When it Comes to Law Firm Clients, Metrics Matter More Than You Think
Unless it involves billable hours, law firms aren't known for their glowing embrace of numbers. But as much as the data driven world is driving a…
By Ian Lopez|March 16, 2017 at 08:11 PM
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Unless it involves billable hours, law firms aren’t known for their glowing embrace of numbers. But as much as the data driven world is driving a shift in client expectations, so too is it forcing businesses to change the way they serve their clients.
While some may gripe about the change thrust upon them and the way they work, it (literally) pays to note that within all this data lie many solutions to business challenges. And one way to leverage such information for various insights is through the use of data metrics.
Evolve Law CEO Mary Juetten, for example, told an audience at the 2017 ABA Tech show that law firms leveraging such data on their own clients can be crucial to the future of their business.
Yet while this may sound obvious as a theory, in practice it’s anything but. When trying to explain to attorneys how data could be used to monitor things like the cost of client acquisition or the cost of maintaining a client, Juetten said she “got these looks like, ‘What are you talking about?’”
“Cash is king, and when I talk to any lawyer, when I ask them about their collections, most can’t answer how long it takes [them] to collect [their] accounts receivable,” she said. “Most lawyers aren’t tracking that. It’s an important [metric].”
But why are metrics on clients important in the first place? Because “most clients are asking for more for less,” Juetten said, likening the experience to the same way consumers use resources like the internet to find the best bang for their buck.
As a client, you “go out online, you research for something, figure out how you can get something for the best price – what we do for everything. Yet somehow the law has decided when you see clients, the clients aren’t going to have that mindset. But the clients are you, so of course they’re going to have that mindset,” Juetten explained.
She added, “To deal with the new legal consumer, you basically need to try to sell to yourself.”
Juetten described this new legal consumer as informed, connected, and picky in choosing their services. Further, she noted that one in five individuals who need legal services figure they can do much of the research needed themselves.
For law firms, she added, “this is a huge opportunity … if you can position yourself to access these people who are going online.”
Juetten uses numbers to back up her points. Citing a report by Reuters, she explained that 42 percent of people do their legal research online. Further, 25 percent refer lawyers to friends and family, and 32 percent of people want free help or consultation.
“It’s all about figuring out how you can position your firm so you’re takin advantage of these new types of consumers,” she said. “It’s obvious from the statistics that you’ll be missing out” if you don’t capture data on your clients.
Metrics that can be leveraged for all business of law aspects are what are considered key performance indicators (KPIs). And while Juetten said that law can borrow from other industries and professional services in determining what KPIs are relevant to their firms, when building metrics on clients, what’s important is focusing on outputs rather than inputs.
“It’s a mind shift,” she added. “Instead of focusing on your billable hours or inputs, you’re going to focus on your outputs … focus on client experience rather than what you’re putting into it.”
KPIs, in a sense, serve as indicators of future performance. As Juetten explained, a KPI “is a way of looking at what has gone on” with which “you can predict the future.”
Michael Downey, a legal ethics lawyer with his own practice and also an ABA board member partaking in the ABA Tech Show session, provided some wisdom on how to find a KPI. Consider, he said, how most lawyers “have no clue” about how many hours they’re going to bill in a month. By acquiring the data around how many hours are typically billed in a month, they can basically use this information to see how their practice may perform in the future.
“It’s what numbers can I look at that are going to help me predict the future of how my practice is doing,” he said.
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