But if you want to grow your law firm, actual data is better.
Of all the law firm owners I’ve worked with, the ones whose firms grow the fastest are the ones that really track their data and analyse it properly.
So I’ve picked out the best bits of data for you to know, to help you drive your law firm’s growth.
These are the specific metrics in your law firm, that when you know them you can identify patterns and opportunities, and get real feedback on the things you’re doing.
Honestly, when you know this stuff you can make really informed decisions that can supercharge your growth so much more.
Watch this video for my 7 Metrics to 7 Figures:
When you watch this video, you’ll learn:
- The seven most important metrics to grow a law firm
- What happened to my law firm when I started monitoring the data
- Why it’s important to keep track of your days off (and to actually have them!)
- How to make sure you’re using your best strengths
- Why it’s important to pay yourself properly
- How to know if you’re targeting your ideal client
The data that exists within your firm is like a treasure chest of useful insights just waiting to be found.
And when you find it…the possibilities for growth just open up.
So watch this video for everything you need to know to find it!
Exclusive Download: Get my Law Firm Automation Checklist
Discover 10 things to automate at your law firm now to grow your firm, make more money and have more fun – click here.
READ THE FULL VIDEO TRANSCRIPT:
When I first started working with law firm owners, something I noticed is that they tend to make decisions in their law firms by gut feel. There’s always something to be said for gut feel and intuition, but I much prefer using data to help me make decisions and drive growth in my business.
Of all of the law firm owners who I work with, those who are growing their firms the fastest all have one thing in common.
They all track their metrics and use that data to drive growth by regularly analysing it, looking for the patterns, and using that information to make decisions about how to drive growth in their law firm.
And they do this at least once a month.
So perhaps you’re a law firm owner who is just completely turned off by numbers; you don’t like looking at your figures, you don’t like talking to your accountant, it all just seems too hard, and to be honest, pretty fucking boring.
Or, perhaps you’re a law firm owner and you track your revenue and your profit. You might track a couple of other things, you might look at it every month or two but you don’t really know how to use that data or that financial information to actually make decisions and drive growth in your law firm.
So here’s the thing. When I had my law firm, before I scaled it to seven figures, I tracked my basic metrics like my revenue and my profit, and I looked at them once a month. But I didn’t look at that data month on month, and I didn’t look for the trends and the patterns.
So when it came to making decisions about marketing, about new clients, about new strategies and opportunities, I had no idea how to use data to help me drive my decision making. It was all based on gut feel and intuition. Sometimes that worked out and sometimes it didn’t, and when it didn’t it would quite often end in drama.
But as soon as I was able to figure out a way to track the right metrics in a way that I could see patterns over time, I was able to use that information to really drive growth in my law firm. I was also able to make decisions based on data instead of my intuition or gut feel.
So that’s why I wanted to tell you the seven best metrics that you can measure in your law firm to drive growth and scale to seven figures.
#1: Number of free days
The number of free days is all about days off that you have. A free day is a day where you don’t do client work, you don’t check emails, you don’t take client calls, you don’t make client calls and you’re not running around doing admin on the weekends.
Can you think about work? It depends.
If you’re thinking about some productive ways to improve your law firm, that’s absolutely fine. If you’re obsessively thinking about a client file and some of the work that you’re going to have to do on Monday, that’s not cool. OK? That’s not a free day.
The importance of free days is that as you’re growing your law firm, you need to refresh your mind and body. I believe that rest is revolutionary.
We live in this hustle culture where everybody’s hustling, and while I’ve bought into that previously, what I’ve learned is that the more rest I give myself and the more I invest in myself in terms of my physical health and my mental health, the more my business grows.
A question I often get asked is, “Can I take two half days?” No, you can’t. A half day, or two half days, will not give you the same mental clarity as taking off at least one full day.
Free days are all about giving yourself the rest and the mind space you need to make great decisions and grow your business.
The best way to do this – and this is a little bit hard to measure – but at the end of every month, I have a look at my calendar. I put my calendar into month view and I go through and count up how many free days I had.
So I don’t work weekends, which means automatically there’s at least eight free days. I also don’t work Fridays anymore so that’s another four… so that’s 12 free days all up. For you it might be less.
When I first started working with law firm owners, often there would be zero free days. And that’s not OK. But it’s good to know where you’re at so that you can start to improve on it bit by bit from there.
#2: Number of days working in your strengths
So if you’ve been in my audience for a while, you’ve probably heard me talk about how important it is to work on your strengths. And a strength is something that you are inherently good at; something you were born good at. It’s not something that you learned at uni or on the job.
Finding out what your strengths are is the starting point here. And you can use strengths and personality tests like Disc, Kolbe or Myers-Briggs. My favorite one is the Gallup StrengthsFinders. Any of these will help you to figure out more about yourself and what your strengths are.
Once you become aware of what your strengths are, it’s really important that you work to those strengths and spend as much time as you can doing those things you’re best at. I define a day working in your strengths as a day where you spend 80% of your time working in your strengths.
Now, how do you measure this? So again, a little bit like free days, there’s no real accurate way to measure it. But again, I put my calendar in month view at the end of each month and I have a quick look at what I did each day and see whether it was a day where I spent at least 80% in my strengths or not.
One way of making this happen is to delegate tasks that aren’t in your strengths to someone else. If you aren’t good at delegating, or if you haven’t restructured the way that you work around your strengths, you need to start somewhere.
Knowing how many days you’re working in your strengths is a great starting point. You can start to work incrementally from there on increasing the number of days that you are working in your strengths.
#3 Revenue
This is an easy one, although lots of law firm owners measure this in different ways.
Some will say their revenue is the amount of money that comes into their bank account every month. For others, it’ll be based on the invoices that they render each month; the number of bills that they do.
Some other law firm owners will do it based on how many letters of engagement, or cost agreements they have signed every month. They may not have actually billed the client yet, but based on having agreement for that work, then they will often count that as part of the firm’s monthly revenue.
I’m not going to tell you which one is right. I like the first one where cash hits the bank account, but you do you.
As long as you’re measuring it consistently and you’re reviewing it on at least a monthly basis, that’s really all that matters.
#4 Profit
Revenue minus your expenses. Most of you will already measure this, which is great. It’s just making sure that you’re looking at that on at least a monthly basis and seeing how your profit level is tracking.
One thing I will say around profit is that often when I start working with law firm owners, they don’t pay themselves a salary. They just take drawings, and I get that. When I became a law firm owner, I took drawings as well for probably the first three or four years.
Some months it was great, but other months were shit. In the shit months, the amount that I was able to pay myself was pathetic because I was paying myself after I paid everything else. I was kind of putting myself last, but then I made a change.
My accountant suggested to me that I start paying myself a PAYE salary. And I was quite skeptical about this at that time, but I decided to take her advice and it was a huge improvement for me.
It was a really big mindset shift because instead of paying myself the bits that were left over, I was prioritising paying myself along with the rest of my team. And after that, that was when the firm really started to grow.
Just that mindset shift for me and the way that I reprioritised paying myself was a really big shift. It also gave me a more stable income as well, which really helped with my anxiety around money and paying myself as a business owner. Of course, less anxiety means that you have more time and energy and mind space to focus on the things that matter.
#5: Number of new client leads
So a lead is when somebody gives you their email address or contact details in exchange for something of value that you offer.
It might be somebody downloading a guide or a PDF from your website, it might be somebody signing up for a webinar that you are hosting, it might be somebody contacting you via your law firm’s Facebook page, having a quick conversation back and forth and then they give you their email address so you can email them some information. Again, that is a lead.
Knowing how many leads you’re bringing into your law firm every month becomes really important as you start to scale, because all of this becomes part of a mathematical equation.
So for example, if you know that for every client, or every new matter that you open every month, that you need to generate 10 leads, then that helps you to know how many leads you need to generate each month to hit your targets every month.
Knowing that data means you can use it to drive your growth, and help you to be able to create a more consistent, reliable revenue so that you’re not just starting off every month hoping that you’ll get enough clients, and enough leads to get those clients.
You’ll be able to start off each month knowing exactly how many leads you need to get and how many new clients you need to get, which will help you to drive that growth.
#6: Number of new clients and new matters
If you’re not already measuring this, it’s probably something that you are able to get out of your practice management software if you use it. Measuring this will help you to drive towards growing your law firm and getting that revenue growth over time.
Knowing the number of leads and knowing the number of new clients and matters that you bring on each month, is another part of that mathematical equation that will help you drive growth in the future.
#7: Your ideal client ratio
Something that I do as part of my Scale Up program with law firm owners is I help them to narrow their niche. Often when we first start working together, they’ve got quite a varied client base.
Something that I know works to scale your law firm is to narrow your niche and choose an ideal client. So this metric is all about looking at how many new clients you bring in each month and figuring out how many of them meet your ideal client profile and how many don’t.
When you narrow your niche, you don’t instantly stop serving all your other clients who don’t meet your ideal client profile. But what will organically happen over time is that because your marketing focus and your sales focus is targeting your ideal client, you’ll organically start to bring in more ideal clients, which, as a result, will probably mean you will start to bring in fewer clients who do not meet your ideal client profile.
So recording and measuring this over time, and seeing the ratio of ideal clients to non-ideal clients you’re bringing in each month, is a really important metric to measure.
For example, you might bring in 20 new clients a month, and to start with maybe five of them will meet your ideal client profile and 15 won’t. And that’s fine. But then within a few months, you will notice that of those 20 new clients, 10 meet your ideal client profile and 10 don’t.
And then another few months later the proportion of ideal clients might grow again. That means that you can start to say that your marketing is working for your ideal client.
Also, as you grow your revenue and grow your profitability as well, you can start to see the impact that narrowing your niche and focusing on one ideal client has on that. So all these metrics begin to start to work together in that way.
If there’s anything these past months have shown us is that the time to make lasting impactful change in the legal industry is right now. So I want to challenge you to shake things up and create change today.
If you’re interested in scaling a law firm, or building, designing and selling online legal solutions and learning about how to do the marketing around that, then there’s plenty more for you to discover over in my Savvy Lawyers Facebook group.
