I’m going to take a crack at a list of things that your law practice probably tracks and measures:
- The number of hours each lawyer works
- The number of hours each lawyer bills
- The amount of money the firm receives for the work it bills
- The percentage of that money that should be allocated to the originating partner
- The amount of money the firm spends to provide its services
- The amount of overall profit the firm generates in a given period of time
- The amount of that profit distributed to each equity partner
- How that amount compares to profits distributed in previous time periods
I can’t envision a law firm failing to measure and track the foregoing items — this seems like the absolute minimum required to operate a law firm of any size. But most firms track and measure very little beyond these basics. Some calculate the percentage of hours billed divided by hours worked (utilization) and the percentage of money collected divided by money billed (realization). Some go so far as to measure overall client satisfaction rates and compare them to previous ratings. A rare few obtain median billing rates for their markets and practice areas and compare their own rates to these standards.
All of this is fine. But I have yet to encounter a law firm, from the most modest solo to the largest global monolith, that measures one particular thing: whether and to what extent the firm has delivered the outcome the client paid it for.
This, if you pause and consider it for a moment, is a little staggering. Law firms exist to do exactly one thing: to deliver outcomes to paying clients. That is their entire market rationale. That is why clients give them money and wait very patiently for a return on that investment. Yet I can’t name a law firm that systematically, at the end of each client engagement, tracks whether it has delivered on the promise it made to each client in the retainer agreement for that engagement. And I’ve been asking about it, at conferences and legal industry events in many different jurisdictions.
Does your firm do this? Do you have a central record repository, anything from a basic Excel spreadsheet to the most complex Gantt Chart you can devise, that systematically keeps track of:
- What the firm promised to do for a client in a given engagement
- What parameters (time, budget, communications, other assurances) attended that promise
- Whether the firm fulfilled its promise and delivered the outcomes in its retainer letter
- Whether and to what extent the client agrees with the assessment directly above
And if so, do you:
- take follow-up action on every engagement that the firm and/or the client believes fell short of what was promised, and
- track how the firm’s rate of success in honouring its commitments and delivering on its promises varies over time?
Because if you do, please share it in the comments below, along with as much detail as you care to divulge. Partly so that I can point to at least one firm I’ve encountered in all my travels that does this one fundamental thing, and partly so that all the other firms whose lawyers read this post can benefit from your experience and wisdom.
The whole reason we’re in business, folks, is to meet our clients’ needs. It is literally, the single most important thing we do. Every time a client hires your firm to do something, you create and send out a retainer document that describes in detail what those needs are and what you’re charging the client to do about it. Do you systematically look back on that document and ask if the client received what you promised therein? If not, I’d like to suggest that you start.