Is Your Law Firm Fulfilling Its Purpose?
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.
Hi Jordan,
Have you reached out to Peter Aprile at Counter Tax? They’re doing some interesting data analysis.
I’m looking forward to hearing it!
Hi Jordan.
Thanks for another helpful article!
It seems to me that those lawyers/firms that are providing unbundled legal services are uniquely positioned to seek and track this kind out outcome data. The detailed retainer letters required for Unbundling map out exactly what the lawyer will do (and what the client will do) towards a particular end. These lawyers could easily implement a short client survey at the conclusion of the engagement seeking client feedback about outcomes. We are inviting this kind of client feedback as part of the evaluation of the BC Family Unbundled Legal Services project, including whether the services contributed positively to the well-being of the client and children, if any. All part of the movement towards client centred services. If they aren’t doing the kind of tracking you suggest already it would not be difficult to start.
Although it is implicit in your article, it could be emphasized that without this information lawyers will not know how to improve their services (and client outcomes) to keep or grow market share.
Keep up the great work!
Kari
Thanks for the post and for creating a venue for discussion on this.
My practice of 5 lawyers offers flat rate immigration legal services. It is clear that clients don’t care how productive one lawyer in the office is versus another or how much time it took to prepare their matter. What they do care about is how much will it cost and the result. We have our fee list published online. We track outcomes and periodically send surveys to clients to check on the degree of client satisfaction and where we fall short. We are constantly tweaking our processes to make sure we are efficient and transparent. All the lawyers in the officer work together, there are no billable hours or targets, only salaried lawyers and a work culture that emphasizes professional excellence, collaboration amongst the lawyers in the office and an amazing client experience. Although we have the ability to do so (via PC Law), I consciously don’t track certain things, for example, individual lawyers’ productivity, because I think it would erode the team-focused approach to our practice.
If we don’t meet the client’s expectations (either in the outcome or in the time it took to achieve the outcome), we either reduce our fees or make up the loss to the client in the next matter we do for them. No clients expect guaranteed results, but they are delighted when we deal with problems head on and present a workable solution, especially without having to ask us. What we aim for (with the flat rates, collaborative office, and client-centered approach) is to have well-informed clients whose interests are aligned with ours. A quick and positive result for them means a larger profit margin for us, so win-win. And if things go off the rails, they want to know the options and that we have their back and the loss is shared.
After 15 years in practice, I fail to see how tracking things like utilization and realization advances the clients’ interests or does anything for the workplace culture but promote competition and hard-feelings among colleagues.
Thanks again!
Liz
North Star Immigration Law Inc.
Halifax, Nova Scotia
My comments are within the context of government where there is sometimes great interest by certain external stakeholder groups who want to know in general:
a) normal turnaround service time OR
b) the company completing contracted work for govn’t, needs to be reminded their current work deliverable outcome. (usually it’s a unsatisfactory situation…if the reminder is sent out).
In a way, just even having a general understanding of normal turnaround times to complete simple vs. more complex client case file, might be a useful picture for a firm.
There could also be note on other parties delaying the completion of the client case file..(ie. court delays, client providing right information as requested by lawyer, etc.). It seems to imply “target” vague completion expectation. How would that be so negative if the client case is not overly complex? The reality, we already have in certain areas of govn’t service delivery, general turnaround times for …inspections, providing a permit to applicant, etc.
The clients do it. I know of at least one insurer that conduct random file audits on its defence panel law firms based on those parameters you mentioned…and more. Then the firm gets a “report card.”