GROUP LEGAL SERVICES ASSOCIATION SOLO, …glsaonline.org/wp-content/uploads/2017/05/02B-Key-Performance... · Tech list and FastCase Class of 2016. She now serves on the Group Legal

GROUP LEGAL SERVICES ASSOCIATION

SOLO, SMALL FIRM, AND GENERAL PRACTICE DIVISION

STANDING COMMITTEE ON GROUP & PREPAID LEGAL SERVICES

MAY 18-20, 2017

SCOTTSDALE, ARIZONA

LAW PRACTICE MANAGEMENT: KEY PERFORMANCE INDICATORS SIMPLIFIED

THURSDAY, MAY 18, 2017 10:30 – 11:30

PRESENTER: MARY JUETTEN

Mary Juetten Traklight and Evolve Law

Bellingham, WA and Phoenix, AZ

Mary Juetten, JD, Founder and CEO of Traklight, has dedicated her more-than-30-year career to helping businesses achieve and protect their success. Mary recently co-founded Evolve Law, a community that is the catalyst for change in the legal industry. Using her extensive education including Bachelor of Commerce degree from McGill and a Juris Doctorate from Arizona State, as well as her US and Canadian accounting certifications, Mary created the only self-guided software platform that creates your custom intellectual property (IP) strategy plus assesses business risk - Traklight. The Traklight Pro version is lead generation or triage for companies; business, startup & venture, and IP attorneys; CPAs, consultants, and other professionals.

Mary is an international author, writer, speaker, and mentor. She previously represented entrepreneurs on the Board of the Crowdfunding Investment Regulatory Advocates and as the Secretary for the Emerging Enterprise Committee of the Licensing Executives Society. She speaks internationally on change and technology adoption in the legal industry. Mary was named to the American Bar Associations's Legal Resource Technology Center 2016 Women in Legal Tech list and FastCase Class of 2016. She now serves on the Group Legal Services Association (GLSA) Board. In 2016, Mary authored Small Law KPIs: How to Measure your way to Greater Profits for Thomson Reuters.

Law Practice Management

Key Performance Indicators Simplified

GP Solo GLSA May 2017 KPIs Simplified 1

2GP Solo GLSA May 2017 KPIs Simplified

Agenda

10:30 KPI Overview 10:40 Start with Clients11:00 Next Focus on Cash11:10 Getting Started at your Firm11:20 Questions

5 Ws

KPI Overview



KPI Overview: Ws

WhoWhatWhy – billable hour misconceptionsWhenWhere it worked – client experienceQ&A at the end of the presentation


WHO

Law firms are businessesAccounting, payroll, KPIs are in addition to the practice of law & can be overwhelmingOutsource or use technologyKPIs are for all size firms because use the same principles; just add zeros


WHAT Key Performance Indicators are metrics for measuring all aspects of business and are beyond the traditional billable hour.KPIs are not “check the box” and are not like financials – they are actionableLaw can borrow from other professional services and industries for KPIs & Technology.Focus on outputs, client experience, collections rather than inputs such as hours billed.Move from Profits per Partner.


WHYNumber one reason for business failure is lack of cash flow.

Cash is King Clients bring Cash & repeat business

Develop KPIs that support positive client experience and collections.Don’t dwell on billable hours; focus on happy clients and collections. Record all hours regardless of fee structure.Use the KPI data for creating pricing and billing models.


PEFORMANCE KPI: Misplaced Focus on Billable Hours.Allan focused on billing, not collecting

At the end of the year, Allan was a billing machine at 116.25%utilization but 86.22% collected.

For one month he was at 88% using Billings Collected KPI

Align your KPIs with firm goals: Cash is King.

Have timekeeper’s focus on collections, not billing. 160 hours does not matter if only 120 hours are collected.


Thomson Reuters Small Law Firm KPI and Benchmark SurveyParticipants:

• 690 surveys sent out to customer panel June 2016• 62 Firms Responded: 10 Solos & 50% under 10 Attorneys

Stats:• 81% use technology (however time & billing (34%) & practice management (44%)

included)• 58% do NOT use KPIs beyond traditional billable hours• Only 6 or <10% use more than 4 KPIs

• 19 use Collected Billings by Attorney• 15 measure overdue Accounts Receivable (A/R)• 14 track Matter Profitability• 3 measure client satisfaction (less than 5%)


WHEN58 responses to TR Survey, 31 firms reported using either of the two profitability metrics:

Take-home dollarsBank Balance

KPIs need to be timely to allow for corrective action.Matter profitability was an option on the survey.


WHERE IT WORKED

Positive and Predictable Cash Flow comes from Clients.Satisfied clients tend to pay and it’s easier to upsell or have happy clients refer friends and associates.Start with client development KPIs, including pipeline and cost of client acquisition and measure firm culture and client experience.

KPI Examples

Start with Clients



WHY FOCUS on CLIENTSClients bring cash & repeat business; Cash is King and critical to firm survivalClients are demanding more for less and lawyers must pay attention to their needsAvvo’s “Sink or Swim: How to adapt to the new Legal Consumer”*• Informed, Connected (online), Picky• 1 in 5 believe can figure out what

lawyers know• Shop for legal like other purchases

(online)• 95% use reviews

*http://go.avvo.com/new-legal-consumer-download

http://go.avvo.com/new-legal-consumer-download


Happy Clients; Profitable Practice

What: KPIs, metrics& Data Driven decisions When: Throughout the Matter Where it’s worked – client experience – net promoter score (NPS) but it is more:- Client needs: expert systems, like Traklight for business; WeVorce for divorce; and Neota Logic for others.

Hint: Your firm must be open to change in terms of process.


CLIENT EXPERIENCE: Net Promoter Score (NPS)Net Promoter Score (NPS) (%)

The percentage of total clients responding to the survey question who are promoters less the percentage of total clients responding who are detractors.

Q: On a scale of one to ten (with one being not at all likely and ten being extremely likely), how likely are they are to recommend your firm to their friends, family, and colleagues?

Why or Why Not?” as an optional question

Allow for feedback, good and bad.

Survey must be tracked, not anonymous.

Technology:

Google Documents or Survey Monkey, Excel for responses.

Follow-up emails or calls.


CLIENT ACQUISITION COST: CAC BEYOND ADVERTISING AND MARKETING

• Advertising, sales, marketing spend

• Client development time @ the billing rates, not the cost

• Technology or automation costs

• Traklight example to reduce the client development time.

TRIAGE AND INTAKE AUTOMATION

Client does the heavy-lifting

Survey must be tracked, not anonymous.

Technology:

Google Documents or Survey Monkey, Practice Specific Automation


Final Thoughts on Clients

Lawyers are dependent on referrals and our reputations.Define your IDEAL clientDo not be afraid to end bad client relationshipsMonitor relationships throughout the matter and beyond.

Next Focus on Cash



Cash is King

Profitability on paper only if you never collect the cash.Stats show that small law firms collect cash from 90 to 150 days after recording the hours.If you have to pay all your bills within 30 to 60 days, you have a problem.Focus on lowering the days that your cash is ”locked up.”Important to calculate lock-up days for both WIP and A/R. Check on percentage of ”old” A/R.Deeper dive depending on results.


PROFITABILITY: Aging ToleranceProfitability (f) Aging Tolerance (%)

Total collections within 60 days divided by total billings.

Set deadline for recording WIP by month-end & payment terms.

Policy to bill out all WIP each month (where practical) or at end of each engagement, regardless of timing.

Investigate factoring or other services if necessary. Use e-billing and consider accepting credit cards.

Getting Started



KPI FrameworkWorkflow Driven

1. Client Development 2. Cost of Client Acquisition3. Productivity4. Profitability5. Performance6. Client Experience7. Firm Culture


Make a Plan

• Pick your biggest pain point

• Design your survey or feedback - make it

easy for clients (WPLG ex)

• Test it on a small group (McCarthy Tetrault)

• Don’t be afraid to make changes (Modern

Law)


Time is finite; Technology is notInfinite possibilities:Potential client calendaring Client Development – automationPractice Management including time & billing Accounting Client Feedback Excel Document Signing & StorageLegal Research E-discoveryCustomer Relationship Management (CRM)


Choosing Tech

Simple to use Demand Metrics | Case studiesMeasure Return on Investment (ROI)Trial or free demoLess is moreFeedbackEvaluate Client ExperienceStart small and buildInteroperable techBe open to change


Systems & Data

Systems – from manual to high tech, define your workflow. Pick the appropriate technology.Garbage In; Garbage Out.Check the data sources and set up as many links as possible. For example, QuickBooks data to automatically populate your spreadsheet.


KPI Framework: 40+ measures but start with 10 or less


TargetsJust Get Started

Go back to the Previous Year or Years for a LIMITED number of KPIs.Measure more often at the start, start monthly or weekly depending on KPI.Do a first quarter review and make adjustments.Look for industry benchmarks but also outside to other professional services.This is not a check the box exercise or like financials which are historical info – KPIs are actionable

Targets depend on your circumstances!


Dashboard: monitor frequently

Client DevelopmentClient Acquisition CostProductivityProfitabilityPerformanceClient ExperienceFirm Culture


Continuous ImprovementDashboard Approach

Like the workflow and matching KPIs, improvement requires constant monitoring.Change and experimentation mentality.Learn to delegate and outsource. Budget should not be just revenue divided by 12, build up costs and revenue, including pricing.Enhance your Practice with enabling technology. Measure KPIs regularly on Dashboard.Review and Act upon the results, adjusting targets, workflow, resources, & technology.

Questions



Small Law Firm KPIs: How to Measure Your Way to Greater ProfitsOrder your copy today:http://legalsolutions.com/Juetten20Juetten for 20% discount

Mary Juetten@[email protected]

Free Starter spreadsheet will be emailed to participants

http://legalsolutions.com/Juetten

mailto:[email protected]

CLIENT EXPERIENCECE BUSINESS 2016 Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec ANNUAL6-CE(a) Net Promoter Score (%) 18% 24% 50% 0% 37% 95% 81% 23% 60% 45% 77% 43% 46%TARGET - Net Promoter Score (%) 70% 70% 70% 70% 70% 70% 70% 70% 70% 70% 70% 70% 70%On scale of 1- 10, how likely to recommend the firm to <others>?Input - Total Responses 22 92 68 146 386 77 234 377 277 198 225 250 2352Input - Promoter (9 or 10) 9 22 42 23 170 75 200 104 177 108 198 150 1278Input - Neutral (7 or 8) 8 70 18 100 187 0 24 254 88 72 2 57 880Input - Detractor (1 to 6) 5 0 8 23 29 2 10 19 12 18 25 43 194

This workbook is copyright material for your use only and not for reproduction or commercialization ©Protect your Intellectual Property (PIP) LLC 2017