Law firm KPI: Attorney Productivity



Next up on our KPI or key performance indicators journey, we shift to tracking staff production. Our firm works with mid-market firms, and once you start to have more than five attorneys on staff, you need to follow these metrics to have a successfully growing law firm.

Utilization Rate

Monitoring billable hours for your staff is an essential metric to track. It is as simple as how many hours the staff attorney or attorneys work per day and how many hours are being billed as billable client work. The utilization rate is the percentage of an employee’s total working hours that are spent on work that can be billed to a client. No one works on billable time for 40 hours per week as there are meetings, lunch, training, and other activities that are not billable.

However, this is a good metric to track as it will show the partners or owners of a law firm if a staff member is not producing. Once that is revealed, it’s vital that you have a conversation about the production with the staff member. This measurement is commonly known as the utilization rate. It's just a simple division calculation. But it's very eye-opening to see the percentages.

Why track this measurement? A healthy utilization rate equals a thriving firm, which is essential to calculating your total overhead cost. While there is no magic percentage for a healthy utilization rate at a law firm. One that nears 100% means the firm is overworking its staff. It should never be held as a badge of honor.

Realization Rate

Realized bills are bills that have been paid. As seen in this other article about writing down hours, write-downs can significantly affect the bottom line. But if the attorneys at your firm are in charge of collecting and tracking their own accounts receivable, the realization rate is a far more critical metric to track.

If your staff is writing down excessive hours or not staying on top of the billing, it can seriously affect the law firm's bottom line.

Accounts Receivable

Having a system in place to monitor and track accounts receivable, even if each attorney is in charge of their own billing, is imperative to a healthy law firm.

Many firms struggle with accounts receivable because they leave it to the attorneys, which is sometimes a missed task. Let's face it: collecting from a client on an unpaid balance is not fun.

Accounts receivable collection is one of the services we offer at our firm. Sometimes it's easier for the outside accounting firm to jump in and assist with helping to collect on any outstanding billings. Additionally, inside QuickBooks Online Advanced, there are some workflows that you can turn on to automate a good portion of this process.

I hope this article plants the seed if you know your firm is struggling with large amounts of uncollected invoices. These two KPIs are a great way to monitor if an attorney is doing good work for your firm.

Lastly, as I mentioned in the article a couple of weeks ago, the client satisfaction score is another component of understanding how your staff is doing at the firm.

At our accounting firm, we've created and designed a specialized report card type report for our clients who want to monitor their staff. We include these metrics and a few others to let the law firm partners understand which attorneys are producing and which ones may need some guidance.

We include goal setting and a few other items to make this system work well for law firm owners to monitor their staff.

If you want to learn more, reach out. We'd love to discuss helping you with your accounting, data migration, or helping you with tracking these crucial metrics for your firm.