The Future of the Legal Profession
  • Home
  • Manifesto
  • Blawg
  • My Books
  • Book Synopsis
  • Sample chapter
  • Value Pricing
  • Store & Links
  • FAQ's
  • Loan Application Form
  • Blog

How to Access Your Legal Documents with your iphone.

27/7/2010

0 Comments

 
 With thanks to Danny Johnson, Attorney, Salt Lake City
0 Comments

Find Something Worth Changing.

14/7/2010

0 Comments

 
0 Comments

The Only Measurement Your Firm Will Ever Need - By Ron Baker

9/7/2010

0 Comments

 
There is a famous saying, often referred to as the McKinsey Maxim, named after the famed consulting firm: “What you can measure you can manage.”

This has become such a cliché in the business world that it is now either hollow or meaningless.

Companies have been counting and measuring things ever since accounting was invented but this has now become meaningless because it does not tell us what ought to be measured.


Besides, has the effectiveness of management itself ever been measured? How about the performance of measurement?

Measurement for measurement sake’s is senseless, as quality pioneer Philip Crosby understood when he uttered, “Building a better scale doesn’t change your weight.”


The Triple Crown Criteria

In his book, From Worst to First, Gordon Bethune details how he was able to turn around the failed US airline Continental, which had filed for  bankruptcy twice in the preceding decade, between February 1994 and 1997, turning it into one of the best and most profitable airlines in the sky today.

It is a remarkable story, and it illustrates the importance of utilising leading key predictive indicators (KPIs) to focus the entire organisation on its purpose and mission. Not key performance Indicators.

Bethune basically tracked three leading Key Predictive Indicators (KPIs), known as the “Triple Crown Criteria” in the airline industry:

  1. On-time arrival
  2. Lost Luggage
  3. Customer complaints
What makes these three KPIs leading is that they measure success the same way that the customer does. And that is critical because, ultimately, the success of any business is a result of loyal customers who return.

None of the three indicators would ever show up on a financial statement, but, as the airlines have learned over the years—by testing the theory—they have a predictive correlation with profits.


Is there a Triple Crown Criteria for Law Firms?

Now that there are well over a thousand firms that have trashed timesheets, VeraSage Institute is proud to announce, based upon empirical evidence, the Triple Crown Criteria for Professional Knowledge Firms (PKF's) such as Law Firms.

We are emphatically declaring that the following three KPIs are all your firm ever needs to track to predict future customer loyalty and buying behaviour.

Think about it: If an airline can run on three KPIs, why can’t a Law Firm?

An airline is far more complicated than any Law Firm, which is what makes KPIs so powerful: they are measurements (or judgments) guided by a theory.

But the theory is the senior partner. It’s not just measurement for the sake of measurement. It’s measuring—and judging—what actually matters, to customers.
It’s defining the success of your firm the same way the customer does, just like with the airline KPIs.

The Three KPIs


Turnaround Time

Michael Dell likes to refer to the time lag between a customer placing an order and the company assembling and shipping the finished product as "velocity".

We believe professional firms should also be diligent about tracking when each project comes in, establishing a desired completion date, and measuring the percentage of on-time delivery.

As Ed Kless senior fellow at the VeraSage Institute always points out, a firm can measure “time spent” or “duration.” The latter is the only thing that matters to the customer, hence that’s what needs to be tracked.

This prevents procrastination, missed deadlines, and projects lingering in the firm while the customer is kept in the dark.

Imagine installing 360-degree webcams everywhere in a Law Firm. Also imagine customers being able to log onto a secure Web site, type in their names and passwords, and the appropriate web camera would find their project and give them a real-time picture of it, probably laying on a lawyer or manager’s floor awaiting review.

Would this change the way work moved through a firm? Would this hold the firm accountable for results, not merely efforts?


Customers don’t want to hear about the labour pains—they want to see the baby.

FedEx and UPS do exactly this; and in fact some US law firms utilise intranets that provide their customers with real-time access to the work being performed on their behalf.

This one metric would go a long way towards mitigating most of the reasons customers defect from firms (not kept informed, feel ignored, and so on).

Value Gap

This measurement attempts to expose the gap between how much the firm could be yielding from its customers compared to how much it actually is.

It is an excellent way to reward cross-selling additional services, increase the lifetime value of the firm to the customer, and gain a larger percentage of the customer’s wallet.

Marriott International uses predictive analytics through its Hotel Optimisation program. Marriott has developed a revenue opportunity model, comparing actual revenues as a percentage of optimal prices that could have been charged. It attributes the narrowing of this gap, from 83 to 91 percent, to this metric.


One accountancy firm made this calculation part of its partner compensation model. What actions can your firm take to close the value gap?

High Satisfaction Day™

I am indebted to John Heymann, CEO, and his Team at
NewLevel Group, a consulting firm located in Napa, California, for this KPI.


When John’s firm held a retreat for the purpose of developing their KPIs, the suggestion of High Satisfaction Day (HSD) was made.

An HSD is one of those days that convinces you, beyond doubt, why you do what you do. It could mean landing a new customer, achieving a breakthrough on an existing project, receiving a heartfelt thank-you from a customer, or any other emotion of exhilaration that makes you happy you got out of bed in the morning.

Sound touchy-feely? John admits it is; but he also says the number of HSDs logged into the firm’s calendar is a leading indicator—and a barometer—of his firm’s morale, culture, and profitability.

Is this too Simplistic?

No.

Compare the above KPIs to what most Law Firms are measuring now—billable hours, utilisation rates, realisation rates, write-downs, write-offs, and other internally-focused metrics that have nothing to do with how the customer defines the success of their firm.

These metrics have zero predictive ability when it comes to future customer behaviour. They are lagging indicators, not leading.

Stop measuring things that don’t matter, and focus on what does matter. The above three KPIs will work in any Law Firm that chooses to adopt them.

The VeraSage Institute stands by this Triple Crown hypothesis for all PKFs.

Prove them wrong.

We’ll all enjoy losing the argument, because it means we’ll learn something new. 

Copyright Ron Baker 2010 VeraSage Institute
This article first appeared on
http://www.verasage.com/index.php/community/
 
on 8th July 2010
0 Comments

    Author

    After many years paying lawyers,I became one in 2005 Just in time for the largest upheaval in the law since records began. Brilliant. Exiting times ahead.

    Disclaimer.  The thoughts, ideas and comments on this Blawg ("Blawg - a legal Blog) are my own and not to be confused (unless otherwise stated) with anyone else and certainly not of anyone in the Firm where I used to work and they are not the views of the firm where I used to work.

    Tweets by @ray_mclennan

    Archives

    April 2019
    December 2018
    September 2018
    August 2018
    April 2018
    September 2017
    November 2016
    September 2015
    January 2015
    May 2014
    November 2013
    September 2013
    August 2013
    July 2013
    June 2013
    May 2013
    April 2013
    March 2013
    February 2013
    January 2013
    December 2012
    November 2012
    October 2012
    September 2012
    August 2012
    July 2012
    June 2012
    May 2012
    April 2012
    March 2012
    February 2012
    January 2012
    December 2011
    November 2011
    October 2011
    September 2011
    August 2011
    July 2011
    June 2011
    May 2011
    April 2011
    March 2011
    February 2011
    January 2011
    December 2010
    November 2010
    October 2010
    September 2010
    August 2010
    July 2010
    June 2010
    May 2010
    April 2010
    March 2010
    February 2010
    January 2010
    December 2009
    November 2009
    December 2008

    Categories

    All
    10 Rules That Govern Groups
    10 Things That Don\'t Matter
    10 Things That Matter
    3 Choices
    Abs
    Accounts
    Advertising
    Appreciation
    Apps
    Bentley Cars
    Budget
    Cards For All
    Change
    Change Hints
    Charities
    Clay Shirky
    Close Vote
    Coaching
    Competition
    Confirmation Bias
    Conformity
    Creative Destruction
    Customer Service
    Deloitte
    Depression
    Disruptive Technologies
    Droids
    Earning Capacity Of Lawyers
    Economics
    Elephant
    Entrepreneurs
    Facebook
    Fee Income
    Fees
    Frogs
    Fti
    Gene Poool
    George Marshall
    Getting It
    Glasgow Bar Association
    Govan Law Centre
    Government Initiatives
    Group Psychology
    Iphone App
    It Based Law
    John
    KPI\'s
    Laptop Lawyer
    Law As A Commodity
    Law Firm Broker
    Law Firm Start Up
    Law Society
    Leadership
    Legal Docs
    Legal Education
    Legal Firms\' Accounts 2009
    Legal Services Bill
    Legal Websites
    Marketing
    Mdp
    Measurement
    Mental Health
    Mergers
    Minimum Wage
    Modernise Or Die
    More Sales
    Musings
    New Technology
    Office Politics
    Online Docs
    Overcharging
    Partnerships
    Pep
    Perceived Indifference
    Pkf
    Pro Bono Work
    Pro-Bono Work
    Pwc
    Royal Faculty Of Procurators
    Rss Feed
    Sales
    Self Esteem
    Self-esteem
    Self Improvement
    Seo Strategies
    Seth Godin
    Socialism
    Social Media
    Solutions
    Substance Abuse
    Tax
    Tesco Law
    The Firm
    Trainees
    Tribes
    Trust
    Turnaround Time
    Twitter
    Two Killers
    Value Pricing
    Values
    Verasage
    Verasage Institute
    Websites
    Who Gets It?
    You Tube

    View my profile on LinkedIn

    RSS Feed

    Buy1GIVE1 - Transaction Based Giving