Six Key Reports for Better Law Practice Management

Regardless of size, many law firms feel like they don’t have the time or the resources to analyze the ins and outs of their practice’s operations. While performance analysis is critical to developing an effective business strategy, it won’t bring in money the same way billable hours and new clients will.

Luckily, advancements in business intelligence technology mean you don’t have to be a statistician to create and understand custom reports. Law firms can now use programs like Rocket Matter to generate reports that provide the same insights mega-firms use to make smart budgeting, staffing, and marketing decisions.

So what key performance indicators, or KPIs, do you need to optimize management of your law practice?

Here are six of the most important metrics solo, small, and mid-sized firms should track:

• Origination
• Allocation
• Matter Budgets
• Productivity per user
• Productivity per matter
• Collections report

Let’s dive into the main components of each of these key performance indicators.

Origination

Origination reports detail how many new clients your firm signs each month and where those clients are coming from.

And why is that important? Because knowing how clients are finding your firm makes it much easier to effectively allocate your marketing dollars.

For example, say you’re regularly spending a significant amount of money on online advertising, but after running an origination report, it becomes obvious most of your new cases are referrals from former clients. In this case, you’ll likely get a better return on your investment if you reallocate Google Ads funds. Instead, you may want to put that money toward developing a monthly newsletter that keeps you top of mind with the previous clients on your contacts list.

Origination analytics will also show you who in your firm stands out when it comes to getting clients to sign on the dotted line. If one attorney is a highly effective closer, it might be financially beneficial to reduce their billable hours quota and increase their business development responsibilities.

Allocation

Allocation reports show the amount of client payments (not just business) your attorneys bring in. These reports are used to evaluate revenue distribution based on expenses and distributions by partner percentage. And when combined with collection and origination analysis, allocation reports will tell you if certain attorneys have clients that regularly miss payment deadlines.

Allocation reports are the kind of nitty-gritty analytics that many small firms have historically tracked manually using something like an Excel spreadsheet, and they can be cumbersome to manage without the right tools. The business intelligence reporting features included in a software like Rocket Matter can make these reports easier to pull together—and more actionable.

Matter budgets

Smaller firms and their clients almost never have an unlimited budget for discovery.

Having a realistic budget can help you:

• Alleviate client concerns about being able to afford taking legal action
• Identify priorities for discovery, which can help determine the strength of a case
• Recognize cases that are taking more time and effort than they’re worth

As an added bonus, matter budgets provide up-to-date information that allows you to clearly and accurately communicate costs to clients, which will increase their trust in you.

Productivity per user

Productivity isn’t the same thing as production. Production is based on how much work, or output, is done based on the input (time, money, staff, resources, etc.) invested.

Productivity, on the other hand, is how efficiently the inputs, or resources, are being used to produce the output.

Productivity = total output / total input

But measuring employee productivity at law firms is more nuanced than a black-and-white formula. Attorneys bring in more money than support staff, so theoretically they would have a higher productivity rate. But every good lawyer knows they won’t be very successful without an extremely effective admin team.

Using a law practice management software to analyze how everyone in your firm is spending their time will reveal where you need to rebalance workloads—and help you ensure your attorneys and support staff are both maximizing their time.

Productivity per matter

Similar to productivity per user, productivity per matter is an important metric for understanding how efficiently your firm is working as a whole. This report shows which types of cases are your sweet spot and which ones just aren’t worth the hours and staff they require.

This data is a key component of smart marketing decisions and plays an important role in developing policies for what matters work best at your firm.

Collections

Knowing how much your company is invoicing versus how much money is actually coming in is Business 101.

Whether it’s an attorney who forgets to follow up on past due accounts or a client who habitually submits partial or late payments, automated collections reports make it easier to determine where your accounts receivable processes are falling short.

Finding and resolving these pain points early is critical to stabilizing cash flow, identifying lucrative market niches, and helping your employees develop better client relations and management skills.

Law Firm Business Intelligence 2.0

The six metrics listed above are standard for law firm reporting and analytics. They’re extremely valuable and, when used correctly, can transform a legal practice.

But they aren’t the only KPIs out there.

Once you understand the basics of your firm’s performance, investing in more powerful business intelligence tools can increase your ability to identify and capitalize on opportunity.

As the first legal practice management software, Rocket Matter literally wrote the book on law firm business intelligence. That’s why we created our Business Intelligence Module.

Available to firms as part of our Premier Tier, Rocket Matter’s Business Intelligence module delivers real-time reports to provide the actionable data you need to build a better practice. With a drag-and-drop interface, it’s easy to create high-level reports such as:

• Throughput rate (how many cases are completed in a specific time frame)
• Average case value (the average revenue from all cases)
• Cycle time (how long it takes to complete a case)

With this tool, firms can even create customized, specific reports using any combination of diverse data points and filters.

Take your firm to new heights

No matter where you are in your business intelligence journey, Rocket Matter’s all-in-one platform can help you get better. By combining time tracking, calendaring, document automation, and performance analytics into a single program, we’ve simplified both daily admin duties and data-driven strategy development for lawyers everywhere.

If you want to see what Rocket Matter can do for your firm, schedule a demo or start a free trial today.