Key Performance Indicators to Track on Fixed Fee Files

Blog post - 31 March 2020

There are countless key performance indicators (KPI) you can track in your law firm, but only so many hours to go through the data. At the end of the day, you should ensure the KPI's you’re tracking will help you meet your business goals and solve business problems.

Fixed fee files offer unique challenges in terms of knowing which KPIs to track. You need to make sure that your fixed fee offering is profitable and that your clients perceive your services as adding value. But how?

These are common KPI's we see in law firms offering fixed fee arrangements:

Realisation Rate

Measures: the difference between the time recorded and the percentage of that time that is paid by the client.

Why it’s useful: it is commonly used to determine rates for fixed fee arrangements.

The realisation rate on any file in an ideal world is 100%, however, unbillable time and time write offs often result in rates closer to 70%. By leveraging fixed fee arrangements, you can consistently collect a higher proportion of the time spent on a file. And this metric will help you determine what the fee should be.

A convenient byproduct of the realisation rate is that it lets you know where you and your team are spending time on files. Using this data, you can draw conclusions about inefficiencies and areas for improvement. Since you know how much time inefficient processes are taking, it’s easy to assess the ROI on any investments.

Employee Engagement

Measures: how satisfied the members of your team are with their jobs.

Why it’s useful: it is a powerful tool for predicting employee retention, assessing leadership, promoting productivity, and reducing burnout.

Engaged employees are safer, healthier, happier, at work more often and more likely to stay with your firm. It’s worth keeping track.

National benchmarks and targets for employee engagement are readily available and comparisons can be made at a micro level and a macro level within your company. Additionally, it’s a simple task to compare performance over time.

Employee engagement tracking tools allow companies to track engagement without building their own system.

Invoices challenged

Measures: proportion of invoices challenged by your clients.

Why it’s useful: it allows you to identify areas for improvement and informs decision making about fee structure.

You can use the proportion of invoices challenges to determine what’s working with any changes you make to your fee structure - and what’s not. Legal customers have exhibited a strong preference for fixed fee arrangements that reflect the value-add of legal services. You’d therefore expect a lower proportion of the fixed fee bills to be challenged by your clients.

This metric can also be used to gain insight into client satisfaction with your team. You can compare rates across your firm and see where there’s room for improvement.

Client referrals

Measures: the number of client leads each month from your existing customers.

Why it’s useful: it provides insight into your customer excellence.

Client referrals are a simple way to measure customer satisfaction without gathering data from your existing clients. It’s a low budget and low effort measure that allows you to gauge whether you have satisfied customers.

This metric can also be integrated with others to determine your firm’s total spend on client acquisition. Over time, this will help you make crucial marketing decisions.

How TIQ Time can help

TIQ Time can help you meet your firm’s financial and cultural goals. Our automated time tracking app makes it easy for you to track all the time you’re spending on files, not just what you remember to input. So, you can accurately measure the true realisation rate on your files with no time leakage.

What’s more is that your employees spend more time on what counts, and less time on billing, so they’re more engaged. And your customers can see what goes into their file, so it’s easy to demonstrate the value you’ve added - on billable and fixed fee files.

This adds up to happier clients and happier lawyers. The referrals will follow.
Get in touch to schedule a demo.