As the final quarter of the year 2023 approaches and many law firms are preparing to revisit not only their budgets but also their strategic key performance indicators, Crespect, a developer of intelligent legal practice management systems, hosted a webinar on how to measure and target the success of a law firm.
The webinar featured speakers Stephen Revell, a former Freshfields partner, consultant, co-author of several books, and the creative mind behind Making Change Happen Consultancy, and Aku Sorainen, founder and senior partner of law firm Sorainen and a founder of a legal tech spin-off, Crespect. They shared valuable tips on how to define appropriate measures and incentivize the relevant behaviors to advance a law firm.
Success Targeting Starts from Value-Based Foundation
Stephen Revell, who was a partner at Freshfields for more than 30 years, emphasised that measuring the performance of law firm leadership should be done with cultural values in mind.
These are our partners, not our employees. The sense of firm, the sense of partnership and values we ascribe to as partners in a law firm all are reflected in the firm’s culture.
Aku Sorainen agreed that culture is a fundamental aspect of any law firm. Culture is often overlooked because it is intangible. According to Aku, law firm leaders should prioritize strengthening their culture, as it promotes alignment among the partners. Better alignment toward mutual goals increases efficiency, collaboration, know-how sharing, overall work quality, client satisfaction and profit. Finally, it makes the work much more fun. Alignment strengthens the culture and vice versa.
KPIs Should Encourage Collaboration Rather Than Competition
Many firms do not clearly define the role of a partner, and there should be careful consideration of how firms evaluate partners. Stephen Revell warned that “firms doing it based just on numbers might be missing a trick. Evaluating partners solely based on numbers can be counterproductive and encourage gaming the system.”
Clearly defining partners’ expectations and measuring performance against these KPIs is an excellent starting point. Aku Sorainen shared that having numerous KPIs from various angles is another key to success. “Having fewer than 10 is insufficient. Essentially, any process in a law firm can be measured and turned into KPIs, with 40-50 providing a better representation of partners’ entrepreneurship and performance. Also they allow to indicate partners’ differences and their strengths and weaknesses.”
During the conversation Stephen outlined five areas where law firms should use KPIs to measure their success:
- Finance: including KPIs related to revenue, profit, collection and others.
- Time spent on different activities: not only spent on clients but also people, knowledge management and similar tasks.
- Collaboration: evaluating how often partner involves other practices and other partners in client matters.
- Client interaction: assessing not only the time spent and the number of client meetings but also the quality of such engagements.
- People interaction: considering aspects like mentoring, training, and participation in training sessions, both as a giver and supporter.
While KPIs are important, a comprehensive assessment of a partner combines hard numbers with a subjective view of people and their contributions to the law firm’s success.
You are invited to watch the webinar and learn about the balance between objective and subjective measures from the webinar recording on LinkedIn or YouTube:
The Convincing Technology and Inspiring Data Can Lead to Results
Experts agreed that partners need a clearer understanding of what they can do better, and regular performance reviews can play a significant role in achieving success. When most of the data is activity-based, there is little room for bias; data is either correct or incorrect. Implementing a system that ensures data accuracy is key to measuring leadership performance.
As Aku Sorainen succinctly put it, “If the management of a law firm can successfully implement a reporting system that produces correct and convincing information, it is often surprising how quickly the firm will start producing what is being measured, since ‘you get what you measure’. Otherwise, it’s trash in – trash ou.”
Karolina Šilingienė, co-founder of Crespect, who moderated the webinar, concluded by reminding attendees that technology like the intelligent legal practice management system Crespect can bring order and can help law firms measure and achieve their goals.