Once you figure out your production numbers, it is easier to track performance and hit your firm’s goals.
I’m a numbers girl. It’s not what my high school math teacher would have told you when she recommended remedial math, but I love numbers. I love the way they balance out, how there is always a right answer, and how they help you solve problems.
I love data. So it is no surprise that I think everybody in every law firm should have some kind of number.
And then there are all the lovely attorneys with whom I work. The ones who went to law school because they were promised no numbers. They are not as enamored with data and don’t see the elegance and simplicity numbers can create when running a law firm. Yet when we start implementing numbers, data, KPIs — whatever you want to call them — it’s like unlocking a door.
Suddenly, progress unfolds, paving the way for prosperity.
Arriving at Your Team’s Production Numbers
What’s measured gets managed. We’ve all heard it a thousand times. And it’s no different in a law firm. The hard part is understanding what behavior you want to drive, and what number or measurement is going to accomplish that.
An Excercise for ‘Getting What You Want’
In addition to owning a fractional CFO company, I help law firms implement EOS. EOS stands for entrepreneurial operating system. Basically, EOS helps business owners get focused and organized so they can get more of what they want out of their business.
I just returned from an EOS training weekend where we talked about a simple tool called “Getting What You Want.” It involves writing out the steps to get what you want — starting at the end and working backward.
Mapping out how work flows through your firm and writing down the steps will reveal everybody’s number. And, once you have your number it is easier to track performance and hit your goals.
For a PI law firm owner, the client journey might look something like this:
Focus First on Leading Indicators
You want to look as early in the journey as possible to find people’s numbers. Most firms default to the end of the journey: money collected for attorneys. The problem is that you don’t know if an attorney is falling behind until after the fact. This is called a “lagging indicator.” If you want to set up people to succeed, you need to start earlier to find a “leading indicator.”
For example, if you know you get paid about 30 days after you settle, that is a better predictor than getting paid. But again, the cases are settling or not settling, so still a lagging indicator. Go even further back. What about sending out demand letters or settlement packages? Most firms know how long negotiations take and that negotiations will never start until after this critical step. So, sending settlement packages within X days is a great leading indicator number for both attorneys and paralegals.
What about case managers? Should they have the same number? That depends on how you set up your firm, but in this case, I might want them to have all records collected within X days of the end of treatment or have a measurable around how often they monitor a client’s treatment.
The faster you move a case, the faster you get paid.
If you go further back in the journey, you will find numbers for other people on your team. For example, your sales team’s number might be the conversion rates between sales calls and signed fee agreements, or the average number of days it takes to get a fee agreement signed. Your marketing team is responsible for delivering the required number of qualified leads to the sales team.
I often get asked whether team members like the receptionist or bookkeeper should have a production number. That is a yes. For example, the receptionist should answer every call within a certain number of rings. The bookkeeper, the keeper of the numbers, might have the books reconciled and reports produced by a particular date, or simply have all entries updated by a certain day each week.
The number for every team member is whatever will ensure you have what you need when you need it.
Know Your Important Production Numbers and Who Owns Them
Consider how work comes into and flows through your firm. Map it out. Look at who is touching what and when. This simple tool will show you what the important numbers are and who should own them.
Once everybody has a designated number and they are being held accountable for it every week, guess what: Your firm becomes predictable. You now know if you are on or off target to hit your goals for the week, month and year.
More Law Firm Financial Tips from Brooke Lively
For more tips on building a more profitable law firm, read:
- What Should Be on Your Law Firm’s Dashboard
- Are Your Law Firm’s Financial Systems Ready to Scale?
- Law Firm Profits: 5 Ways You May Be Sabotaging Your Firm’s Growth
- The Best Compensation Plans Use the Law of Thirds
- Law Firm Overhead: What It Is — and What It Isn’t
- Building a Law Firm That Pays You First
- Understanding Law Firm Profits — And What to Do With Them
- How Are Law Firm Owners Paid? Total Compensation vs. Salary
- Funding Growth: Are You Starving Your Law Firm?
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