As you know, Smokeball provides you the tools and empowers you to do what you do best – practice law. That’s why I recently wrote an article for attorneyatwork.com in their Product Spotlight section discussing three KPIs that every small law firm should know.
In a couple of weeks, Smokeball clients will receive a new version release that includes a brand-new feature providing five new firm insight dashboards. Firm owners will have “New Business Insights,” “Fee Insights,” “Activity Insights,” “Lead Analysis Insights” and “Real Estate Closing Insights.” Just to give you a glimpse into the dashboard, the “New Business Insights” dashboard will reveal the number of new cases and matter you open, which attorneys are working on them, where the new clients are coming from and provide seasonality data on new matter over the last 12 months and by year.
By simply using Smokeball, you can visualize the health of their firm with a click of the mouse. These firm insights provide you the business intelligence to go about your day practicing law knowing that Smokeball is watching over your firm.
Click here to learn more about how Smokeball can give you the business intelligence you need to succeed.
Firm Insight Dashboards with Just a Click
Running a small law firm is not easy. Not only do you zealously represent your clients, you must run a business. What are you looking at to make sure your business is performing profitably and as efficiently as possible? Do you have the insights into your law firm to help you grow?
Here are three key performance indicators (KPIs) that you should be following.
Referral Sources of New Clients
One of the greatest challenges for small law firms is getting new clients. Part of getting new clients is spending marketing dollars in the right places. If you spend money on print advertisement, Facebook ads, or on websites, how do you track the effectiveness of your marketing?
One method is to collect that info from every client and then crunch the numbers. If a client comes in from a referral, you want to know from whom. If the client comes in from an ad, you want to know which ad and why. This will help you apply future marketing dollars to the right place. You want to spend your marketing dollars wisely, and knowing where your new clients are coming from will allow you to do that.
Profitability of Each Matter
Whether you bill hourly, fixed fee or on contingency basis, you need to know the profitability of each of your matters. Profitability is revenue minus the costs. Seems simple enough – right? Revenue is simple to calculate as it is the amount of money that your client has paid you. Costs are a bit more difficult to calculate. Costs are not only the expense involved with the matter (filing fees, witness fees), but also include the cost of salary, benefits and other overhead.
To get the most accurate cost calculation, you and your staff should be tracking all your time and activities contemporaneously to determine the cost. To calculate the hourly cost of an employee, you can divide the employee’s salary by the number of hours worked in a year. For example, if your paralegal is paid $50,000/year including benefits and overheard, divide that number by 2080 (40 hr work week for 52 weeks), the hourly cost of the paralegal is $24.04. You can then compare this hourly figure to the amount collected for their work to determine the profitability. This may seem tedious, but that’s the only way to get an accurate calculation of your profitability.
When you bill hourly, you need to know the rate at which you are paid for your time. It doesn’t matter how many hours you charge your client if they don’t pay you. To calculate your realization rate, divide the amount you billed by the amount collected. For example, if you billed the client 20 hours and they paid you for 15, the realization rate is 75%. Any increase in realization will automatically mean greater profits for you.
Smokeball Gives You Firm Insights
Do you have the time to do the data gathering and analysis to obtain the business intelligence you need? The three KPIs described above are figures you should focus on every day, month, quarter and year.
With Smokeball, you can access these KPIs with a click of a mouse by simply using our legal practice management software. Smokeball automatically tracks your activities contemporaneously and associates it to the case or matter. It’s even ready for you to invoice right away. Smokeball will calculate your staff costs and give you the real-time profitability of each matter no matter if you bill hourly, fixed or on contingency basis. Want to know where your new clients are coming from? Smokeball will tell you exactly what the referral source is and percentages over the last 30 days so you can quickly and intelligently adjust your marketing dollars.
You went to law school to do law and not business. Let Smokeball take care of your firm so you can pursue your passion and practice law. Click here to see a demo of Smokeball.