Attorneys are under pressure to do more with less and many struggle to strike the right balance between practicing law and running their business. The 2016 State of U.S. Small Law Firms Study by Thomson Reuters identified the #1 small law firm management challenge as developing new client business and client satisfaction ratings are a top indicator of success. Successful firms are using metrics to guide data-driven decisions to address their challenges and drive client satisfaction.
To get a better understanding of what types of metrics small law firms should be using, I interviewed Mary Juetten, founder of Traklight, Evolve Law, and author of the book Small Law Firm KPIs: How to Measure Your Way to Greater Profits.
Amy Larson: What metric can small law firms use to track the amount of incoming work and understand when they need to attract more business?
Mary Juetten: My recommendation is for small firms to borrow from outside the legal field and build a client pipeline model to estimate upcoming work and the associated revenue.
Attorneys can do this with a simple spreadsheet that lists all potential clients in column A and the estimated revenue per matter in column B. Column C should include the “Go” which is the percentage likelihood that the client will hire an attorney and column D should include the “Get” which is the percentage likelihood that you will be the attorney that is hired. The final step is to calculate your adjusted pipeline value by multiplying the estimated revenue X the go X the get.
For example, if a potential client with a matter worth $25,000 has a 100% chance that she will hire a lawyer, but you estimate your chances are one in four (25%), that yields a $6,250 adjusted pipeline
|Potential Clients||Est. Rev||Go||Get||Adjusted Value|
With this data, you can compare the total adjusted value in your pipeline to your budgeted revenue for the next month. If there is a significant shortfall, it’s time to refocus your marketing efforts.
My expert tip is to remember that this is an art, not a science, and it takes refinement over time. Look to data in your legal practice management system, especially your past matter revenue history, to guide you as you estimate matter revenue and then to track the accuracy of your estimations on the matters you actually get.
Amy Larson: Client satisfaction ratings are a top indicator of success. How can small firms track that?
Mary Juetten: The best way to track client satisfaction is with a Net Promoter Score (NPS) and this can easily be done through a survey with two simple questions:
- On a scale from 1 to 10, how likely are you to recommend our firm to friends, family and colleagues?
- Why or why not?
Responses can then be categorized as a “promoter” including responses of a 9 or 10, “neutral” including responses of 7 or 8, and “detractors” including responses of 6 or less.
To calculate your NPS, take the percentage of promoters (# of promoters/total # of survey responses) minus the percentage of detractors (# of detractors/total # of survey responses). Your NPS can be benchmarked against other firms, but like many KPIs, the targets depend on your definition of success.
|NPS Calculation||# of Responses||% of Responses|
|Promoter (9 or 10)||9||41%|
|Neutral (7 or 8)||8||n/a|
|Detractor (1 to 6)||5||23%|
|Final NPS Calculation||18%|
My expert tip on this metric is to pay close attention to the open-ended responses you collect. It may be difficult to receive negative feedback, but understanding it and then improving upon it, is the best way to increase your client satisfaction as well as your chances of client referrals – which is your most affordable way to attract new clients.
For more from Amy Larson follow her @Larsonac71
Amy Larson is a Director in Small Law Firm Customer Marketing at Thomson Reuters. She has over 17 years of experience in technology marketing with extensive focus on learning how technology can meet the needs of attorneys. Amy has been involved in numerous product launches throughout her tenure, public relations efforts, interviewing customers and telling their stories, and often writes and distributes information on legal practice management.Be Sociable, Share!