Asked and Answered

By John W. Olmstead, MBA, Ph.D, CMC

Q. I am the managing partner of a three attorney personal injury plaintiff firm in Indianapolis. We have a total of 600+ open PI files. What are some of the key financial metrics/indicators that we should be using to manage the practice?

A. From your case count it is obvious that you a managing a high volume practice. In addition to selecting the right cases, managing your inventory (case portfolio) is crucial as is managing and monitoring the effectiveness of your marketing investments. Here are a few metrics that you might consider incorporating into a one page report with trend line charts. You can design the report in Excel and pull the numbers from detail reports from your case management system:

Plotted by Month

• Fees Collected by Case Type 
• Number of New Client Appointments Made
• Number of New Client Appointments Kept
• Number of New Cases Conditionally Signed
• Number of New Cases Accepted/Opened
• Number of Later Case Dumps
• Ratio of New Cases to Dumps
• Number of Demands
• Number of Files Closed
• Number of Open Cases - by Case Type
• Total Open Cases
• Number of Open Cases Per Lawyer
• Average Age of Open Cases (Turnover)
• Expected Fees - Value of Case Inventory by Case Type (Expected Value)
• Total Expected Fees - Value of Total Case Inventory/Pipeline
• Average Case Fee
• Marketing/Referral Source - No of cases opened each month by referral source.

This will get you started.

Income statements/profit and loss statements are nice history lessons but they don't help you manage the productive operations of the firm.

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John W. Olmstead, MBA, Ph.D, CMC,(www.olmsteadassoc.com) is a past chair and member of the ISBA Standing Committee on Law Office Management and Economics. For more information on law office management please direct questions to the ISBA listserver, which John and other committee members review, or view archived copies of The Bottom Line Newsletters. Contact John at jolmstead@olmsteadassoc.com.