The demand for legal services may be declining, but law firm leaders cannot let profits fall too. Should you raise hourly billable rates, even as clients increasingly challenge soaring costs? Should you demand that lawyers work more hours and risk alienating top talent who prioritise work/life balance?
Or would you rather empower your lawyers to eliminate revenue leaks and expand profits through increased financial recoveries?
BigHand’s recent market research report (and the data points below) reveal how more than 800 law firms plan not only to maintain profitability during the current economic downturn but also to reduce revenue leaks to expand profit margins.
Overall, it’s clear that developing a more strategic approach to profitability requires bringing matter-level billing, collections, pricing, and work allocation data to lawyers’ fingertips, empowering them to effect positive change proactively.
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Bring the business of law to lawyers’ fingertips.
Clients have increasingly demanded more financial transparency and cost-effective matter resourcing for years. Clients want comprehensive information promptly—or better yet, immediately accessible at any time via secure online portals.
To accomplish this, firms often must replace manual data tracking and reporting methods with the accuracy, precision, and sophistication of advanced financial BI analytics tools. This allows you to enhance specificity and provide contextualized insights while analyzing and reporting on matter components such as budgets, costs, timelines, billable hours, resource allocation decisions, and more.
Now that lawyers must answer client questions on these components every day, it’s become critical that they can immediately access up-to-date matter-level financial details.
Lawyers can then also apply data-driven insights to improve matter profitability proactively. After all, they make the daily decisions on fee negotiations, budget projections, resource allocations, invoice write-downs/write-offs, and other issues directly impacting your firm’s working capital.
Enable lawyers to reduce profit leakage proactively.
Giving lawyers controlled access to financial data builds a culture of accountability for how their decisions affect the firm’s bottom line. Lawyers can develop and track profitability initiatives, such as improving billable time entry (as 44% of NA and 31% of UK firms plan) and increasing visibility into Aged WIP and Aged Debt (planned by 38% of NA and 32% of UK firms).
Daily data tracking and longer-term analytics shine new lights on where and how profits leak, including post- and pre-billing discounts, budget variations, reductions in hours billed, and other wasteful practices. Instant dashboard alerts of cost overruns, unexpected delays, unrecovered fees, missing time entries, and other actionable insights keep lawyers informed and in control at all times.
These insights would arrive just in time, as 75% of NA and 64% of UK firms confirmed increased write-offs this year, with 55% of NA and 48% of UK firms saying write-offs have increased by more than 10%.
Manage matters cost-effectively with real-time financial data.
With the ability to drill into time, fees, and collections and surface key metrics such as leverage and realization rates, lawyers gain the clarity to manage matters cost-effectively.
Setting a goal to reduce discounts off standard rates would target the most significant cause of profit leakage (as confirmed by 34% NA and 28% UK firms). One way to achieve this is to determine which tasks customers object to paying for and delegate them to support personnel—insights quickly gained with BI analytics.
Fast access to real-time information is especially beneficial for answering ad hoc client questions in minutes. The 40% of NA and UK firms planning to improve client communication as each matter progresses can avoid sending surprise bills that result in discount requests and stay tuned in to client expectations.
Discover how to boost your firm’s profitability without demanding more billable hours from hard-working lawyers or raising rates on already overburdened clients. Speak with BigHand about investing in fast access to comprehensive data to achieve stability no matter what the economy throws your way.
[ Artificial Lawyer is proud to bring you this sponsored article by BigHand. ]