Blog · Board and management reporting · Law firms
The ten client KPIs a law firm should run on, each with its formula, the export it comes from and what it tells you: practice areas per client against the norm, dormant clients by prior fees, billing and collection realisation by client, lock-up by client, partner book concentration, cross-referral between partners, matter profitability by leverage, client fee concentration, share of client legal spend, and new matter origination. Also the three measures most firms miss, the figures to drop, the identities, and who owns what.
A law firm's clients belong, in practice, to individual partners, and its reports are organised by partner and practice. The measures that matter turn the view round to the client: what each one uses, what it has stopped sending, what it really pays, and how much of the firm's cash it is holding.
| # | Measure | Formula | Export | What it tells you |
|---|---|---|---|---|
| 1 | Practice areas per client against norm | Practice groups with fees in 24 months ÷ median for clients of the same type and size | Practice management system | The cross-selling list, by client and practice |
| 2 | Dormant clients, by prior fees | Prior-year fees of clients with no new matter in k × their own typical interval ÷ prior-year fees | Matter intake records; billing | Clients who have begun instructing another firm |
| 3 | Realisation by client | Billed ÷ time at a fixed standard rate; collected ÷ billed; trend per client | Time and billing; cash | Discounts that grew without a decision |
| 4 | Lock-up by client | (Unbilled work in progress + unpaid bills) ÷ average daily fees, per client | Work in progress and receivables ledgers | Clients the firm is financing |
| 5 | Partner book concentration | Share of each partner's fees from their largest client and top three | Billing by originating and responsible partner | Books that depend on one client |
| 6 | Cross-referral | Matters opened for a client by a partner other than the relationship partner, sent and received, per partner | Matter intake records | Who shares clients and who keeps them |
| 7 | Matter profitability by leverage | Margin per matter; hours by grade delivered against hours by grade priced | Time records; matter budgets | Partner time on work priced for associates |
| 8 | Client fee concentration | Top ten clients' share of fees; largest client share; effective number of clients | Billing | Dependence at firm level |
| 9 | Share of client legal spend | Fees from the client ÷ estimated external legal spend, by source grade | Billing; client disclosures and estimates | How much of the panel spend the firm holds |
| 10 | New matter origination | New matters and first-year fees by source: existing client, referral, pitch, directory | Matter intake records | Where growth actually comes from |
Every one of these is computed per account, per partner and practice group, and in total, and every one carries an identity that must hold before the table is shown.
Practice area gaps per client. Reports run by partner and practice. No report lists, per client, the practices it does not use.
Realisation per client over time. A write-off here, a courtesy discount there, and a client is at 74 percent that was at 92 three years ago.
Cross-referral. Origination credit is tracked carefully. Who introduces colleagues to their clients is not.
A client paid $410,000 last year, all for employment work. Similar clients use four practice groups. It opened eleven new matters the year before and four this year, none in the last seven months. Realisation on its matters has moved from 91 to 78 percent over three years through write-offs on nine matters. Lock-up is 164 days. The relationship partner describes the client as solid.
Billable hours as a client measure. Hours are an input. Realised fees and margin are the result.
Number of clients. Most firms have hundreds of one-matter clients that distort any count.
Pitches made. Without win rate by source it measures effort.
| Table | Must hold |
|---|---|
| Realisation | Time at standard = billed + written off + written down + open work in progress |
| Lock-up | Client work in progress and debtors sum to the ledgers |
| Practice areas | Client fees by practice sum to client total; client totals sum to firm fees |
| Cross-referral | Referrals sent across all partners = referrals received |
A table whose identity fails is a table with a row missing or counted twice. It is not shown until it is fixed.
| Measure | Owner | Reviewed |
|---|---|---|
| Dormant clients; lock-up by client | Relationship partners; finance | Monthly |
| Practice area gaps; cross-referral | Managing partner; practice heads | Quarterly |
| Realisation by client; matter profitability | Practice heads; finance | Quarterly |
| Concentration; share of client spend; origination | Managing partner | Twice a year |
A measure with no owner is a metric, not a KPI; see KPI versus metric versus measure.
Ten measures from time and billing, matter intake and the ledgers. Turn every report round to the client, and the gaps, the drift in realisation and the cash being financed all become visible. Covirage computes all of them from the exports law firms already produce, files only, with the definitions stated and the identities checked. See Covirage for law firms.
Because a corporate client that uses the firm for employment and nothing else almost certainly buys property, commercial and disputes work from another firm. Compared with similar clients who use four practice areas, the gaps are specific and can be valued. It is the cross-selling list most firms talk about and few produce.
A client that instructed every quarter for years and has opened no new matter in nine months has usually begun instructing someone else. Nothing marks the moment. Measured against the client's own pattern of new matters, dormancy appears months before the fees fall, because open matters keep billing.
Lock-up is unbilled work in progress plus unpaid bills, expressed in days of fees. Firm-wide it is a finance figure. By client it shows who is being financed by the firm: work done months ago, not billed because the partner is reluctant, or billed and not paid. A few clients usually hold most of it.