Legal Practice

5 KPIs to Make a Law Firm More Profitable


The profit and market reputation is access to every business. There must be some yardstick by which the performance of the firm is measured. Key performance indicators(KPI) are those indicators that are way beyond the billable hours, and they are just indicators. They are not something financial but are actionable in nature. Advancement is knocking at the door, and the adoption of such techniques is done by many of the attorneys. It is setting up a foundation for success which is based on KPIs. This will help us in understanding the functioning of the firm in and out.


One of the primary reasons for the failure of any business is not having sufficient funds or a lack of cash flow. Money or finance is not the aspect of the successful running of the business, but one of the most important aspects of running a business, or a law firm. Once the KPI is rightfully aligned with the goals and targets of the firm, this results in understanding the reason for both success and failure.

It is not always necessary for the billable hour’s rate in order to earn a profit, but there are other ways which can result in the profit. There are other ways also by which the same can be increased, which shall be beneficial for both the clients as well as the law firm. In this article, some of such ways will be discussed for the profitability of the law firm.

One of the most predictable sources of cash is the client. Because in exchange for legal services you receive remuneration. So, structure the cash incurred for getting those clients or in client development. Analyzing that will increase firm and client experience.


  1. Realization and realization reports

Realization is to understand what the firm is collecting and what the firm is paying. This includes the amount of time spent in a case, how long the client takes to give the payment after receiving the notice for payment, payment of stamp duties for the clients. The plan must be very clear as to analyzing the minimum amount of funds the firm must have at all times for its survival.

The client will not pay the bills as per your convenience, but as per their suitability. Analyzing what the time is taken for collecting the money from the clients will help you understand how to frame the strategy to pay your bills within the due time.

Make a realization report which shows intact the figures of expenses and future expenses and preparation for contingencies. At all times, there should be a back-up fund that has to be maintained by the profit fund.

  1. Revenue and expenditure

It is very important to manage revenue and expenditure. To save money and earn a profit, it is first important to know where the money is being spent. It is important to do things more efficiently. Analyzing the aspect of where the firm is spending helps to discover the ways of more profit.

  1. Efficiency

Technological advancement will help to increase the work undertaken as the work present and undertaken could be completed more efficiently when a law firm is technologically advanced. For example, there are chances that a document might be lost due to some natural phenomenon or careless human action, but that is not the scenario when you adapt to legal case management software. Client calendaring and auto-updating the method of receiving feedback from the client is a suitable method to be adopted.

On similar lines, when it comes to calculating the billable hours of the law firms when done manually, there are chances that it may go wrong due to human error. So, automating this process helps to increase efficiency. As the work when done by a human can increase the administrative works and also the chances of error in high.

The major target is keeping the client happy and use the technology for the betterment and increasing efficiency. Higher the efficiency, the more effective is the working, the better the functioning of the firm. Increased efficiency will, in turn, increase the rate and quality of performance, which will, in turn, result in more cash flow into the firm because of the satisfaction provided by you at work.

  1. Timekeeper

Timekeeper simply means keeping track of the time and on the billable hours. Keeping track of how much time is engaged in completing what kind of work. This will also help you understand and keep a record of what task is time-consuming, which increases the billable hour, but the performance is not as expected. It will also help to understand the number of fees which is charged from the client. Billable hours and the time spent on working in that particular case are never the same, and thus keeping track of the same, i.e. billable hours is really necessary.

  1. Distribution of work

The world is competitive. So, when you hire someone to do a task make sure firstly, they are worth it and secondly extract the best possible for the benefit of the firm.

Delegate the work necessarily. For example, when it comes to taking a print out, this task can be done by a person responsible for administrative work, then why engage an associate in it. Then the billable hours though remain the same but the person responsible though is paid salary less, so ultimately it results in satisfaction to both law firm and the client.

We strive in a scenario that focuses entirely on the clients and is governed by their demands. In such a scenario, advancement of business might seem a tougher challenge, and thus having the Key Personal indicators for your law firm helps monitor your own performance, time spent, time required to be spent and reveals other such billable and personal growth information about the firm which then become the guiding step towards the development. Law firms are working strategically, which in turn helps develop the business, which is the whole purpose of starting a law firm.

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by supriya dash

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