The success of a criminal law practice depends on hard work in and out of the courtroom, but it also requires attention to detail. The latter can be accomplished in part through regular reporting about law firm performance. Key Performance Indicators (KPIs) are often talked about within the business arena, but some criminal lawyers have no idea what they are or how their implementation can increase firm profits.
What follows is an explanation of KPIs and why criminal law firms should use them to make their legal practice more profitable in the year ahead.
What are KPIs?
Investopedia defines KPIs as “quantifiable measures that a company uses to gauge its performance over time. These metrics are used to determine a company’s progress in achieving its strategic and operational goals, and also to compare a company’s finances and performance against other businesses within its industry.”
When used effectively, KPIs can be used to reach strategic long-term goals. For instance, specific indicators can be identified in relation to long-term goals. Regular review of these indicators can help business leaders identify problem areas and make the changes necessary to keep the company on track to meet the target.
KPIs also help attorneys become more informed about various aspects of their firms. For example, a firm leader may have been charging the same hourly rate for more than 20 years without realizing that local counterparts typically charge twice as much. The right KPI would alert the leader, providing an opportunity and justification for adjusting the firm’s hourly rates.
KPIs for Criminal Law Firms
Client Satisfaction – Referrals and reviews are extremely valuable within the legal profession. What clients say about the criminal representation they receive can result in consistent new business or an absence of new matters. With a client satisfaction KPI, criminal law firms can gauge client approval and find areas for improved client relations.
This strategy can be implemented in various ways. Firms can request that clients complete a satisfaction survey. They can also ask clients to take part in an exit survey with a staff member or uninterested third party. Both are effective for determining client satisfaction.
Realization – Most criminal law attorneys still bill clients by the hour, but it does not matter how much they bill if they consistently fail to collect the total billed amount. Realization is the rate that firms receive payment for their billed hours. It is calculated by dividing the amount billed by the total amount collected.
Once the realization has been established, criminal law firms can do a couple of things. First, they can look for any patterns or systems contributing to low realization. Then, they can take that information and make necessary changes to firm processes. Even a small increase in realization can equal greater profits for a criminal law practice in 2022.
Matter Profitability – Are some specific criminal law cases more profitable than others? Do some of them result in way more challenges than profit? Firms can only answer these questions when armed with relevant indicators. Determining matter profitability involves looking at the total allocation of direct and indirect expenses for each matter and subtracting them from realization (total collected fees).
This is an essential step in the KPI process. Solely looking at hours billed, or invoice totals fails to give an accurate view of how much profit is actually being made from each matter. A data review may reveal that certain criminal law cases result in higher costs, while others typically result in higher profits. Firm leaders can use that information to make strategic decisions about where firm resources will be spent in the coming year.
Marketing Expenditures – Marketing expenditures can include a few different indicators. For example, how much of the firm’s operating budget is being spent on marketing in total? In addition, how much of the marketing plan budget is being spent on individual marketing techniques? Lastly, which marketing techniques have proven effective at securing new clients
There is no need to keep throwing money into marketing that is not going to pay off in 2022. A marketing KPI helps criminal law firm leaders regularly review their marketing strategies to determine which directions yield the highest results.
KPIS Provide Criminal Law Firms with Valuable Knowledge
Knowledge is the key to maintaining a successful criminal law practice in 2022. With the right KPIs, practice leaders can keep a constant eye on firm progress, while identifying areas for necessary improvement. The more data compiled and reviewed; the better-equipped leaders will be to make effective decisions for the firm’s wellbeing.
Measuring KPIs does not have to be a difficult task with legal technologies that can run numerous data reports within a matter of minutes. TimeSolv legal billing software users have access to more than 30 reporting options. To learn more about how TimeSolv can help your criminal law firm implement and maintain an effective KPI measurement system, click this website link.
