Parameters to Measure Your Law Firm’s Success
The measures that show whether a law firm is truly succeeding, and why waiting for perfect conditions holds firms back.
A busy law firm is not always a successful one. These are the parameters every owner or managing attorney of a small firm should track.
1. Are you tracking your budget?
Track spending every month and, where possible, write a short report on how things are moving and what needs to change.
2. How do you manage cash flow?
Forecast the cash coming into the firm regularly. If you do not know where your future income will come from, it is hard to run the firm today.
3. Are you still waiting to get paid?
A firm can be full of client walk-ins and still show a deficit every month. A reliable collection system matters as much as the work itself, because getting paid keeps the firm running and the team motivated.
4. Are you spending time on the right work?
Owners should focus on client relationships, new business and developing associates and paralegals. List productive and non-productive tasks, decide who should own each one, and consider an outsourced partner for work that does not need you.
5. Are you improving how the firm works?
Case management, research, data and social media tools let attorneys save time and money and put their effort into what they do best: representing their clients.
Frequently asked questions
What metrics should a small law firm track?
Monthly budget and spending, cash flow forecasts, collections and unpaid invoices, how partner time is split between productive and non-productive work, and adoption of tools that save time.
Why can a busy law firm still lose money?
Because work done is not the same as cash collected. Without a collection system, a firm full of clients can still show a monthly deficit.
What should a law firm owner delegate?
Tasks that do not need the owner’s judgment, so their time goes to client relationships, new business and developing the team; some of this work can go to an outsourced partner.
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