How Legal KPI Can Maximize Resources

Key performance indicators are not just applicable to sales oriented organizations, to health facilities, or to banks and lending institutions. Even in legal-oriented companies or law firms, KPIs are very much in need. Why is this so — because no CEO will say that opting for higher costs is better, when one can operate on lower expenses? Unless, of course, there is data that will support the efficiency and effectiveness of the allocation of resources; unless there is a report that produces measurable values; unless managers focus on priorities, no CEO will gamble on expensive operation.

A business organization is never complete without the important cogs in the wheel — the different departments. These departments could be the accounting, sales, advertising, marketing, collection, billing, human resources, legal, and information technology. More often than not, only a few of these departments are allotted a significant chunk of the company’s resources. This is due to the fact that most managers, directors and even CEOs, decades ago, think that some of these departments are just petty and require fewer resources. They put lesser values on these sections, not knowing that they actually spend more on less important things, rather than what they believe as cost savings.

This is where performance management comes in, and in this part, KPIs or key performance indicators play a big role. See, what business managers perceive before as added expenses are now considered serious investments. For example, having an IT department was a subject of debate for the board of directors for companies back in the 70s and 80s. They believe it is not really that important to hire full time computer programmers and technicians to maintain their computer systems, so they opted to offer part time IT personnel. This goes without them knowing that the company would actually end spending more on lesser values.

This is why it is very important for a company, especially for a conservative and sometimes un-initiative organization such as a law firm, to consider weighing things and evaluate the performance of each department. KPI or key performance indicators are not factors for success, but these are specific areas and activities that are subject for measurement. It could either be financial or non-financial. But whatever it is, KPIs for a law company are a must. There are generally eight key performance indicators managers can draw. These eight KPIs are further categorized into four: the indicators for service levels, for customers, for external clients, and for operational efficiency.

Under the KPI for service levels, there are three indicators: morale and teamwork, turnaround, and accessibility. These are usually measured on a one to five scale. The next two indicators are found under the KPIs for customers. These are results and overall satisfaction. These two are measured using a five point index. The sixth KPI found under external clients is impact, measured using a three point scale. The last two indicators, categorized as operational efficiency are: legal services cost and performance of budget; both measured at a three point scale.

Measuring and managing the performance of the organization has never been easier, thanks to new hardware platforms and applications that help analyze values and data accurately. Yet it is clear, that without knowing the legal KPI, it is impossible to know whether the company has spent more on less or not.