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It can be difficult to set key performance indicators (KPIs) for a law firm because it’s not always easy to determine what success is in legal work. The short answer is this: success is how you define it as a company. But, once you have a definition, it’s important to put KPIs in place that allow you to measure your progress and meet targets year on year.
Why do KPIs matter?
Setting targets can feel like an uphill task; the possibilities are endless. KPIs are what let you measure whether you meet these targets and are essential for keeping your company on track.
In short, if you can’t measure it, you can’t improve or achieve it. In fact, you can’t see it – your objectives will remain vague ideas that aren’t tied to yearly performance, daily action or monthly targets. They’ll stay abstract. Without KPIs, businesses flounder – even legal ones. And in today’s competitive and changing legal landscape, no company can afford that.
How to set meaningful targets for a law firm
There are several different kinds of targets you can set for a law firm: financial targets, client targets, or targets based on the type of work your firm offers. But no matter what your targets are, there are some golden principles for creating meaningful KPIs that can help you measure progress.
1. Make sure your KPIs follow the SMART principles
Design your KPIs such that they follow the SMART principles – i.e., they are Specific, Measurable, Achievable, Realistic and Timebound. This will help you create concrete KPIs that are reflective of the work you do on a daily basis and that will clearly show you actionable ways in which you can improve.
2. Base your KPIs on past performance
It’s helpful to base KPIs on your company’s past performance. Analysing your past performance allows you to identify both problem areas and areas of strength, and shape your targets for the coming year accordingly. There are several ways to measure past performance. Software tools like DPS Spitfire provide data functionality and reports that allow you to form an accurate picture of your company’s operations and create KPIs accordingly.
3. Find out what your team and clients think
When creating targets and KPIs, it can be useful to know what your team and clients think. What would your clients like more of? What does your team believe are the strongest areas of performance and where can the company expand its operations? Multiple perspectives will help you form an accurate picture of the environment in which you operate, and help you formulate effective KPIs.
4. Don't forget to look to the future
Most companies ignore this when shaping their KPIs, but future trends matter. If the legal landscape is going to change in the coming years, then your firm’s operations will need to change too, and your objectives and KPIs must reflect that. Identifying trends and potential areas of disruption are important when thinking of how to frame your KPIs.