Law Firm KPIs Doing the Work | Part Two

Are you really doing the work? Welcome back to part two of Law Firm KPIs, where I’ll show you how tracking your metrics will optimize and automate your business. To ensure that you are moving a case from start to finish as efficiently and profitably as possible.


In this episode we discussed:

  • How to make sure you’re doing the work, and the metrics you need to do so. 
  • How to automate your workload.
  • Monitoring the average hours per case and by subtype
  • Knowing the level of cost per case and case type
  • How to use the utilization rate to fix how much time you really spend doing the work.

Allison Williams: [00:00:05] Hi, everybody, it’s Allison Williams here, your host of The Crushing Chaos with Law Firm Mentor podcast, Law Firm Mentor is a business coaching service for solo and small law firm attorneys. We help you to grow your revenues, crush chaos in business and make more money.


Allison Williams: [00:00:33] We’re going to continue our discussion about law firm key performance indicators, law firm KPIs. And today we’re going to be talking about doing the work. So in other words, what are the metrics that you need to master in order to ensure that you’re doing of the work that you’re actually moving a case from beginning to end start to finish in your law firm is as efficient, as productive, and as profitable as it should be. So here are some key performance indicators that we’re going to talk about today that are going to help you to start looking at doing the work from a perspective of automaticity and measurements that are going to make it a lot more financially successful for you. All right.


Allison Williams: [00:01:27] So the first one, we’re going to be talking about different business models, right? There are lots of different types of ways that we do the work and ways that we pass along, the expense for the work to our clients. But of course, what is probably the most prominent form, at least at this point in time in the way that lawyers ultimately build clients is the billable hour. So it’s really important that we’re talking about billable hours as a KPI that the performance indicator part of the KPI really has to focus on how many billable hours are produced. And unfortunately, one of the greatest shortfalls that I see a lot of lawyers make a lot of mistakes that we make are simply giving work over to our associates or paralegals and expecting that they will produce enough work right, that they will be oriented toward quote, doing the work and then going home. And you’ll see great variability between professionals between how many hours are billed by professional one and professional two. So take two lawyers, right? You could give the same file to a lawyer and expect that one lawyer is going to spend 10 hours on the file. Another lawyer could spend five hours on a file. Now, it could be that there’s actually a discrepancy between how much time and attention is being given to the file or it could be that the time captured by the respected professionals is very discrepant. So of course you want to have efficiency protocols in your office on training people how to build hours.


Allison Williams: [00:03:02] Now, if you are someone that struggles yourself or your team struggles to meet billable hours, we do here at Law Firm Mentor have a free resource we can give you called Meeting Billable Hours. All you have to do is email us at info at Law Firm Mentor dot net and put into the subject Meeting Billable Hours, request that replay and we will send it out to you. It also comes with, by the way, a very nifty guide on how to keep pace with your hours throughout the course of the week, the month, and ultimately the year. But where we are as owners, falling short with billable hours is that we don’t set a requirement for the number of billable hours that are expected, and we don’t monitor it regularly.


Allison Williams: [00:03:47] In my law firm, we actually have a report card that we give out to our associates every single first of the month. They get their scorecard and their scorecard tallies the total number of billable hours they are expected and required to produce and where they fell. And if they fell short of the billable hour requirement in a given month, you’re going to see a number in red. But we’re also going to tally the year to date total because one of the things that we train our associates on is pre-framing the work that they do so that when they go on vacation, they don’t have an urgent, intense negative feeling when they come back to the office. Oh my God, I’ve got to make up all this time. Nor do they have the pressure of knowing that the firm is going to be holding them accountable to that time and asking them, Where are your hours? So we simply give them that forecasted training on, here’s how you meet your hours, here’s how you stack additional hours each week. Preparing for the week you’re going to be out so that at the end of a quarter, you’ve got your vacation time already pre-build, if you will, so that you don’t have to go on vacation worried about what’s going to await you when you get back.


Allison Williams: [00:05:01] Now, obviously, if you’re practicing law, especially in a litigation practice, you’re going to have some work when you come back. That is going to be, that’s going to be perhaps time-sensitive, perhaps your clients had called. Some things may have been covered in your absence, some things not. So it’s not that you’re not going to have work when you come back, but you’re not going to have productivity when you come back. That’s going to have to be on top of what you already have to do, right? So it alleviates the stress of going on vacation because yes, you’re going to come back to work, but you’re not going to come back to work on top of work that you have to immediately get done.


Allison Williams: [00:05:35] So you need to be tracking billable hours. By the way, that report card that I referenced earlier that we give out in my law firm not only includes how many billable hours we’re required versus how many hours were produced, and is there a shortfall or a surplus? But it also tracks the same metric with the next key performance indicator, which is your collection rate. So in other words, those billable hours should generate a certain amount of revenue. And if you are billing appropriate and collecting retainers upfront and we highly recommend you consider evergreen retainers, whereas when the, the money on account drops down to a certain level, there is a requirement of replenishment so that you don’t ever get down to billing again zero or billing and creating an account receivable. But we do know that sometimes you can have a surge of work in a given month and all of a sudden you’re at zero or close to zero when you are collecting money from a client. So it’s really important that you be monitoring every single month where your clients are relative to their accounts receivable.


Allison Williams: [00:06:42] So the collection rate is the percentage of dollars that are collected of the dollars that are built. So we know there is a, a phenomenon. I don’t want to call it a problem. I consider it a problem, but I don’t want to, I don’t want to forecast it as a problem. You know, there’s a phenomenon where across the country, lawyers do not collect one hundred percent of the dollars that they billed to their clients for a host of reasons, right? We talked about some of those in our sales discussion of KPIs in the last episode, but some, some considerations include that clients run out of money before the end of the case, some clients are simply egregious in conduct, they will simply walk away after the work is done and not pay you. There could be circumstances where client files for bankruptcy, there might be situations where work is done inappropriately that has to be corrected, and so part of the bill is written off. You could have any number of reasons why you could build some hours that don’t get generated and collected dollars, but you need to have your firm’s collection rate and you need to have your individual producing attorney and paralegal’s collection rates. 


Allison Williams: [00:07:53] So that you are always optimizing around how much money is coming in, right? Never assume that you’re going to collect one hundred percent of the dollars that you built unless you have a pure flat fee law firm and you collect and require one hundred percent of your fees upfront. Because there can be situations where even if you’re billing as a flat fee firm and you billed someone a flat $10000 for a file, if you say to them, I’ll take $5000 now and $5000 in 60 days or 90 days or however long into representation, so they have some time to collect that and get it over to you. There could be situations where you work and exceed the $5000 that you initially earned and have done work against that second $5000 before it came in. So you could have less than one hundred percent of a collection rate, but ultimately your goal is to always be improving your collection rate. Also, knowing what your collection rate is and holding the producing party accountable to the collection rate gives you a great opportunity to actually optimize performance of your team, as well as generate excitement around their role. In other words, once someone has a salary, they are at a place typically where they know where they’re going to earn. They know the dollars and cents that are going to be coming into their household, and they start to live according to those dollars and cents. But what if you actually were able to incentivize people and reward them when they exceed the expectations for the firm? So if the firm has a collection rate of, say, 80 percent and a particular biller has a collection rate of 90 percent, that person ultimately could be rewarded for that excess collection rate right for dollars in excess of the firm’s collection rate because that person is ultimately contributing directly to your success.


Allison Williams: [00:09:52] And if a person knows that they’re going to be now motivated if they are a money-motivated person, right? Not everyone is. In fact, statistically, most people are not, believe it or not. But if you have a lawyer that is money motivated or even is success motivated, right? You can say the way we define success is exceeding our collection rate. That person is going to have more of an incentive to drive up the collection rate to collect more dollars for the firm if they’re getting a piece of it and if they are rewarded based on driving up the collection rate. So you always want to be monitoring the collection rate for opportunities to improve your compensation systems, but you also want to be monitoring it, of course, so you can be planning your budget and your expenses and investments in the law firm and know that you’re going to have the money to cover it based on historical data and ultimately improvements that you’re making in that collection rate. All right. When we get back, we’re going to be talking about some additional metrics associated with dollars and cents and in particular, the production of your legal work. We’ll see you soon.


Allison Williams: [00:11:03] Sales, they’re critical to your business, but many lawyers I know hate sales. Does this sound familiar? Your book console to give free legal advice, but then your potential client fails to close? This happens because you haven’t learned how to effectively sell legal services. Once you’ve learned the Law Firm Mentor approach to legal sales, your potential is endless.


Lisa Knox: [00:11:22] My name is Lisa Knox. I am the owner of LM Knox Law and Mediation based right here in sunny Tampa Bay, Florida. I think a lot of attorneys specifically, we forget that sales is a key part of running a successful law firm. We have to sell our clients, we have to sell our team as well, and we have to sell our referral basis and our referral sources. And so understanding how to do that and also building the confidence that attorneys proclaim to have that anyone at some point needs to refresh your on. So that’s the benefit.


Allison Williams: [00:11:58] If you’re ready to transform into a sales powerhouse, I invite you to sign up for our online course, Legal Sales for Lawyers and Non-Lawyers. Text SALES to nine oh eight two nine two three five two four. Once again, that’s nine eight two nine two three five two four to get pricing information and to start leveraging the power of psychology to connect with and attract new clients.


Allison Williams: [00:12:30] All right, we’re back now, and we’re going to be continuing our discussion about law firm KPIs, specifically on doing the work, the productivity of your team. And the next KPI, I want to talk about is your realization rate also referred to often as your effective rate. Now, I want you to think about this as the percentage of hours billed relative to the hours worked. So if you come into your law firm in the course of a day and let’s say you have a traditional nine to five Monday through Friday work schedule, very few law firm owners do. But let’s assume that that’s your work schedule, so you’re going to be working for eight hours of a day. And let’s assume that you have allocated that you’re going to take an hour for lunch, you’re going to take an hour for admin and you’re going to take an hour for supervisory activity that cannot be billed to a client. Checking in on your administrative team, checking in on your associates, reviewing work of your associates, communicating about your marketing, different things that you might have to do that really are not passed on directly to a client. So then out of the three hours that are gone, you have five hours left to be billing.


Allison Williams: [00:13:42] For a lot of lawyers, they don’t capture all of that time right, so some of that time might be billed. Some of that time might be searching through your email for something that you remember either a client saying to you or you saying to a client, it could be searching through a stack of documents on your desk for the last thing that you printed out, that’s going to be relevant to a motion that you’re drafting. Or it could be that you’re looking over financial reports that are given to you in discovery, but you’re not actually looking for something substantive related to the client. Maybe it’s that you’re interested in how certain financial reports look relative to others from certain financial institutions, and you decide not to build that to a client. So in that scenario, you might actually only bill four out of those five hours that are available for billing and thus out of the day’s time that you allocated to billing, one hundred percent of your time was not actually passed over to a client.


Allison Williams: [00:14:44] Now, another way that your realization rate, the amount of your hours billed relative to the hours worked could go down, could be if you actually did the work and did not choose to pass it along to a client. Now that happens a lot, and oftentimes, sometimes we refer to those cases as low bono right where someone is not pro bono, they’re not working for free, but they are certainly not passing along all of what they could to their client. There are other times where you simply elect because of the circumstances not to pass along all of your time. Now the challenge here is that depending on your money mindset, this is you the billing attorney, so it could be you, the owner of the law firm, or it could be your associate, or it could be your paralegal if you feel guilty about charging a client for the work that’s done because the client’s financial circumstances might be dire or the client might have other legitimate expenses that they are prioritizing, and they are giving you a story that says this thing over here is more important than your bill. And you tend to agree with them because you devalue what you’re doing for them. And that scenario, you might say, I work on this file for three hours, but I’m only going to build a client one hour. Ok, now I don’t agree with that approach. I think people should ultimately pass along all of the time that they are spending on a file to a client, and they should be candid with their client.So the client knows that they are going to have that expense, right?


Allison Williams: [00:16:09] The problem comes when you either are not candid with your clients about money, so your clients feel negatively about you. They feel that you’ve taken advantage of them or when you are cheating yourself out of the time that you have really legitimately put into a file and thus educated your client that their fees are surreptitiously suppressed relative to what they actually should be. So that in those times when you actually do bill what the actual time was, the client is like, Hey, wait a minute, why did you suddenly jack up my bill? You weren’t actually jacking it up. You were just jacking it down at the times where you weren’t billing it. But the realization rate takes into account that if you worked 10 hours but you only captured 80 percent of those 10 hours, then your realization rate is less than one hundred percent, your effective rate is less than one hundred percent. And typically, you’re going to hear about realization rates when you talk about the sum total of the hours build relative to hours worked, but the effective rate is almost always connected to the billable hours.


Allison Williams: [00:17:09] So if my actual time spent on a file generates my hourly rate of four hundred dollars per hour and I build 10 hours, that’s $4000. But I only actually bill and collect. I’m only passing along to a client for whatever reason,right, some, some of it could be write-offs, some of it could be some of the things we talked about earlier. Only three hundred and seventy-five dollars per hour worth of my value. So instead of the four hundred, I am essentially collecting a certain portion of it at a lower rate than I would have otherwise, then the effective rate goes down, right? And you want to be tracking effective rates because one of the things that when you start to get really sophisticated in looking at your KPIs, you’ll see that if your effective rate on a file is consistently lower, there’s oftentimes a pattern that you aren’t catching before it manifests itself that you could be changing in order to drive up your effective rate, which means doing no more work. Meaning changing, charging no more to your clients. Just simply changing the efficiency and the process with which you approach your work,  you can collect more dollars per hour of the hours that you are working. So that’s the reason why looking at effective rates is so important. It also really helps that when you start looking at effective rates that you can start to monitor the progress of your legal team over time. So you would expect that a newer attorney is going to have a much lower effective rate. In fact, oftentimes the way that law firms address that is to really reduce their actual billable hour, right? So instead of having a three or four hundred billable hour, it could be one hundred and one fifty-two hundred because you recognize that that person has less intuitive knowledge, less skill. And part of what’s going to happen is if you set the bill too high, you set the hourly rate too high. The client is going to ultimately have a bill that’s unreasonable because the fees are too high. But on the flip side, if your attorney is producing hours and those hours are legitimate, the person actually did the work, but it took a lot longer than it would have if they were more skilled and knowledgeable. Part of that time is learning time that you’re not going to pass them on to a client. So you might only expect that of the two hundred dollars hourly rate, that 60 percent of that, or one hundred and twenty dollars per hour will actually be passed along to a client at the start of that person’s career. Then as they progress, as they learn, as they become more knowledgeable, you should see that instead of 60 percent, it goes up to 70 percent, maybe 80 percent. And the attorney is actually progressing because they’re becoming more efficient, more knowledgeable, more capable and you could use the monitoring of effective rates to actually test and see how productive your team member is becoming over time.


Allison Williams: [00:20:18] So in other words, it becomes a data metric, right? Instead of looking at a person and saying, How do I feel this person is learning, what is my instinct tell me about this person’s abilities? You could actually use an objective measure and go over that objective measure with your attorney so that they’re aware that they are becoming more efficient. This is something that you could actually use to advance them, as well as to promote to them that they are learning, even in those moments when they feel a little down on themselves because they’re not moving at the speed of lightning as you and the client might like.


Allison Williams: [00:20:53] Ok, next, KPI super important to understand when thinking about and monitoring the doing of the work in a law firm is the average hours per case type and per case subtype. Now you want to look at the total number of hours that you put into each of your files because over time you want to systematize as much as possible within the legal work so that you can spend your quote-unquote free time. The time that isn’t highly structured and systematized, you can put that time into the really novel solutions the high touchpoint client counsel. You can be a better lawyer when you are giving more of your attention, time, effort, and dedication to creating effective legal solutions. That is what people pay us for.


Allison Williams: [00:21:44] People do not pay us for emails and phone calls. Yes, emails and phone calls happen in the course of counseling a client, but we know that a lot of that is passing data back and forth. Right. It’s moving a case along, moving a case along as absolutely necessary, it provides a value to the client. But if you were to ask the client what they value in their attorney, it is probably going to be more the conversations that you have going deep and wishes, their desires, their settlement positions, opportunities for them versus the time that you spend passing along court notices, emailing them that you received a letter from the adverse attorney and you’re going to send it along and so forth. OK?


Allison Williams: [00:22:26] So when you think about the average hours that you put into each case type, the value of knowing this is so that you can start to create some efficiency protocols to get the time down. If you are in a flat fee model or if you’re billing by the hour to be able to objectively monitor that time so that ultimately you can plan ahead how much staffing you’re going to need to be able to deliver the services in your office. So if you know that your uncontested divorce matter that has no children typically is going to take you seven hours of time, then for each one of those types of cases that you bring in, you know how much work you’re going to pass along to another person and thus how much capacity they’re going to have available for additional work.


Allison Williams: [00:23:18] What a lot of people do, however, is they completely disregard that metric altogether, and they simply go with gut and they say, Well, right now I feel really busy. Sometimes feeling really busy is as a result of being really mentally disorganized and having a lot of thoughts running through your head and a lot of obligations that you don’t have effectively managed on a calendar or a task management system or a CRM. And so you’re in somewhat of an inner chaos that now makes you feel that you are overloaded on work. And it’s times like that that people will go out and hire. And as soon as they go out and hire without a plan for how that person is going to drive up revenue and profit, they then hire someone. That person takes longer than they would like to get up to speed. And next thing you know, they’re only making a little bit more money, but they’re spending as much, if not even more time training, developing, supervising the attorney. So when you don’t have a firm handle on what time a case should take, yes, we know that there are slight variability from lawyer to lawyer with some tasks, but there should be a reasonably concise range. If you don’t have that, it is really, really challenging to plan your revenue, to plan your profit, and to plan your staffing.


Allison Williams: [00:24:34] So knowing these numbers can really help you now, I also identify here that you should know the average power average hours per case subtype because knowing that you have a breakdown of hours at a certain point for the subtype of a case meaning not just the practice area, but the niches within your practice area can give you greater ability to not just plan the work, but to allocate the work, right, so you don’t give all of your high touchpoint, high time required cases to one person, but to divvy it up. Ok, now this is not just beneficial for planning workload, it’s also beneficial for planning and creating the best work experience for your team because everyone needs to have, at least in the grand scheme of things, people tend to go into law because they like to use their brains. They like to create solutions, they like to be in the activity of creating a result for a client. And if you give one person all of the very challenging, very difficult, very complex cases where they’re problem-solving every minute of every day and you give another person the very banal work that is paper-pushing and very client-centric, but not very intricate, not very challenging. That person may or may not become burned out because they’re bored, right? And that person, also the person who has the really intricate work may or may not become burned out because they are overextended, right? Their mind is in hyperdrive all the time.


Allison Williams: [00:26:09] Typically, you want to have a balance of those different types of cases in your office so that everyone gets the pleasure of doing the work that they enjoy, but also gets to have that reprieve that comes with some lighter duty work. Now, depending on your practice area, this may or may not be implicated, there are some people who they do nothing other than lighter duty work, right? It could be that they only handle traffic tickets and if they handle traffic tickets, there’s not going to be a great deal of variation in the complexity of those cases. But maybe some of the variability there might be the hours worked when you have certain case types or subtypes in certain counties, right? When you go to certain places, you’re spending more time physically at the courthouse than you might spend if you go to a different county. Right. But you want to start looking at the total hours invested in the cases so that you can keep your eye on the pulse of the quality of the work, but also the quantity of the work in the different case assignments.


Allison Williams: [00:27:06] Ok. The next KPI when we’re talking about doing the work is the average cost per case type and of course, per case subtype. Now, the average cost is the cost to deliver the service. Ok, so this would be everything that it on average takes for you to run a file, everything from filing fees to the courthouse, to the per-unit cost of preparing a physical file if you’re using physical files, to a portion of the software licenses to be able to access practice management software right, you want to start having your eyes on the pulse of what it costs your law firm to deliver a service to a person. Because at some point we’re going to get to one of the most important metrics, which is labor efficiency rate. We’re going to talk about that in just a moment. But when you’re thinking about the cost for delivering the service, one of the things that you always want to be looking for is the most qualified, least expensive person in your business to deliver that service. So if you are stacking the deck with lawyers and some of the work that’s in a file is not lawyer work, then the rate at which you are paying to deliver that service is going to be greater, right? It’s going to cost you more when you factor in your salary for an attorney than if you were to factor in your salary for a paralegal. And when you start to become intimately aware of the cost to deliver each type of case in your law firm, it becomes something that you can actually control how much you’re going to retain in profit because if you start stacking the deck of certain cases with lower-cost labor.


Allison Williams: [00:28:47] But that is still competent to do the job right, you’re not going to start assigning lawyer work to paralegals. You’re going to only have paralegals doing paralegal work. But you might have legal assistants supporting paralegals instead of paralegals doing all the work on their own. Or you could have paralegals supporting lawyers instead of lawyers having all that work on their own. And so when you start looking at a file as a total average case value minus your total average cost per file, you then start to be able to plan and project your profit. And this helps you not only with managing your expenses but also with fueling your growth, right? Because if you know a certain portion is going to be leftover after all of the basic minimum expenses that you have on a file and you can say on a file that’s assigned to a lawyer. This is what my profit is going to be versus on a file assigned to a paralegal, this is what my profit is going to be. You can start planning that out. You can start saying, OK, if I’m going to have one hundred thousand dollars of profit this year, how much of that is going to go into my marketing, right? If I want to fuel the growth by increasing my paid marketing, how much of that is going to go into a higher-level employee who can actually save me time, effort, money, energy, managing the law firm because I don’t enjoy management and I want to have someone else can take that off of my plate.


Allison Williams: [00:30:10] But you can’t make those kinds of decisions without a whole lot of question mark and a whole lot of lack of clarity when you are guessing at, generally speaking, we bring in X dollars a year period, and generally speaking, we spend Y dollars in expenses, right? The kind of net amount is necessary for you to keep your eyes on the general pulse of your business, right? So if you start seeing, generally speaking, we have this much money in the bank and now that number is going down, you know what questions to ask to get it back up again? But knowing the level of cost per case and case type gives you a control that you’re never going to experience if you only have the gist of how much it’s actually costing for you to deliver your service.


Allison Williams: [00:30:55] All right. Two more KPIs, the utilization rate is one that I want to cover very briefly. Utilization rate is the percentage of your day that is billable, right? So we have heard industry mavens, if you will kind of talk about the idea that lawyers are not collecting, they’re not producing enough time during the course of the day, they’re working, but they’re not actually producing the time when they are working, right? So they are kind of in a state of scatter, the amount of time it takes you to find things, the amount of time it takes you to go to the water cooler to have conversations, right? A lot of law firms said that they actually saw a boost in productivity when they went virtual as a result of COVID because there wasn’t that water cooler time anymore.


Allison Williams: [00:31:40] Right? Now, you have to be very intentional if you want to chat with somebody, you don’t get to just stop by their desk when you’re in the mood to get up and walk around. The utilization rate is going to help you to look at how much of your time is really spent on doing the work of the, of the files and doing the work of being a lawyer or professional in the law firm versus the time that is all available. And this can help you with things such as looking at how you compensate people, right? If you’re finding that you have a really, really good crackerjack paralegal, but her utilization rate is really low because she’s a chatty Cathy who walks around the office and doesn’t do the actual work, or because she spends time engaging in ways that might be beneficial, right? She might be getting really friendly with the client. So that has a place, but it’s not actually doing the work. Then you have something more than simply your gut feel things that you’ve observed, Anecdotal one-offs that you can talk to her about and ultimately, you have a data based approach that makes it a lot easier to hold people accountable to a standard.


Allison Williams: [00:32:49] Now, the last KPI I want to talk about today is the labor efficiency rate. Now, the first time I actually heard about labor efficiency rates in the context of a professional services firm was when I got introduced to a book by Greg Crabtree. Greg is a CPA out of Huntsville, Alabama, and his book Simple Numbers gave us a description of why when professional services businesses in particular start to reach around the $2 to $3 million mark, they start to hit a ceiling. And part of the reason why they hit a ceiling at that mark is because they need so much in management because they’re starting to get people kind of in a state of scatter. A lot of people doing a lot of things and a lot of different ways, they need to have management to hold people accountable but the cost of management, which is considered a higher level skill, is actually greater than the cost of the labor itself. Right. So when you hire a managing attorney, you expect to pay more than your young associate.


Allison Williams: [00:33:52] And so that discrepancy of how much management you need, right? The cost of a fractional CFO or actually full-time CFO, the cost of a managing attorney, the cost of an office administrator, the cost of a different division head right? When you start getting more complex and structured and needing more people, your cost goes into those people and those people are not directly producing revenue. So you’re needing to spend and you’re starting to conceptually see your person, whoever you’re hiring, the managing attorney, the office administrator, as an expense rather than an investment. Now, it’s not that they are actually an expense and not an investment is that you haven’t figured out a way to monetize that particular investment, and so therefore your mind transmutes them into an expense. But the challenge, though, remains the same, which is that you’re paying out of pocket for salary and benefits and all of the indicia of employment, or someone who’s not a direct driver of revenue. So your revenue does not go up, but your expenses do go up and thus your profit goes down. And if you don’t know how to effectively evaluate your labor efficiency rate, i.e. how much are we producing, do we need to increase our billable hour requirement? Do we need to increase our effective rate and our utilization rate? Do we need to capture more of the time that we are producing in billable hours? If you’re not looking at these metrics, then what ultimately ends up happening is that your labor becomes very inefficient and you don’t have the resources to add the management that is going to fuel the revenue growth and the profit growth without cutting into the profit to pay the management resource.


Allison Williams: [00:35:28] So that’s one of the things that you really should be looking at. Now if you’re curious about how to actually calculate your labor efficiency rate. I would highly recommend referring you over to Greg Crabtree’s book. It’s a wonderful resource. I’m actually going to put a link to it in our show notes for today, but we’re going to wrap up today talking about law firm KPIs. Now, today we covered part two, which was about doing the work. Tomorrow we’re actually going to be talking about or rather, I should say on our next episode, we’re actually going to be talking about inviting in the work. Now this conversation can be triggering because some people hear that as finding a way to bill your clients. And that is absolutely not what we’re talking about. But we are talking about finding a way to add more value to your clients in a way that benefits your clients so that you can actually produce more off of the work that is already available in your offer.


Allison Williams: [00:36:16] All right, everyone, I’m Allison Williams. You’re listening to The Crushing Chaos with Law Firm Mentor podcast. I’ll see you on the next show.


Allison Williams: [00:36:33] Thank you for tuning in to The Crushing Chaos with Law Firm Mentor podcast to learn more about today’s show and take advantage of the resources mentioned. Check out our show notes. And if you enjoy today’s episode, take a moment to follow the podcast wherever you get your podcast and leave us a rating and review. This helps us to reach even more law firm owners from around the country who want to crush chaos in business and make more money. I’m Allison Williams your Law Firm Mentor, everyone. Have a great day!


Allison Bio:

Allison C. Williams, Esq., is the Founder and Owner of the Williams Law Group, LLC, with offices in Short Hills and Freehold, New Jersey. She is a Fellow of the American Academy of Matrimonial Lawyers, is Certified by the Supreme Court of New Jersey as a Matrimonial Law Attorney, and is the first attorney in New Jersey to become Board-Certified by the National Board of Trial Advocacy in the field of Family Law.

Ms. Williams is an accomplished businesswoman. In 2017, the Williams Law Group won the LawFirm500 award, ranking 14th of the fastest-growing law firms in the nation, as Ms. Williams grew the firm 581% in three years. Ms. Williams won the Silver Stevie Award for Female Entrepreneur of the Year in 2017. In 2018, Ms. Williams was voted as NJBIZ’s Top 50 Women in Business and was designated one of the Top 25 Leading Women Entrepreneurs and Business Owners. In 2019, Ms. Williams won the Seminole 100 Award for founding one of the fastest-growing companies among graduates of Florida State University.

In 2018, Ms. Williams created Law Firm Mentor, a business coaching service for lawyers. She helps solo and small law firm attorneys grow their business revenues, crush chaos in business and make more money. Through multi-day intensive business retreats, group and one-to-one coaching, and strategic planning sessions, Ms. Williams advises lawyers on all aspects of creating, sustaining, and scaling a law firm business – and specifically, she teaches them the core foundational principles of marketing, sales, personnel management, communications, and money management in law firms.


Contacts – Social Media

Book: Simple Numbers by Greg Crabtree


To sign up and get more information about our Legal Sales for Lawyers and Non-Lawyers Online Course, text SALES at 908 292 3524.


Book a Session with our Growth Strategists 


My Favorite Excerpt From The Episode:

TIME: 00:23:18 (33 Seconds)

What a lot of people do, however, is they completely disregard that metric altogether, and they simply go with gut and they say, Well, right now I feel really busy. Sometimes feeling really busy is as a result of being really mentally disorganized and having a lot of thoughts running through your head and a lot of obligations that you don’t have effectively managed on a calendar or a task management system or a CRM. And so you’re in somewhat of an inner chaos that now makes you feel that you are overloaded on work. And it’s times like that that people will go out and hire.