How will you measure success in 2014?

 

Ed Koch, the late mayor of New York City, was known for campaigning on street corners and at subway station entrances asking voters: “How am I doing?”

As January 2014 draws to a close, most law firms have held at least one partners’ meeting to review the results of 2013. Whether you are a partner of a large firm or you are on your own did you ask yourself: “How am I doing?”

Hopefully, besides the financial report from the office manager/bookkeeper,  there was a review of some of these benchmarks which are equally important for evaluating the current health of your law firm business:

1. Does the firm have more active cases today than it had 12 months ago? A sure sign of the health of a law firm practice is whether the work load is increasing year-over-year. Wall Street measures the success of a business by the growth of sales. Your practice management system should be able to provide a list cases filtered by “date opened”. An annual or quarterly review of this list will give the earliest indication of the health of the business.

2. Did the number of new clients obtained during 2013 exceed the number of new clients obtained in 2012? While a growing case list is one sign of a prospering business, a growing list of new clients is just as vital. This is where the use of social media, coupled with a constant customer relationship program, can directly add to the firm’s client list. Firm newsletters and emails to existing clients should be the first step to take. The easiest source of a new client is a referral from a happy existing client.

3. Did the average number of days between client contacts decrease in 2013, compared to 2012? Among the biggest complaints from law firm clients is that they do not hear from their lawyer often enough. A simple email costs literally nothing but the one minute to draft and click send. It should be the goal of every lawyer to reach out and “touch” each client a minimum of once every 90 days. A good practice management system can automate the process and keep track of which clients need to be contacted.

4. Did the ratio of employees to total firm income increase or decrease in 2013? This is not really a money question. Rather, it points to the need to create a working environment in which every employee can be as efficient as possible. This means using the latest time and billing, practice management and document management systems available. It requires acknowledging that smart phones, tablets and cloud-based document sharing are as critical to a successful law practice as was passing the Bar exam. Fear of technology is no longer acceptable.

5. Does each area of practice represent an increasing amount of total firm business? OK. This is a money issue, but it is best reviewed in a dashboard. The ebb and flow of the economy dictates which areas of law practice (real estate, immigration, bankruptcy) are in lesser or greater demand. Quarterly reviews of the trends of each practice area should help the firm decide where to invest the firm’s assets (time and money) for the highest return.

The law firm businesses which will succeed the most in 2014 will be the ones which continuously monitor these five metrics and adjust the firm’s business model accordingly. If done properly, in January 2015 they will be able to answer: “How am I doing?” with a resounding “Very well, thank you!”

Steve Miller, JD  has provided law office productivity consulting services since 1998. He is certified in LexisNexis PCLaw®, LexisNexis Time Matters® and Amicus Attorney®.

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