Legal Practice Management: How to Optimise Your Law Firm’s Operations & KPIs

Managing a legal practice efficiently is no easy task. Law firms must juggle numerous responsibilities between handling client relationships, tracking billable hours, and ensuring compliance. An intelligent legal practice management system can streamline operations, improve profitability, and provide measurable data for key performance indicators (KPIs).

This article explores the fundamentals of legal practice management, the most critical law firm KPIs, and how firms can leverage AI-powered solutions to maximise efficiency and profitability.

Legal Practice Management (LPM) refers to law firms’ strategic and operational processes to handle their cases, clients, finances, and internal workflows. A well-optimised legal practice management system ensures that law firms can:

✔️ Streamline administrative tasks

✔️ Improve client relationship management (CRM)

✔️ Enhance time and billing efficiency

✔️ Reduce profit leakage

✔️ Ensure compliance and risk management

Crespect has integrated all of these functions into a single platform, helping firms save time and increase revenue.[1] [2] Instead of juggling siloed data on multiple platforms, we deliver it all on one intelligent legal practice management tool, which also has built-in CRM features.

Without a structured approach to practice management, law firms face common challenges such as:

• Unbilled hours due to inefficient tracking
• Missed deadlines due to poor task management
• Delayed invoicing and collections
• Lack of financial visibility, affecting profitability

AI-powered legal practice management tools—such as Crespect—offer solutions that optimise legal workflows, reduce errors, and increase overall profitability.

To measure success and financial health, law firms must track specific KPIs. The most critical legal KPIs include:

This is a timeless classic. Every law firm measures it per lawyer, per team, per practice group. Don’t forget monthly analysis, quarterly and annual comparisons. Even if this metric sometimes feels like a relic from the Jurassic period of business models, it still has survived.

The problem isn’t the billable hour itself—it’s when firms rely on it exclusively. Let’s explore further how a law firm could draw more measured performance conclusions.

This KPI measures the percentage of a lawyer’s billable working hours for clients.

Formula: (Billable Hours ÷ Total UsedHours) × 100

How to Improve: Use time-tracking tools to accurately capture every billable and non-billable hour. At Crespect, users can track time invested in client relationship management or hours spent on internal operations such as knowledge management, marketing, or mentoring.

This KPI reflects the percentage of recorded billable hours that are actually billed to clients.

Formula: (Billed Hours ÷ Billable Hours) × 100

How to Improve: Ensure accurate time tracking and optimise invoicing processes.

This measures the percentage of billed invoices that are successfully collected.

Formula: (Collected Revenue ÷ Billed Revenue) × 100

How to Improve: Implement automated invoicing and follow up on late payments.

This KPI measures the number of hours and value of billable work that has been performed but not yet invoiced.

Formula: (Unbilled Revenue ÷ Total Revenue) × 100

How to Improve: Leverage intelligent notification centre, reminders and automated invoicing flow, leaving no unbilled hour unnoticed.

Measures how much revenue is locked up in unpaid invoices.

Formula: (Uncollected Revenue ÷ Total Revenue) × 100

How to Improve: Automate invoicing and enhance collection monitoring.

Measures the percentage of repeat clients.

Formula: ((Clients at End of Period – New Clients) ÷ Clients at Start of Period) × 100

How to Improve: Strengthen client engagement through automated case updates and personalised interactions.

According to Aku Sorainen, founder of Crespect and senior partner of the law firm Sorainen, collecting strong data beyond billable hours is the only means to make decisions about a firm’s performance.  According to Aku: „If we don’t get enough quality data in the system, then we can’t analyse the data: trash in, trash out.”

At Sorainen, they have around 40 different performance indicators, and the importance of those indicators depends on the lawyer and their strengths and weaknesses. Thus, the firm relies not on strict requirements but on a flexible system that focuses on individual aspects. To strengthen such a data-driven culture, they have found it helpful to measure not only such statistical factors as utilisation, realisation rates, and delay-days of data entering the system but also the following:

• How proactive is the lawyer in developing important client relationships?
• How valuable is it for a lawyer to make the CRM entries for other lawyers?
• How many debriefing notes do different teams make?
• How many outbound referrals to clients and foreign law firms do partners and lawyers make?

Eventually, measuring these activities impacts the firm’s culture, and all people, including partners and lawyers, become more disciplined in entering relevant data into the system.

As Aku puts it well: „When we can create such a culture where all lawyers are responsible for entering, managing and sharing data, we can start entering opportunities to use economies of scale, data-analysing tools and of course, AI tools.”

A legal practice management system provides real-time insights into these KPIs, helping firms make data-driven decisions. Here’s how:

• Automated Time Tracking & Billing – Reduces lost billable hours
• Live Financial Monitoring – Improves realisation & collection rates
• Integrated CRM – Enhances client engagement and retention
• Task Automation – Prevents missed deadlines and inefficiencies
• Smart notifications and alerts – support budget control and help lawyers avoid overbilling
• Custom Reports & Dashboards – Provides visibility into firm performance

A solution like Crespect ensures that law firms maximise profitability, improve efficiency, and reduce administrative overhead.

Optimising legal practice management is essential for any law firm looking to scale and remain competitive. By tracking key KPIs and leveraging AI-powered legal tech solutions, firms can reduce profit leakage, enhance operational efficiency, and improve client satisfaction.

With Crespect, you can give your team an all-in-one tool built on state-of-the-art law firms’ practices. As a result, it is a frustration-free case. Time and client relationship management featu
res are only a few examples of what you can expect.

Is your law firm ready for the next level of efficiency and profitability?