KPIs for Law Firms
These are the KPIs a law firm tracks to turn billable time into cash. Utilisation, realisation and collection together show how much of the work becomes revenue.
The KPIs to track
Utilisation rate
Billable hours divided by available working hours for each fee earner.
Realisation rate
The value billed divided by the value of recorded time at standard rates.
Collection rate
Cash received divided by the amount billed.
Lock-up days
Days of work in progress plus days of unpaid billed fees, showing how long cash is tied up.
Matter profitability
Revenue from a matter minus the cost of the time and expenses spent on it.
Days sales outstanding is the average number of days it takes to collect payment after a sale.
Formula and SQL query on the Days Sales Outstanding (DSO) page.
Customer concentration ratio is the share of revenue that comes from your largest few customers.
Formula and SQL query on the Customer Concentration Ratio page.
Revenue per employee is annual revenue divided by average headcount, a rough measure of workforce productivity.
Formula and SQL query on the Revenue per Employee page.
Where the data usually lives
A practice or case management system, time recording, billing and the accounting ledger.
Measurement mistakes to avoid
- Time recorded late makes work in progress look smaller than it is; check recording lag.
- Fixed-fee matters need effective hourly rate rather than simple billed hours.
- Client money held on account must not be counted as revenue.
Questions to ask your data
You can type these as plain questions. SchemaChat turns each one into SQL against your connected database or uploaded file, runs it, and shows the SQL and the figures it used so you can check the answer before you share it. Check that the result matches how your business defines each KPI.
- What are utilisation and realisation by fee earner this quarter?
- How much unbilled work in progress do we hold, by age?
- Which matters are the least profitable?
- How long do clients take to pay?