When running a Personal Injury law firm, navigating your firm’s performance and projections can often feel overwhelming. However, if you have an understanding of leading and lagging indicators, you can simplify this process and pave the path to maximizing your PI firm.
Leading Indicators: Forecasting the Future
Leading indicators give you an idea of what is coming based on historical data. They are glimpses into the future and they allow PI firms to predict how their finances will shape up for the coming quarter or even for the entire year.
Leading indicators are particularly effective in identifying points where your firm’s pipeline might be clogged. At PI firms, leading indicators include things such as Demands Ready To Be Sent and Medical Records Outstanding with Clients at MMI.
Looking at a Time on Desk by Case Interval report is also a great way to check in on your leading indicators. This report compares how long specific cases (or attorneys) are spending at various points in the case (first client contact, first medical record ordered, MMI, demand mailed, etc.). Seeing where cases are spending more or less time than normal provides incredibly helpful insight as to how the pipeline is moving at your firm.
Lagging Indicators: Reflecting on the Past
While leading indicators forecast the future, lagging indicators offer a retrospective view. They report on what has already happened but do not predict what is to come. In contrast to leading indicators, they show you how your PI firm has performed so far.
At law firms, lagging indicators include things like “Cases Settled with Fees Not Yet Deposited.” They do not predict future revenue but can highlight operational inefficiencies or potential cash flow problems.
The Balancing Act
Striking a balance between leading and lagging indicators is essential for a well-rounded understanding of your firm’s performance. Ultimately, these data points help you understand where you’ve been, where you are now, and where you are headed. By mastering the use of leading and lagging indicators, you can take your PI firm’s profits to the next level.
If you’re interested in learning more about leading and lagging indicators at Personal Injury firms, we’re here to help. Join us September 13th-15th, 2023, for Xcelerate Your Profitability. This one-of-a-kind event will cover each and every report and process you need to run your law firm. Reach out to firstname.lastname@example.org for more information!