If the last six months have taught us anything, it’s that the future is difficult to predict. And yet we already knew that, didn’t we? That’s why most of us spend time analysing historical data. What’s already happened is easy to measure, it is solid and reassuring. Predicting the future is just too flaky. It’s not an exact science so it jars with our analytical brains.
In our work with law firms, one of my most common observations is that too many firms put too much emphasis on backwards-looking KPIs and too little on forward-looking ones. Hours recorded and value billed last month might be (relatively) easy financial data to report on, but how much action do they drive? How many levers do they offer to management for improvement?
Future focussed KPIs help us understand future opportunities and risks by using appropriate historical data to predict what might happen. For example, if our client satisfaction score is trending downwards, that may not be reflected in last month’s billing, but it certainly will be in future months. But with such a predictive indicator, there is time to take action before that impact is felt. Similarly, with the turnaround time on cases, if the time from instruction to billing is trending upwards for a given work type, there are potential future problems (with both cash and client satisfaction) building that require short term action.