina is going. And we don't want you exhausting yourself on today's problem because you're spinning around it rather than just going ahead and solving it. However, a very close second, especially for people who say I've got problems everywhere and I don't know where to start. We tell you you should start where the money is, because the more money you make, the faster in your law firm, the easier you're going to be able to buy yourself solutions.