Legal Process Outsourcing

Gauge the performance of your LPM with these KPIs

One of the reasons holding legal professionals back from fully embracing legal services outsourcing is the misconceptions surrounding the performance efficiency and productivity of outsourcing services. But there is a simple way to alleviate this worry and gauge how the legal process management (LPM) services perform – track the relevant key performance indicators (KPIs). Using KPIs to track performance has been a commonplace practice in the modern business landscape but is a relatively novel concept in the legal profession. However, becoming a data-driven law practice and tracking the right KPIs provides a benchmark against which law firms and legal departments can measure performance and identify areas for improvements, taking the necessary steps to address them.

Choosing the KPIs to track

Measuring and tracking KPIs takes time and effort, as there are thousands of data points you can potentially measure to assess your performance. However, it is not necessary (or even feasible) to track every one of them. Therefore, listing your objectives when identifying what legal service outsourcing KPIs to measure is crucial. Using the SMART (specific, measurable, achievable, relevant, and time-bound) criteria would help strategise for success. This can be across different functional categories, like client and matter development, client satisfaction, marketing, finance, individual performance, and lead analysis. Once you have the list of relevant KPIs, you can use the data to measure and track your KPIs for gauging legal process management success.

Starting point for KPI tracking

Although KPIs can vary greatly from one law firm to another, a great starting point to track legal process outsourcing performance is with some of the metrics that law firms most frequently track. These include:

  1. Client satisfaction:
  2. This is a relatively simple KPI to track, with client feedback using web surveys or telephonic interviews. You can invite the clients to share their feedback or input once their matter closes or have a survey site set up on your website for easy accessibility.

  3. Client development:
  4. Understanding client development can give you insights into how you are attracting prospective clients or managing relationships with existing clients. Tracking "win rate" for new clients – how many prospects become paying clients – or tracking new work from existing clients can help you measure this KPI.

  5. Cost of client acquisition (CAC):
  6. CAC encompasses all the expenses for acquiring new clients – from marketing and advertising to your time in billable hours. You can divide the total acquisition expenses by the number of new clients over a period and set targets for CAC to measure your ROI per client.

  7. Attorney realisation rates:
  8. This KPI allows you to understand how much time your attorneys are recording compared to the fees they collect. It gives an insight into how you can maximise revenue from the billable hours your attorneys put in.

  9. Law firm profitability:
  10. Profitability is one of the key indicators for any business's success. You can calculate your firm's net profit margin over a set period to understand if you are operating efficiently or if you need to redesign your strategic position to improve productivity.

Once you have the handle on these basic KPIs, you can then expand your KPI tracking to encompass other operational areas – like marketing, firm culture, or individual employee performance – to get more detailed insights into different operational facets and improve the overall efficiency, productivity, and client experience of your law firm.

Tips to effectively track KPIs with limited data

Since tracking KPIs is a relatively novel concept within the legal industry, law professionals may not have access to the data collection and analysis tools prevalent in other business domains. But even with limited information, law firms can effectively track their KPIs if they:

  • Understand how tracking the KPIs can positively impact the bottom line with more efficient legal processes.
  • Determine the most relevant KPIs to help understand performance and offer insights into potential improvement strategies to maximise efficiency and profitability.
  • Build internal record-keeping practices surrounding key KPIs to make capturing and recording necessary data easier.
  • Create a KPI tracking spreadsheet and build a dashboard with tools available in Excel or Google Sheets to identify the KPI trends and produce a report.

Legal service outsourcing tools can simplify this process of recording and tracking processes while gauging your legal process management success. You can use these tools to streamline and automate the methods to collect data, track KPIs and build reports, saving you time, eliminating potential human errors, and giving you access to advance analytics to track your progress.

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How can Infosys BPM help?

Infosys BPM Legal Process Management solutions leverage partnerships with general counsels, CIOs, CPOs, and law firms across the globe to standardise, transform, and automate legal tasks. Our LPM solutions act as an extension of your legal operations, allowing you to leverage the commercial model, integrated IT support, and consulting services to add flexibility and value to your legal processes. With our services and technology solutions – like eDiscovery managed services, contract management, research solutions, contract analysis, and next-gen eDiscovery – you can easily measure, track, and ensure your legal process management success.

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