Why Performance Monitoring is Essential for the Success of your Business

Monitoring financial performance at all levels of your firm is crucial to maintaining a vibrant profitable business. 

If your leaders and managers understand and act upon the financial management information they receive, the better the chances of improved financial performance over time.

There are three important steps to successfully implement a performance monitoring programme in your law firm.

1.) Generating the correct financial management information

The starting point for most law firms is to generate a good set of management accounts with the emphasis being on team performance, as opposed to the individual lawyer’s performance.

Focus on the fees and gross profitability of each department because these are the things that a Head of Department can influence and keep the design of the financial management information easy to follow and user friendly. 

2.) Distribute the information. 

If you are not using financial dashboards in your firm, your accounts department should aim to consistently produce the monthly management accounts as soon as possible after the month’s end.

Some law firms are wary of distributing information within the firm for cultural reasons, whereas other firms are more open with what is shared. 

In my experience, Heads of Department and lawyers are motivated and respond well to being shown how their team or office is performing compared to other teams and offices in the firm.

3.) Act on the Information

The Managing Partner and Head of Accounts should spend time with each Head of Department explaining the financial management information provided and establishing a framework throughout the firm.

The performance monitoring framework should include monthly 1:1s between the Managing Partner and each Head of Department to review performance and a monthly meeting with the Heads of Department as a group to review the firm’s performance and forecast future performance.

Monthly 1:1s between the Head of Department and each lawyer in their department should be set up to firstly ensure the lawyer understands the information provided and secondly to review performance.

Each review meeting should have a short-written record of the decisions made, the action to be taken, by whom and by when to ensure progress is made.

Those firms that can successfully implement the three steps identified in this article are likely to see improved performance as a result and give themselves a better chance of success in the highly competitive legal services sector.

If you are thinking of introducing performance management in your firm and would like to discuss any of the themes in this blog, please get in touch at ih@hopkinslegalconsulting.co.uk or give me a call on 0791 666 9095.