Still measuring success by billable hours? You’re not alone — but you might be falling behind. In 2025, the most successful law firms are shifting focus. They’re tracking impact, profitability, and the real drivers of a sustainable, thriving practice.
Most law firms stick to the basics when it comes to performance tracking.
◦ Billable hours
◦ Case wins
◦ Revenue
That’s it, but this is not enough because if you are still relying on just those, you are missing the bigger picture.
In today’s legal world, growth is not just about how much work gets done it is about how efficiently, profitably, and predictably that work gets done.
In this blog post, we will walk you through five KPIs that any law firm can start tracking no matter your size or niche.
These are not any random metrics. They are real, actionable insights that can change the way you run your firm.
Let’s get started
01
Client acquisition cost (CAC): What is it really costing you to win a client?
Client acquisition cost (CAC) is the KPI most firms think they understand—but few calculate correctly. It shows exactly how much you’re spending to land a new client, from ad spend and webinar costs to your marketing agency’s retainer. Every dollar counts, and it all goes into this critical number.
Formula to use:
(Total Marketing + Sales Cost) ÷ # of New Clients
CAC Example:
Let’s say your firm spent the following last month:
◦ Facebook Ads: $600
◦ Email marketing software: $120
◦ Webinar platform: $60
◦ Marketing agency retainer: $420
◦ Intake team salaries (portion related to new client work): $480
Total Marketing + Sales Cost = $1,680
You acquired 20 new clients in that month.
CAC Formula:
CAC = Total Marketing + Sales Cost ÷ Number of New Clients
CAC = $1,680 ÷ 20 = $84
What this means:
You are spending $84 to acquire each new client.
What is considered a good CAC?
Yes, a lower CAC is better. No one wants to spend more than necessary to acquire a client.
But what matters even more is how consistent and predictable it is.
If one month your CAC is $70, and the next it’s $180, then you need to re-think
You can’t scale or plan effectively with those kinds of ups and downs.
Also, look at the trend over time. If your CAC keeps rising while client quality or revenue stays flat, you’re likely wasting money somewhere.
Low is good—but steady and improving is what drives sustainable growth.
Why does this number matter?
If you are not tracking CAC, you are just assuming.
And when you guess, you risk:
◦ Spending on the wrong channels
◦ Doubling down on stuff that is not working
◦ Letting small leaks drain your entire marketing budget
For example, maybe you’re getting leads from webinars, but they rarely convert.
Or you’re spending money on ads without checking what each lead is costing you.
Track it
Watch the trend
Adjust based on what the numbers are telling you
Otherwise, you will just keep spending and hoping for the best and that is not a strategy.
02
Realization rate: From billable to bankable
Ever noticed that your bank balance never quite matches your billable hours? You log 100 hours, bill for them, but the money that actually hits your account feels like a lot less.
That is where realization rate comes in. It measures how much of the fees you bill are actually collected.
Why does this matter?
If your realization rate is low, it means you are losing money somewhere after the work is done-even though you put in the hours and billed for them.
Common reasons include:
◦ Giving big discounts to clients after billing
◦ Delayed payments dragging out cash flow
◦ Disputes or write-offs that reduce final collections
◦ Poor communication around invoicing or payment terms
What is a good realization rate?
If you’re collecting 90% or more of what you bill, you’re in a really good position. It means most of your hard work is turning into actual revenue.
But if you’re around 80% or less, it is time to analyze. You might be offering too many discounts, running into billing disputes, or waiting too long to get paid. Either way, you’re doing the work but not seeing the full return.
03
Utilization rate: Are you actually working on what pays?
When people hear “utilization,” they often think it means checking how busy someone is every minute of the day. But that is not the point.
Utilization is really about understanding how much of your team’s time is spent on work that actually earns the firm money?
Let’s say you have got an associate working 50 hours a week.
But when you check, only 25 of those hours are billable which means only half their time is being charged to clients.
That gives them a utilization rate of 50%.
Formula
So in this case:
25/50*100=50%
What is a good number?
For most lawyers, a 70–80% utilization rate is considered healthy.
It means they’re spending most of their time on meaningful, client-focused work while still having time for internal meetings, admin, or development.
If someone has a low utilization rate, it doesn’t mean they are lazy.
It usually means something else is getting in the way, like:
◦ Too much admin work
◦ Lots of internal tasks or non-billable meetings
◦ Not tracking time properly
◦ Or maybe they’re not clear on what they should be focused on
Utilization helps you find these gaps so you can fix them.
Utilization is not about working more.
It is about working smarter and making sure your team’s time is spent on what matters most.
Because when you understand where your time is going, you can make better choices and build a more profitable, balanced practice.
04
Client satisfaction score (CSAT): The most underused KPI in law
Most Law Firms only hear from unhappy clients
If a client is upset, you will definitely hear about it. But when things go well? Most clients just stay quiet.
That is why using a simple Client Satisfaction Score (CSAT) is helpful. It is a quick way to check in and catch problems before they get bigger.
How does CSAT work?
Just ask one easy question:
“How satisfied were you with our service?” (Rate 1 to 5)
And follow up with:
“What could we have done better?”
That is all it takes to get honest feedback.
Why does CSAT matter?
◦ To spot problems early: Fix things before they become bigger problems.
◦ Show clients you care: Clients appreciate when you ask for their opinion.
◦ Improve your processes: Real feedback helps you make smarter decisions.
◦ Build stronger relationships: Happy clients stay longer and refer others.
You don’t need complicated surveys or big systems. A quick email, or a simple form, works perfectly as long as you actually review the feedback and act on it.
05
Profit per partner (PPP): The reality check you can’t ignore
PPP shows you how much real profit each equity partner in your firm is actually making. It is one of the best ways to check if your firm is truly financially healthy or just busy running the numbers.
The formula is simple:
Net profit ÷ Number of equity partners
Net Profit means all the money left after paying salaries, rent, marketing, and everything else. Then you divide that by the number of equity partners who share ownership and profits.
How can PPP help your firm grow?
◦ Evaluating partner performance: If some partners are consistently raising your PPP, while others are not, you can address performance gaps or rethink equity splits.
◦ Equity buy-ins and buy-outs: Knowing PPP helps you price new partner shares fairly and make smooth transitions when partners leave.
◦ Strategic planning: You will understand whether your current business model and operations are truly profitable, helping you plan for long-term success.
Firms that monitor PPP don’t just guess about their financial health; they know exactly where they stand.
This confidence helps with tough decisions like partner exits, ownership handovers, and growth strategies.
When you know your PPP, you can stop worrying about just “being busy” and start focusing on building a profitable firm.
If these five KPIs gave you a fresh perspective, that is exactly what we wanted. Understanding these is the first step to stronger, smarter growth.
These are just five of the dozens of operational metrics reshaping modern firms.
Want to Dig Deeper?
Download our free e-book
Inside, you will get:
◦ The 3 hidden blind spots that are quietly eating away at most firm’s profits
◦ How to bring your culture, clients, and cash flow into alignment so everything works better together
◦ Real-world examples from firms that have transformed their businesses and are growing today
Set a recurring KPI review every quarter. Assign a team lead to each KPI. Put these metrics on a dashboard. Because what gets tracked, gets improved.
And when it comes to running a modern law firm, insight is your biggest asset.