Predictive Analytics

Law firms that aren't currently leveraging KPIs to measure progress are already behind. KPIs, or Key Performance Indicators, are benchmarks used to measure a department, firm, or practice group's progress, efficiency, and effectiveness. In other words, it is a direct, tangible measure of a group's performance. Law firms need them: Without an empirical way to measure progress, they simply cannot grow in a meaningful, organized and intentional way.

In this article, we will explain how law firms can and should use viable data sources (internal and external) to track their KPIs. We will also illustrate a few use cases on how to implement KPIs by relying on accurate, reliable court data, and share how firms that are not currently utilizing KPIs can start implementing data-driven decisions for meaningful growth.

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Using Court Data to Set KPIs

A KPI is a concrete, measurable value that establishes how effectively a company is achieving its top business objectives. In other words, companies use KPIs to take their pulse—to see how well they're doing in terms of achieving their stated goals. At the highest level, KPIs generally measure the performance of the company as a whole, while at a more granular level, they track the success of individual practice areas and attorneys within law firms.

KPIs are especially vital to growth-oriented law firms, as they provide a way to set and measure progress benchmarks. Firms can do this by leveraging reliable data sources, which can help attorneys within firms make data-driven business decisions.

Internal Data Sources

Building decisions upon accurate data sets can save firms money because they drill down into specific issues like a particular litigation department's average output, the revenue it brings in, how much it costs the firm, and how it compares to competing departments. This can, in turn, position decision-makers within law firms to better determine when a new hire, a layoff, or a general restructuring is necessary.

For example, consider a plaintiff's personal injury firm, which will likely face several upfront costs in each case: hiring medical experts, reconstructing accidents, and ordering client medical records, to name a few. The firm could use the dual internal data points of (1) the average revenue cases of a specific nature bring in, and (2) the average expense involved in such cases.

By examining these data points, the firm can make a reasoned, numbers-based decision about whether these types of cases are lucrative enough to continue taking. If a small-scale "neck pop" case, for instance, seems to be more trouble than it's worth, the numbers can spell out whether that's true: If the cases cost a great deal in terms of expenses as well as time and energy and result in small settlements, the firm can ultimately decide to stop taking them.

External Data Sources

However, internal data sources, alone, are not enough. It is important to combine internal sources with external ones, like court data. Court data—an outside, verifiable data source—adds to internal data sources by providing another point of reference for trackable KPIs.

For instance, if a personal injury firm taking cases on a contingency basis suspects it's falling behind competitors in terms of how long it takes to close certain types of cases, it can pull court data from competitor cases to see whether that's true and if so, how the firm can improve. What arguments are competitors making that seem to win the day? Are they consistently filing cases in the same venue? Which judges seem to repeatedly rule in their favor?

Layering and diversifying KPIs in this manner can provide firms with more meaningful, nuanced insights. Not to mention, with the rise of technology that allows attorneys to download court data in bulk via APIs, collecting it is far easier than it once was—so lawyers and firms have no excuse not to rely on these insights.

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Practical Use Cases for Law Firms

There are countless combinations of internal and external KPIs law firms can use to track and grow their law practice, but two instances in particular relate to (1) seeing trends in case volume and (2) providing clients with more certain cost and time estimates.

With access to court data for competitors, firms can compare internal metrics to uncover whether their case volume is higher or lower, and compare year-over-year caseload trends. They can also dig deeper to compare the average caseloads of their individual attorneys to their competitors and see whether their competitors are getting a higher volume of more profitable cases (auto accident vs. product liability). This information can then help firms set realistic goals for increasing or maintaining their case volume and develop strategies for improving their market share and profitability.

Firms can also create powerful selling points for clients by combining internal data points on the actual costs of handling a case through each stage of litigation along with data on the time it takes them and their competitors to close a case. First and foremost, providing more certainty to clients on both cost and time for resolving a case with the data to back it up can be a huge differentiator for firms. And, if firms happen to resolve the particular type of case involved faster than competitors, it provides a strong argument that they will end up saving clients more money over the life of the case, even if their hourly rates are higher. Typically, the longer a case takes, the more expensive it is.

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How to Get Started

Having access to reliable data sets is key to devising effective KPIs. In a recent Law Department Operations Survey, Alphaserve CEO Arup Das emphasized that the process of developing KPIs "starts with asking important questions. What are our goals? Are we trying to increase capacity by automating some work? Are we focusing on creating a better user experience? Can we better optimize how to get work done?" He recommends using these questions as guides and parlaying the answers into four or five measurable KPIs that firms and legal operations departments can use to start making data-driven decisions.

This is where court data comes in. By pulling real-time records from actual cases filed in relevant jurisdictions and practice areas, attorneys have access to accurate, concrete data points that they can then use to make informed decisions about growth, scalability, and diversification.

 

Josh Blandi is the CEO and Co-Founder of UniCourt, a SaaS offering using machine learning to disrupt the way court records are organized, accessed and used. UniCourt helps clients tap into the mountain of court data generated everyday for legal analytics, business intelligence and development, background checks, case research and many other innovative uses.