Understanding Your Metrics with firmTRAK’s Rich Marvel

Episode Notes

Transcript

Lunch Hour Legal Marketing

Understanding Your Metrics with firmTRAK’s Rich Marvel

03/26/20

Kelly Street: Welcome to Lunch Hour Legal Marketing. Before we get started we want to thank our sponsor, Nexa, formerly known as Answer 1, is a leading virtual receptionist and answering service provider for law firms. Learn more by giving them a call at 800-267-9371 or online at www.nexa.com.

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Intro: Welcome to Lunch Hour Legal Marketing, with your hosts Gyi Tsakalakis and Kelly Street, teaching you how to promote, market, and make fat stacks for your legal practice, here on Legal Talk Network.

Gyi Tsakalakis: Hey everybody. No Kelly today because she is right at the airport on her way to the ABA TECHSHOW which is where we will be doing this impromptu Lunch Hour Legal Marketing episode. So thanks for tuning in.

I am really excited today to have our guest, Rich Marvel, and I am going to let Rich tell his story here in a second, but the genesis of this episode, in the short version was, I am checking out this firmTRAK which we are going to talk about today, but really the story in there and the problems that Rich and his team are solving really resonate with me in the context of understanding metrics at your firm, for me particularly as it relates to marketing, but we will dive deeper on all the different KPIs that firms should be thinking about, but I am going to shut up and let Rich tell us what you are doing before firmTRAK, and little bit about yourself, what do we need to know about Rich?

Rich Marvel: Well, Gyi, I am a solo practicing attorney in Bloomington, Illinois, which is just a couple of hours south of Chicago and I came to an epiphany within my own practice that I was somewhat working blind. I didn’t have an understanding of what was moving my law firm, and where the direction of my law firm was going. This is at the same time I started to scale my law firm with the inclusion of some independent contractor resources, adding some additional staff members. So we were really busy, but I didn’t know how effective we were, and I struggled with digging into my existing project management or practice management solution to be able to get quick answers to some of the things that I wanted to look at.

For example, I’ve started to become worried that I didn’t have a temporal memory of dates, due dates, activities, tasks, things that were taking place within the law firm. 10 years ago we had yellow pads and we were kind of keeping this long to-do list and in this day and age it just was not feasible.

Gyi Tsakalakis: 10 years ago, I know Larry is still doing that.

Rich Marvel: Well, most of them are, most of them are. So I needed a way to have a better view of what my data included. So at that point we were using PracticePanther and I went out to the marketplace to see if I could find something that would answer my problem, and I couldn’t find anything at that time, so I looked into some custom solutions; the custom solutions were going to require thousands of dollars, cap costs and operating costs was going to be an ongoing expense that I didn’t want to incur. So I went out and I hired a project manager who immediately came in and started to optimize how I was doing some of my data capture points and he started to run some pretty robust Excel spreadsheet downloads that I became very dependent upon and once that happened we kind of decided that we could just automate this because I didn’t want to wait until Monday morning, I wanted to look more proactively and predictably where I was going within the firm, and that’s when we decided we would take it to the cloud.

Gyi Tsakalakis: Awesome.

Rich Marvel: So then we engaged some developers. I’m not a developer and we built it out at that point, we’ve been in development for a little over a year at this point.

Gyi Tsakalakis: It’s awesome. I love it, you’re a practicing lawyer, you had a problem at your firm and now you are building tech to solve the problem, which is what we’re here to talk, we’re talking about the ABA TECHSHOW.

Rich Marvel: Yeah, I think the ABA TECHSHOW is a nice platform for lawyers to explore the different options that they can implement within the law firm, where I’m passionate and my passionate space is for the small lawyers. I’ve sat through probably 30 different demos of programs as part of due diligence and also in my solution and a lot of the programs would say, well, your capital expenditure to bring us in $80,000 and it’s going to cost you $80,000 a year to maintain this and I have to like — it almost, I almost lose my breath.

Gyi Tsakalakis: Right.

Rich Marvel: I’m a small guy. In my opinion I have a great practice and I’m blessed. $80,000 a year to maintain a project management solution, you’re not —

Gyi Tsakalakis: Most of these firms are not tech companies.

Rich Marvel: They are not tech companies. So there are solutions out there if you have a huge budget and I think 25 lawyers, 60 staff people, your options become — there’s lot of options in it.

Gyi Tsakalakis: During the enterprise space then.

Rich Marvel: I wanted and I’m passionate about the small lawyers and I wanted to empower small lawyers to have the same ability that their BigLaw counterparts have and I think it’s easily done and it’s just a matter of implementing it within that space.

(00:05:00)

Gyi Tsakalakis: Awesome. So let’s dive deep. How does it work? How does the tool work? How do you get set up on it? Where is it pulling data from?

Rich Marvel: The tool is a cloud-based software-as-a-service application, all our data is stored in AWS onshore. firmTRAK directly connects to your practice management solution, so we have direct connections with a variety of providers, so we have API access, so we directly connect to the data and we pull it into firmTRAK.

firmTRAK at that point imposes some of the user-defined variables that we put in, so billable targets, for example, cost of resources, determination who’s full-time and what full-time actually means for them because what we want to determine is some of the metrics associated with efficacy of the staff and efficacy comes down to whether or not they are being capturing their time, are they utilizing all the time available? How much of that time are they billing?

Once the user-defined variables are included, then the program then pulls the data from your practice management solution, sprinkles in the user defined variables and then elicits and comes up with the metrics that come out on the firmTRAK dashboard.

Gyi Tsakalakis: Yeah, and the dashboard looks pretty sharp. It’s well-visualized data representation, that seems like a real focus of the tool.

Rich Marvel: Yeah, the idea is to provide deep level assessment as quickly as possible. Time is what drives law firms and that’s what motivates me in order to do this, so I want to be able to take a quick assessment at the data to be able to make decisions on where my law firm needs to go.

Historically, a lot of the graphs and the data visualizations are coming out of the tools are honestly little cumbersome to actually get to and then they are also very one-dimensional, so you’re only looking at one axis as opposed to starting to take a look at multi-dimensional datasets in order to make better insights and better decisions. So I just don’t want to look at aggregate hours, I want to look at aggregate hours and then compare it to maybe what matter type that they’re working on and maybe I want to start looking at profit margin. Where are the margins and where is my team most effective, what areas of my practice should I just ignore because I’m losing money?

Gyi Tsakalakis: Right.

Rich Marvel: There’s a difference between being busy and being successful.

Gyi Tsakalakis: Absolutely.

Rich Marvel: I wanted to remove myself from being busy and try to focus my time on those matters that I was most profitable and most effective at.

Gyi Tsakalakis: Very smart.

Rich Marvel: And it was important to me because I’m dealing in this small space that I think the gravity that changed within lawyers is strong and I think that the idea of bringing in a new product and teaching people a new platform, new processes, new procedures is I would say destined to fail in 99.9% of all law firms.

Gyi Tsakalakis: Keep it easy.

Rich Marvel: It’s just the reality. So it was important to me because my staff wasn’t going to just open up to a new change, and frankly, I wasn’t going to spend $80,000 for a new platform. It was important for me to use existing tools, and systems, and processes. The data is there, lawyers have the data. They just don’t know how to access it, and that’s what firmTRAK gives you the ability to do.

Gyi Tsakalakis: Very cool. So you touched on. I was going to ask you, well, what are some of the primary KPIs that you really have focused on, even your experience as a lawyer is, I think a lot of lawyers they don’t even – they are not even at that stage even start to be like, oh yeah, like, revenue, gross profit margin, net profit. What are some of the KPIs that really become important to you that you’re focused on and then what are — what kind of — this firmTRAK, is it kind of like any KPI you can get in there or what KPIs do you find that most of your users are really to jump off the page for them.

Gyi Tsakalakis: Yeah.

Rich Marvel: If you start with the concept that we’re trying to do an 80/20 and a lot of our betas are users now are identifying needs within their own particular firm where they want custom reporting, and that has been a sticking point for us, because what our goal is, is to provide fundamentals, and from the fundamentals then there’s always some one-off shoots that some law firms will have some obscure report that means something to them but it means nothing to anyone else. We’re not doing those types of reports because that doesn’t come out of the data, the way that we want it to.

So the information that our clients are looking at will include, and the things that actually drove my practice are profit margins and utilization. Are your resources capturing the time because if they are not capturing the time, there’s no way that it’s ever going to be billed. So the appearance of someone being busy and working all day, if that translates into capturing two hours of their time, even if it’s for administrative work and maybe up that two hours, one hour is billed, that’s a terrible ROI on your investment because your staff is only billing one hour and then once you put your collection percentage on, you may be only getting 0.75 of that one hour.

So, for me, once I was able to identify that and I softly encourage my staff to start tracking their time better, then you can start seeing substantial changes in your margins because the hourly rates are so significant at times. So that was a huge market for me or a metric that I wanted to see. The other metrics are my top tens. I wanted to be able to quickly look and see who my top ten clients were, who my top ten matters were, and my top ten matter types.

(00:10:04)

So within my own law firm I have about 15 matter types, within those matter types I can selectively determine which ones are more profitable or not profitable, which one am I leveraging my time the best, which one I’m most effective at and it was surprising to me that the one areas of practice where I thought were most profitable than the law firm were the least leveraged, so I was really busy, but I really wasn’t making any money on those areas of the practice.

By identifying that then it goes back to your neck of the woods as far as marketing, now I can market. I can strategically market to the areas of the practice that I want to grow, that I’m most margined at, that my team and my staff and resources they enjoy working on the most, they are the most effective and it’s easier for us to process.

So instead of trying to be the Swiss Army knife, I want to focus on what we’re good at and get better at those things as opposed to just being average at everything.

Gyi Tsakalakis: Right, now it makes a ton of sense, and I love the way that you framed that because you validated the quality from a business standpoint of different matter types, of different clients and that’s directly tied to marketing, right, because you should be spending more time and more resources on those matter types and those types of clients that the patterns you’ve identified, that you’ve already proven through data are the most profitable for your firm and stop spending money and time on the ones that on.

Rich Marvel: That ultimately is the goal of truly having a business model that is replicable, repeatable and scalable. Without being able to identify those factors that you just indicated, you’re at the whims of whatever comes through your door and how your marketing efforts work. So, by identifying the areas that you want to work in and that are most profitable and you are most effective, now you’ve got a sustainable business because now you can do target marketing to actually grow your business in a structured way.

One of the integrations that’s been really helpful over the last couple weeks is we finalized an integration with QuickBooks and I love the practice management tools that we have integrated with, but the reality is in the small law space, the adoption of practice management is not as robust as I would like it to be. So QuickBooks opens up an entire new platform for us because most lawyers are going to be working with QuickBooks and now our metrics can work with QuickBooks and provide a lot of insight for lawyers who even just have QuickBooks and nothing else.

Gyi Tsakalakis: Right. No, and as we were talking even in kind of preparation for the episode, I think from putting my marketing blinders on here, I have been thinking, all right, I got QuickBooks line items for marketing, and networking expenses, and you’re going to be able to take all that and the time you’re spending on those things and see it visualize on a dashboard of like, hey, this is actually translating into directional growth in terms of net profit because you have that data there and it just makes it much more accessible.

Rich Marvel: Right, it’s removing the ignorance from the decision-making process, and with QuickBooks now we are able to incorporate true overheads and expenses within the law firm because if you go to like classic breakdown of how revenue should be generated with the law firm, a-third of that total revenue is going to go to expenses, a-third should likely go to your resource costs and the cost of actually delivering the work and a-third should be profit.

By pulling in QuickBooks, we can instantly assess where a law firm is whether or not they are bloated on their cost of resources or if their expenses are too high relative to their margins that they want to maintain. So it’s been very helpful that way. Our customers have really enjoyed that.

Gyi Tsakalakis: Awesome. Well, Rich Marvel, thank you so much for taking some time to talk to me today. People want to learn more about firmTRAK in which you are up to over there, what’s the best way to reach out to you?

Rich Marvel: Yeah, you could go to our website at firmtrak.com, you can also find us on LinkedIn and other social media sites. So we’d be happy to talk with lawyers about their opportunities to visualize the data and make better decisions.

Gyi Tsakalakis: Awesome. Thanks again and to our listeners thank you so much for tuning into this impromptu episode of Lunch Hour Legal Marketing from the ABA TECHSHOW in Chicago 2020.

As always, if you have feedback, would like to be a guest or leave a review, please don’t hesitate to do so on Apple Podcasts, iTunes, Google Podcasts, wherever you get your podcasting. Thanks so much, have a great day.

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