Legal Business Blog

What namely is to be measured in the legal business. And how we do it

I’ve been planning to write this post long ago, but I still couldn’t find a way do it without turning the text into an instruction on A2.Time reports. Finally I settled with myself on explaining WHY any of these parameters would matter. Well, if all else fails it will be useful to the current users of the system. Let’s go.
By now we have 11 reports in the system that you could use to measure our own legal business for yourself and your client.

1.Report on time and expenditures to the client.

This report is one of the commonly used. We choose a client, choose a project, choose a period and obtain the consolidated information regarding the total time spent for fulfillment the instruction of the client and all expenditures. It is simple. By the way, it helps a lot with recovering expenditures for representation in the court.

2. Invoicing.

It is just a list of all invoices that were formed in A2. Time for the period chosen by us. Those invoices that are not paid are highlighted in red. The target of this report is to control accounts receivable. We can quickly understand who of the clients, for some reason, have not yet was able to pay.

3. The clients.

We observe all the clients that are in the system. It is possible to select only those who are active ones at the moment or vice versa those the work with whom has been terminated.
From the point of view of each client we observe how much time has been spent on his projects for that or other period. How much invoices were drawn and paid and is there any debt. It helps to observe easily which the Clients are “favorite ones” and which bring 80% of the time spent and 20% of the money.

4. Revenue analysis by practice.

It is demonstrably regarding which direction of your work brings the greatest result in money. The target is to separate the key thing and focus specifically on income-generating activities.

5.Cost per employee

Here we can see who and how much for the given period accounted the time in the system. In hours and in money. An important moment is the efficiency of time count. This report does not include the money paid. Personally for us the half of the working time is the minimum count. That means at least 80 hours per month. If an employee counts less regularly it means that somewhere we have a problem. Although, generally, the target of billing in ILFs is 1920 hours per year. That is 160 per month. Vacations are not supposed))).

6.Cost per projects

This allows you to observe the total utilization of the time for the company (i.e. how much was taken into account). It is possible to do regarding the separate project in order to see “what has been done”; it is also possible to do regarding the all projects at once. The last function allows you to track the WIP indicator (work in progress), i.e. how busy we are in principle.

7.Distribution of revenue per the partners

This report is required in order to consider the contribution of each partner to the revenue of the company. For the purposes of our work we take into account only the “pure” contribution of the partner from the project. It means minus expenses that are simply compensated by the client. The key task is to see how much money this or that partner brought to the company during the specified period of time and take into account its effectiveness. If it is interesting the more details you can find here about our revenue distribution system.

8.Efficiency of the projects.

It is obvious at once how profitable this or that project for your practice. Through the total approved time, the amount billed and paid by the client we get the efficiency in %. It is calculated as the ratio of time spent and time paid. If the project is 50% effective, it means that the time spent is twice as much as was paid. If efficiency is 100% it means equality by hours. If more than 100% (sometimes it happens!) – my congratulations, you well agreed and spent time under the project less than you paid for it.

9. Analysis of revenue per the clients.

This report gives on one page a list of all clients and their projects that have paid for the period. You can see at once the most important clients for your legal business. Such key clients are not only the main consumers of services, but also the best source of new orders and recommendations.

10. Employees, their hours and efficiency.

Very likely this type of report is the most complex one in the system. It shows on one page the contribution of each employee into each project, as well as a consolidated information. We use it to reward lawyers based on performance results. Here about the logic of our calculations. For the premiums the final figures are required. But the ability to look inside each project allows you to see quickly if there are any “mismatches” in the time accounted.

11. Distribution of time of employees between projects.

We can observe how much time each employee spent on that or other project and download this information in Excel format. We see at once who is the most effective in company among the colleagues and who should be rewarded.
That;s it. I am sure that someone needs other data, and someone will consider this data excessive. We plan to reduce the number of reports since they clearly intersect, and transform part of the information into a graphical view.