Guest Post: Get Closer To Your Firm’s Goals With Technologyaderantuser
Briefing talks to Karen Bailey, head of solutions consulting EMEA for Aderant, about combining business intelligence and matter management tools to make a great leap forward in pricing and profitability.
Pricing and profitability go hand in hand, and both relate directly to understanding the cost of delivering legal work. They combine to create competitiveness and efficiency – and business intelligence (BI) tools are helping legal businesses get closer to those goals. If your firm isn’t using a dedicated BI tool now, it’s competing against those that are – which might leave it at a disadvantage.
Legal businesses are increasingly using specialised BI tools to deliver a competitive edge that the traditional methods of reporting and analysis cannot achieve. But getting the best out of management information produced by BI tools means applying the right measurements, or metrics, and using data to shape both financial goals (reducing costs) and pricing goals (ensuring profitability while delivering keen prices).
Karen Bailey, head of solutions consulting EMEA at Aderant (which recently acquired the industry leading BI software, Redwood Analytics), says BI tools are changing the way firms report, how they identify client and market trends earlier and more accurately and, most importantly, how they can price legal work.
“Firms will hugely benefit from a future in which they better understand their clients’ behaviours. This brings efficiencies and drives informed decision-making, because firms can create and use the data in more constructive ways.”
Information gained from BI tools helps teams to assess workload more accurately, assign potential resources and better analyse pricing/cost up front. But this is most effectively achieved when combined with matter management systems when the work is done. This would more likely reduce write-offs down the line.
BI and matter management should work off each other. “The BI tool tells you what you have done and how far you got it right, and matter planning/management enables firms to look at historical matters and better estimate staffing levels and what levels of profitability the firm made on those matters. But you need BI to know if they made the right levels of profitability.” Fee earners can also use BI tools to ensure work stays within desired profitability margins.
This kind of symbiotic relationship between BI and matter management creates strategic opportunities for innovative legal businesses. Getting deeper visibility on previous matters, Bailey says, in terms of resourcing, profitability and outcomes gives legal businesses better options – options that feed directly back to client value.
Live management information and matter management also help law firms work on matters in a more project management-oriented way. “As soon as work goes off plan, it can be seen very quickly. That gives firms the chance to go back to the client or, if it’s a Jackson reforms matter, you can go back to the court and say the scope of the matter has changed.”
Flexibility in pricing is ever more central to a competitive offering. “For existing clients who have special rates, or if you want fixed fees, blended rates, or a cap, prices can be more easily calculated against the associated cost. The client could potentially be offered a choice of any of these options, with the firm being assured that each of the arrangements would achieve the right level of profitability. The client gets the choice, and the firm knows it’s still working to a profitable rate.”
Getting much better management information from BI tools can also be very important if a firm finds itself operating at overcapacity, she says, because heads of department can, for example, be alerted to take on matters at slightly lower levels of profitability “rather than doing nothing at all”. But being sure about profitability only comes from better data.
Better information and better management create a more efficient working method, which may be increasingly important in combating a shift Bailey is seeing in the way GCs work with their legal partners. Matters are being broken down and clients are more inclined to only outsource components of the work, she says. “GCs are doing more work in-house, so where firms come in to pick up the slack, they have to be extremely efficient on smaller, commoditised pieces of a matter and have to ensure that they deliver value for the GCs as external legal spend is increasingly scrutinised.”
Ultimately, says Bailey, the way firms work with and act on client and internal management information is reshaping the legal process to make it more efficient and more profitable. In turn, this is creating competitiveness, because they are the differentiators for the legal businesses.
Download the September 2014 issue of Briefing magazine here.