Award-winning Michigan personal injury lawyer and the managing partner and lead trial attorney at Buckfire & Buckfire, P.C.
Running a law firm is no different than running any other type of business. Even though the legal business is a service business, the operational aspects should be treated similarly to other business enterprises, like retail stores, online businesses, and even restaurants. Gathering and analyzing business data is something that many law firms never perform, but measuring the right metrics can increase efficiencies, improve inefficiencies and increase profitability.
At my six-lawyer personal injury law firm, I did not appreciate the importance of tracking data until the topic was discussed at an attorney mastermind meeting. Some firms had a perfect picture of their business, knowing every detail about their cases, new leads and marketing performance. Other attorneys, including myself, thought we knew our business because we were in the office every day and believed that we had a good grasp on everything.
I quickly learned from the firms’ actively measured data that they had a much better understanding of their financials and better understood their marketing return on investment than other firms. The firms that scrutinized their metrics were better positioned to prosper in the future. They also seemed to be in better control of their practice.
The firms that actively measured their data had different methods of gathering and reporting information. Some firms used basic Excel spreadsheets or utilized their case management software to generate custom reports. Other law firms utilized a sophisticated dashboard, like one created by Vista Consulting, a personal injury business consulting service based in Baton Rouge, Louisiana. The Vista dashboard is a powerful tool that allows firm owners and office managers to view all key data in real time.
Attorney Chad Dudley, Co-Founder of Vista Consulting, believes that all law firms should be measuring and analyzing data on a daily basis because it is the only way to accurately determine the efficiencies of your practice and the best use of your marketing dollars. He and his partners have been able to grow their Louisiana personal injury law firm to 24 attorneys because they are able to manage their staff caseloads and their marketing programs through the use of the Vista dashboard. Mr. Dudley believes law firms could benefit from doing the following:
- Track new leads by case type during the past 30 days. If leads are not coming in at a consistent or improving rate, it is just a matter of time before business shrinks.
- Track signups by case type during the past 30 days. Leads are great, but they have to translate into good cases. If leads are up, but signups are static or declining, there are issues. Leads and signups have to be analyzed together, and both are vital to knowing whether your firm is healthy.
- Track fees by case type during the past 30 days. If leads and signups are healthy, that is a good sign, but it has to translate to cases getting to the finish line with a fee if your firm is to remain profitable. Leads, signups, and fees are vital signs of your firm, and monitoring them on a daily basis is strongly advised.
- Offer client surveys. Getting ongoing feedback from clients about their experience with your firm is critical. Unhappy clients can be a signal to a lot of potential issues at your firm. Getting feedback from clients about your firm is critical to identifying any problems and being able to address these issues quickly.
- Analyze fee center profitability. Fee centers are another word for the departments at your firm. It is great if your firm is generating a profit, but is it making a profit because all the departments are profitable, or is it because one department is extremely profitable and carrying all the other departments? Obtaining a profit and loss statement that is broken up by fee center makes this very clear.
Firms new to this type of tracking may feel overwhelmed at first, but eventually, it will help you better understand your business. By having important data, decisions on business operations, like staffing and advertising, will become much more precise. Ultimately, you will be running your law practice like a real business, and efficiencies and increased profitability will follow.
The information provided here is not legal advice and does not purport to be a substitute for advice of counsel on any specific matter. For legal advice, you should consult with an attorney concerning your specific situation.
