Authored by Liz Lamar, This piece originally appeared in the APRIL issue of ALM's LJN Legal Tech Newsletter
Measuring profitability means measuring lawyer and staff performance. Regardless of whether law firms bill on contingency, flat fee or by the hour, they must measure productivity in order to understand their profitability.
How do law firms measure productivity, and more importantly, how do they turn that productivity into revenue for the firm? In large part, turning time into money begins with which metrics the firm has in place and whether the right key performance indicators are being measured and tracked.
Increasing revenue is about much more than cost-cutting be it by slashing headcount, reducing technology budgets or curbing professional development and staff training. Partners and firm administrators must also focus on measuring those activities within the firm that increase firm income. Although there are many ways to measure firm performance and derive metrics that will reveal a firm's financial and operational health, this article explores four distinct metrics that should be included in every law firm's performance dashboard.