You’re ultra-busy with depositions, paperwork and trials and it’s hard to find a few minutes to look at the bigger picture to assess how you’re doing and where you’re heading. You’ve got urgent deadlines to meet and needy clients who beg for just a “few minutes” of your time. But if you don’t take a few minutes every month to evaluate what you’ve accomplished and where you’re heading, you’ll lose focus of the one thing that matters the most: YOUR SUCCESS.
Judging your success is a numbers game—you need metrics for every major category of your law firm’s success. The metrics are numbers (“Smart Numbers”) that are easy to access and can be provided on a moment’s notice for you and your staff.
For most law firms, the Smart Numbers can be broken down into four categories:
- Case Management,
Think of the numbers/metrics in each category that you rely upon every month to determine your success. Write them down and ask your staff to add/delete the numbers that are important to your success in every category. Be careful not to go overboard—you just need 3-5 metrics for each category.
Your Smart Numbers for Case Management
Begin by analyzing case management. Even with the best marketing, you won’t make money unless your cases are getting to trial. Focus on the number of active lawsuits that you have and how long it is taking to get them to trial.
Your Smart Numbers for Case Management can include:
- Number of lawsuits filed,
- # of day from receipt of the defendants’ answer and the service of the plaintiffs’ discovery responses,
- # of days from service of the plaintiffs’ discovery responses until the first deposition,
- # of days from the first deposition until the filing of the note of issue,
- # of days from the filing of lawsuit until the first day of trial
The Case Management metrics will show where your lawsuits are getting delayed in litigation and only then can you determine whether there’s something you can do to get your cases moving quicker.
There’s a good chance that the defense lawyers aren’t cooperating when your staff attempts to schedule depositions, or the defendants are ignoring court-ordered deadlines for discovery. Whatever the problem is, you need to make sure your lawsuits are moving through discovery and getting trial dates…or you will never get paid.
Knowing Your Numbers for Financial Freedom
Savvy business owners (yes, you run a business) are acutely aware of their income and net worth. It’s not enough have your accountant give you the numbers for your profit/loss at the end of the year—you should be reviewing your numbers monthly and projecting income for the next 12 months.
Start by getting your Smart Numbers for your financial success include:
- Monthly budget for law firm,
- Estimated annual Profit/Loss for law firm,
- Projected legal fees/income for next 12 months,
- Ratio of legal fees to disbursements on case-by-case basis,
- +/- Change in Annual Revenue and Income from one year to the next
That’s all you need, but you’re not done yet. Meet with your bookkeeper at least once every 2 months to review your Smart Numbers with your staff. Don’t hide your financial numbers from your staff—if you don’t show them your profit/loss, they’ll figure it out on their own. When you don’t hold back anything, your staff will appreciate the transparency and just maybe become more committed to your success.
Numbers for the One Thing that Matters the Most
If you don’t have a pipeline of new cases, your law firm will die.Getting new cases is the lifeblood of your law firm, but when was the last time you analyzed your marketing numbers?Marketing is the most important thing that all lawyers do. Face this brutal truth or your law firm will suffer a quick death.
Cases should be put in the category of “NEW”, “UNDER CONSIDERATION” and “ACCEPTED”. Get the metrics for your marketing efforts over the last 6 months:
NEW: # of new cases referred to your law firm
UNDER CONSIDERATION: # of cases that are “under consideration” for litigation,
ACCEPTED: # of cases accepted for litigation
Let’s say you have 300 new cases referred to you over the last 6 months and of those cases, 45 have been moved to “Under Consideration” and 4 have been accepted for litigation. Okay, you’re getting somewhere, but compare those numbers to the prior 6 months. You know whether you’re getting more cases and you can evaluate the quality of cases.
Digging Deep into Your Marketing Campaigns
Do you have any clue whether you’re getting more cases this year than a year ago? Where are your best cases coming from? Should you invest more cash in your website? You can’t make an educated decision without first looking at your smart numbers.
Go inside your Smart Numbers by getting the metrics from each of your best sources for new cases and break down the categories to see which is your bringing the best new cases. Break down your marketing campaigns: #1: Referral-Based Marketing; #2: Website Marketing; and #3: Traditional Marketing, i.e., TV, radio, yellow pages.
- # of NEW lawyer referrals,
- # of lawyer referrals that are UNDER CONSIDERATION,
- # of lawyer referrals that are ACCEPTED for litigation
- # of NEWcases from your website,
- # of website cases that are UNDER CONSIDERATION,
- # of website cases that are ACCEPTED for litigation
- # of NEW cases from traditional marketing,
- # of cases from traditional marketing that are UNDER CONSIDERATION,
- # of cases from traditional marketing that are ACCEPTED for litigation
You have a better sense of where your new, potential and accepted cases are coming from, but you need to dig a little deeper. Put settlement values on every case that is accepted for litigation—the “settlement value” is the rock bottom number that your client will accept. Based upon the settlement value, you can project your legal fee after deducting the anticipated cases expenses and the referral fee.
Let’s say you spent $10k on your website and you made $100k in legal fees from website referrals over the last 12 months. You have a ROI (return on investment) of 10-1 for Website Marketing and you’re damn crazy if you don’t invest more into your money-making website. Do the same with the other marketing sources, such asReferral Marketing and Traditional Marketing. You’ve got a specific ROI for all of your marketing campaigns and you’ve got data to support the decision that you make for marketing expenses.
Metrics for Lawyer-to-Lawyer Referral Based Marketing
Like most lawyers, your best cases usually come from lawyer-to-lawyer referral based marketing. So you want to dig even a litter deeper into the metrics for your lawyer-to-lawyer referral based marketing. You should check these numbers:
- # of Referral Partners (i.e., lawyers or members of the legal community who refer new cases),
- Top 10 Referral Partners by legal fees, county and # of referrals,
- # of Referral Partners who refer at least one case every 12 months,
- +/- # of Referral Partners from the previous calendar year,
- # of Referral Partners who have not referred in a case in the previous 24 months
You want to set goals for your total # of Referral Partners and celebrate every time you get a referral from a new referral partner. And if one of your former referral partners hasn’t referred a case in a year or two, it’s time for lunch with an old friend to find out why.
Is Your Website Working?
Just having a website that is on the first page of Google is worthless if it’s not bringing new cases to you. Your return on investment for internet marketing is determined by one thing: new clients and money. But you should check these numbers for your website marketing on a monthly basis:
- # of unique website visitors,
- # of inbound links to website,
- # of new contacts per month, i.e., potential clients who contact you to discuss a new case through phone, email or your online chat service
That’s it—you don’t need anything else to know whether your website is working. You should check the # of new pages that were added to your website every month. Make sure you’re adding at least one new page to your website every month, or the search engines won’t know your website exists. Take time to improve the top 10 pages on your website with colorful images and refresh the content with edits and in-bound links to other pages on your website (known as “deep links”).
Measuring Your Success Just Got Easier
Once you’ve defined your Smart Numbers, make sure you share them with your staff and review them at a monthly meeting.It makes no sense to have your Smart Numbers unless you’re reviewing them and making sure your staff knows what’s working.