Measuring performance is the first step to improving a firm’s operational efficiency. Legal software makes benchmarking easy, but too many firms make one of these six common mistakes which undermine the value of performance measurements. and attorney software
1) Not Understanding The Data – Legal software can easily produce pages and pages of statistics on your firm’s performance, but without context the data is just noise. Managers have to know how these values correspond to performance; only then can they make effective decisions which will have a positive impact on performance. It’s better to focus on a few, well-understood key metrics than produce huge reports nobody will ever read or understand.
2) Emphasizing Numbers Over Other Information – Income or billable hours are straightforward metrics to quantify in legal software, but don’t forget to assess less concrete values such as client satisfaction rates or repeat business. Don’t become so focused on hard numbers that you ignore other aspects of running the firm that impact customer perceived value. Consider hiring a third-party firm to survey clients about your firm to ensure you get unbiased results.
3) Gaming The Statistics – Once attorneys realize what metrics are being tracked using legal software, they may start manipulating those numbers. They become focused on boosting some measurable statistic such as hours billed per month and give less attention to other aspects of the work which may in fact drive perceived customer value. Often this is not a deliberate attempt to skew the numbers, but an unintentional side effect of benchmarking and operating to a performance metric.
4) Focusing On The Past – As investment counselors warn their clients, past performance is not a guarantee of future results. Firms who spend too much time trying to match this year’s financial performance to those of years past end up making the same mistakes year after year, or not responding to changes in the marketplace. Past performance is a valuable reference, but you still must consider how to grow the company in the current environment.
5) Ignoring Competitors – If you benchmark only against yourself, you are limiting your potential. Instead, include information in your attorney software about the performance of firms in the same region or the same areas of law to get a more strategic view of the industry. Don’t be afraid to compare yourself to much larger firms, since the basic principles of efficient operation don’t differ based on company size.
6) Playing It Safe – Many firms reach a comfortable level of operation and become complacent as long as the legal accounting software shows an acceptable profit each year. An annual profit does not equal growth, so implement a strategic plan which seeks out new clients or new sectors of the marketplace.
Any firm can conduct comprehensive benchmarking activities with the latest generation of attorney software, but like any tool the software is only as good as the expertise and policies behind it. Take control of your law firm by using performance measurements to chart a course to future success.