We often focus on measurements for the wrong reasons. Much of what drives us is the opinion of our peers. They think it’s important, so we decide that it must be important.

Unfortunately, “they” often run unsuccessful businesses, resulting in unhappy clients who respond by switching law firms, pushing for lower fees, and denigrating the profession. Sure, the lawyers who measure the wrong things salve their wounds by joining bar associations and getting together with other lawyers who tell them how right they are.

Their clients, of course, disagree and are out getting their legal needs met by alternative mechanisms. Being “right” isn’t something we get to judge. The clients get to judge.

Typical Lawyer Metrics

Here’s what many lawyers measure:

1. House

I know lawyers (in fact, I’ve done this myself) who compare one another by searching real estate records and assessing the size and value of their competitors’ homes. We peruse government records and multiple listing services to see who bought which home, how much it cost, and how big it is.

2. Car

I had a lawyer at a gas station, upon viewing my Honda Civic, remark that I was still driving one of “those cars” in a snide tone. He was filling up his Jaguar. Of course, he “snapped,” spent some time in jail, and has now been disbarred. But I promptly bought a Range Rover I couldn’t afford. The crazy lawyer who commented on my car isn’t the exception. He just didn’t hide his crazy very well.

3. Number of Lawyers

This one drives me crazy. As a result of my family law practice and now my consulting, I know there’s no association between lawyer income and number of lawyers. I’ve divorced lawyers in solo practices making more money than partners in huge law firms. This metric is completely meaningless, yet lawyers constantly use it as a measurement. I have to fight my urge to ask this question myself.

4. Location of Office

This never fails to come up in a conversation with another lawyer. Everyone wants to know where the office is located, and it drives us to have good answers. We pay more than we should to be in locations our clients hate. We spend big bucks to be on the top floor of an office building with inadequate parking that is surrounded by challenging one-way streets and that takes untold extra minutes to access due to its location and parking. Then we implement elaborate systems to overcome the location’s obstacles, like paying for clients to use valet parking, etc. Insanity.

5. Reputation Among Lawyers

It’s nice that other lawyers like and respect you. But, while they may be referral partners, what really matters is that clients like and respect you. They’re the ones paying the bills. They’re the people who need to trust that you can do the job. We spend far more time building our reputation among our peers than we do among our clients. Why, for instance, are you—my competitor—sending me a holiday card? What objective does that meet? Do you just get possessed by the spirit of the season?

The Metrics That Truly Matter

Here’s what you’ll measure if you want to grow your business:

1. Client Satisfaction

Are your clients happy? Most lawyers I meet are afraid to ask. They like to assume (incorrectly) that a client who isn’t complaining is happy. That’s not usually the case. If you want to grow, then you’ve got to turn your clients into referral machines. Check their satisfaction with a survey process like the one prescribed for determining a Net Promoter Score. That’s what you need to be measuring.

2. Referrals

Are those happy clients sending you new business? Are you tracking the referrals carefully by doing a detailed inquiry of prospective client calls? Don’t stop at one question. Ask until you really know the origin of each client and tally the data. You should be getting referrals, and that number should be growing.

3. Repeat Business

Are your existing clients coming back for more? Are they sufficiently satisfied that they’re asking for your help when new problems arise or old problems return? Different practice areas require different thinking when it comes to repeat business, but you want to know whether your clients trust you sufficiently to come back when they need more help.

4. Revenue

You ought to see growth on the top line as a result of your satisfied clients coming back as well as referring others to you. Revenue is a critical metric to watch. Of course, revenue for the sake of revenue isn’t helpful. You don’t want to bring in clients, and their money, if you’re ultimately going to lose money on the work. It’s important to see growth, but it’s more important that the growth be profitable.

5. Profit

Now we’re talking. This is the measurement to watch most carefully. It’s not a leading indicator. You’ll need to see the other metrics improve before you’ll see bottom-line growth. When the client satisfaction goes up, followed by the referrals and repeat business, you’ll see the growth of your profit. Growth in this trailing indicator proves that you’re measuring the right things and that you’re moving the needle in the right direction.

Notice What’s Missing

Take careful note of what’s not included in the list of things to measure. Don’t worry yourself with the houses, cars, number of lawyers, location of offices, or your reputation among lawyers. Those things, to the extent that you care, take care of themselves if you’re measuring the things that really matter.

Focus on the key metrics that drive your reputation among clients. Stay focused on client satisfaction, referrals, and repeat business, and you’ll see the revenue and profit come right along. Keep your eye on what matters, and you’ll end up with what matters to you.