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#ClioWeb
Measure3
A Clio WebinarJoshua Lenon – Clio
Mary Juetten – Evolve Law & TraklightBille Tarascio – Modern Law & Access Legal
MEASURE, MEASURE, MEASUREKey PerformanceIndicators (KPIs) for Modern Law
Firm Success
Measure3 KP Is for Modern Law F i rm S uccess
Billie MaryPracticing Attorney – Modern Law
Access LegalMom
Law Degree | Canadian and US Professional Accountant
Traklight | Evolve LawMom
ABOUT US
Identify innovation. Safeguard success.
I LOVE WHAT I DO
My crew.
MEASURE3
1. WHY MEASURE
2. BUSINESS INTO LEGAL
3. WHAT TO MEASURE?4. MEASURE, COMPARE, & ACT
5. WHERE FROM HERE?
Measure3 KP Is for Modern Law F i rm S uccess
See the conference application for KPI Worksheet | Slides.
1. WHY MEASURE
Measure3 KP Is for Modern Law F i rm S uccess
FEELING LUCKY?
THE OVERWHELMING QUESTIONS
GOAL: Understanding that measuring and acting upon KPIs will impact your Firm’sprofitability
WHY MEASURE
CASE STUDY: Modern Law’s Client Development KPI Measurement Part I
Measure3 KP Is for Modern Law F i rm S uccess
(FEB 2015)
SNAPSHOT OF MODERN LAW’S CLIENT DEVELOPMENT PROCESS
STEP 1
STEP 2
STEP 3
STEP 4Book Potential
Client Calls
42 phone calls scheduled
30-minute calls
40 Phone Calls Completed
Done by AttorneyBilling @ $250/hr
New Clients
7 New ClientsOne Referred6 from Phone
Calls
Measure
18% Conversion Rate
$5000 Billable TIme
Why Measure KP Is for Modern Law F i rm S uccess
WHAT DOES THIS 18% MEAN? WHAT DOES THIS $5000 MEAN?
Nothing – if Modern Law does not have a target cost of customer acquisition.
Why Measure KP Is for Modern Law F i rm S uccess
Nothing – if Modern Law does not have baseline/target conversion rate.
MEASURE AND ACT TO ENSURE PROFITABILITY
BILLINGS COLLECTEDIncludes Marketing, Rent,
Admin Salaries
FIRM OVERHEAD FIRM FAILURE
$ $ $
Why Measure KP Is for Modern Law F i rm S uccess
- Knowledge is power
- Car goes faster downhill with brakes
- Data driven decisions
- Not just cranking out billable hours
- NEED TO CREATE VALUE FOR CLIENTS
Why Measure KP Is for Modern Law F i rm S uccess
Measuring Results vs. Guesswork/SWAG
2. BUSINESS INTO LEGAL
Measure3 KP Is for Modern Law F i rm S uccess
GOAL: View your Practice as a Business
BUSINESS INTO LEGAL
Step Back and look at Traditional Law Firm Measures
B usiness i nto Legal KP Is for Modern Law F i rm S uccess
BORROWING FROM CLIO’S 2014 PRESENTATION:
a Jessica Pearson works 60 hours in a week.
b She was in meetings and talking to potential clients for 10 hours.
c Jessica bills at $250.
d She billed $10K last week.
e Firm collected $7K.
Measure3 KP Is for Modern Law F i rm S uccess
TRADITIONAL KPIs
1Utilization Rate
83%50 Billable/60 Available Hours
2Realization Rate
80%Potential to bill: $12.5K
50 Billable hours recorded @ $250Billed $10K/$12.5K potential
3Collection Rate
70%$7K Collected/$10K Billed
4NET Collection Rate
56%$7K collected/$12.5K potential
<50% - $7K/$15K True Potential
B us iness i nto Legal KP Is for Modern Law F i rm S uccess
- Focused on supply of billable hours not demandfor services
- Therefore not focused on the value of services, client needs, or satisfaction
- What about fixed fees???
- What about targets???
- Charging correct rates?
Need to focus on return on investment, contribution margin, and cost of client acquisition, plus client and form satisfaction. All with targets.
B us iness i nto Legal KP Is for Modern Law F i rm S uccess
Traditional KPIs...
3. WHAT TO MEASURE?
Measure3 KP Is for Modern Law F i rm S uccess
GOAL: Expand Traditional KPIs to include Business Concepts
WHAT TO MEASURE
Return on Investment, Contribution Margin, and FULL Cost of Client acquisitionSatisfaction Measures and TargetsFirm and Personal Level
Measure3 KP Is for Modern Law F i rm S uccess
- Client Satisfaction
- Client Development
- Company Culture
- Cost of Client Acquisition
- Throughput & Productivity
- Profitability & Margins
- Individual Performance
Measure3 KP Is for Modern Law F i rm S uccess
See the conference application for KPI Worksheet | Slides.
WHAT TO MEASURE
SEVEN AREAS OF KPIs
a Net Promoter Score (%)
b
CLIENT SATISFACTION
Sales Conversion Rate (%) CLIENT DEVELOPMENT
c Average Work Climate Satisfaction
d
COMPANY CULTURE
Cost of client acquisition- CAC ($)Life-time or Annual customer value – CV or LTV ($)
LTV to CAC ratio (ratio)COST OF CLIENT ACQUISITION
eRevenue per Matter ($)Contribution Margin per Matter ($)Attorney Leverage ($)Paralegal Leverage ($)
THROUGHPUT & PRODUCTIVITY
f
Billable Hours Paid by AttorneygINDIVIDUAL PERFORMANCE
Return on Owner Equity (Investment) (%)Profitability Margin (%)
PROFITABILITY & MARGINS
What to Measure KP Is for Modern Law F i rm S uccess
See the conference application for KPI Worksheet | Slides.
4. MEASURE AND COMPARE
Measure3 KP Is for Modern Law F i rm S uccess
GOAL: See the Value of Measuring and Setting Targets
4. MEASURE AND COMPARE
CASE STUDY: Modern Law’s Client Satisfaction NPS
Measure3 KP Is for Modern Law S uccess
One Question as part of follow-up:
“On a scale of 0-10, how likely are you to recommended our firm?”
0- 6 Detractors7-8 Neutral9-10 Promoters
Modern Law Target is 90
Measures how happy clients are with Modern Law and provides opportunity for corrective action even after matter is closed?Very important for “one and done” type law practices to have the referrals and not the usual follow-on matters.
Measure3 KP Is for Modern Law S uccess
CLIENT SATISFACTION
TakeAways:• Alldetractorshadsameattorney• Manyneutralrespondersalsohadthatattorney• Evidencebaseddecisions
Total Responses 67Promoters: 51Neutral: 13Detractors: 3
To Get Score:51/67= 76%Subtract3/67=5%
Total Score: 71
Calculations
5. WHERE FROM HERE?
Measure3 KP Is for Modern Law S uccess
GOAL: Understand the action required after measuring and comparing to targets.
5. WHERE FROM HERE?
CASE STUDY: Modern Law’s Client Development Process Part II
Measure3 KP Is for Modern Law F i rm S uccess
a Our clients are happy with our services
b
CLIENT SATISFACTION
We are effectively converting leads to sales CLIENT DEVELOPMENT
Billie
c Our employees feel safe, positive, and comfortable
d
COMPANY CULTURE
We understand our cost of acquiring new clients.We understand the long term revenue from clients.Revenue covers costs of efforts to acquire clients.
COST OF CLIENT ACQUISITION
e We are seeing the most profitable types of cases.We have the right staffing levels.THROUGHPUT & PRODUCTIVITY
f
Are Attorneys managing Clients well enough?gINDIVIDUAL PERFORMANCE
Business is meeting industry profitability standards.We meet profitability expectations.
PROFITABILITY & MARGINS
Where from Here? KP Is for Modern Law F i rm S uccess
1Cost of Client Acquisition (CAC)
Refresh Memory from before: $5K of billable time for 6 new clientsNeed to add in sales & marketing costs: $5KTotal CAC = $10K/6 = $1.7K
2Client Lifetime Value (LTV)3 Limited Service Clients – average $1K3 Full Service Clients – average $4K
3Client Contribution MarginLimited Service Clients = $1K - $1.7K = -$.7KFull Service Clients = $4K - $1.7K = $2.3K
4Modern Law Changes:
First, created in-person PAID consultationsSecond, added in $12 per hour Intake Positions (non billable)Third, added Flat Fee optionFourth, use Access Legal for clients that cannot afford
5Impact of Changes on KPIsConversion Rate increased by 59%CAC dropped by the $5K of Billie’s time& increased by $12 per hour person’s time
Where from Here? KP Is for Modern Law F i rm S uccess
RESULTS
NEXT STEPS
1 Create a KPI workbook or dashboard
2Revisit your Practice Management & CRM to mine Data
3 Set Targets and Time to review results
4Knowledge is Power
Where from Here? KP Is for Modern Law F i rm S uccess
ANY QUESTIONS ON THE OTHER KPIs ON THE
WORKSHEET?
Measure3 KP Is for Modern Law F i rm S uccess
1
KPI$$WorksheetMeasure,$Measure,$Measure$
Key$Performance$Indicators$(KPIs) How$Calculated Target Tells$Us…. FrequencyCLIENT'SATISFACTIONNet$Promoter$Score$$(%) %$of$Clients$who$say$they$would$recommend$us ≥X% Our$Clients$are$happy$with$our$services Quarterly
CLIENT'DEVELOPMENTSales$Conversion$Rate$(%) #$of$New$FullPScope$Clients$/#$of$Potential$Client$Intakes ≥$X% We$are$effectively$converting$leads$to$sales Monthly
FIRM'CULTUREAverage$Work$Climate$Satisfaction$(#) Total$Work$Climate$Survey$Score$(Scale$1P5)$/$#$Surveys ≥$X Our$employees$feel$safe,$positive$and$comfortable Quarterly
COST'OF'CLIENT'ACQUISITION
Cost$of$client$acquisitionP$CAC$($)$$sales$and$marketing$+$opportunity$cost$of$staff$or$lawyer/#new$clients ≤$$X We$understand$our$cost$of$acquiring$new$clients Monthly
LifePtime$or$Annual$customer$value$P$CV$or$LTV$($)
Total$Revenue$per$year$by$client$(if$not$one$and$done,$then$cumulative) ≥$$X
We$understand$the$long$term$revenue$from$clients Annually
LTV$to$CAC$ratio$(ratio) CV$or$LTV$/$CAC ≥$1X Revenue$covers$costs$of$efforts$to$acquire$clients$ Annually
THROUGHPUT'&'PRODUCTIVITYRevenue$per$Matter$($) Gross$Revenue$/$#$New$Matters$in$CLIO$(same$period) ≥$$X We$are$seeing$the$most$profitable$types$of$cases Monthly
Contribution$Margin$per$Matter$($) Gross$Revenue$P$CV$P$Variable$Cost ≥$$X We$are$seeing$the$most$profitable$types$of$cases Monthly
Attorney$Leverage$($) Total$$$Billings$of$All$Attorneys$/$Total$($)$Billables ≥$X% We$have$the$right$staffing$levels Quarterly
Paralegal$Leverage$($) Total$$$Billings$of$All$Paralegals$/$Total$($)$Billables ≥$X% We$have$the$right$staffing$levels Quarterly
PROFITABILITY'&'MARGINSReturn$on$Owner$Equity$(Investment)$$(%) Owner$Compensation$/$Gross$Revenue ≥$X% Business$is$meeting$industry$profitability$standards Annually
Profitability$Margin$(%) Total$Net$Operating$Income$/$Total$Income ≥$X% We$meet$profitability$expectations Monthly
INDIVIDUAL'PERFORMANCEBillable$Hours$Paid$by$Attorney$(%) Total$Collected$$$by$Attorney$/$Total$$$Billings$by$Attorney ≥$$X Are$Attorneys$managing$Clients$well$enough? Monthly
Measure3 KP Is for Modern Law F i rm S uccess
CONTACT US
602 882 6287
Measure3 KP Is for Modern Law F i rm S uccess
@maryjuetten @mymodernlaw
480 649 2605
#ClioWeb
QUESTIONS?