In this third post from business and client development and service strategist, Julie Savarino, we discuss the increasing importance that data analytics plays in today’s legal firms and how lawyers, practice groups and firms overall can use them to drive cost savings, revenue and profits. You can connect with Julie on LinkedIn, and explore her other two posts about 3 key trends in pricing and pitching new legal work as well as the importance of re-evaluating your firm’s CRM.
Many new and aggressive entrants in the legal industry (including alternative legal service providers and the Big 4 accounting firms) are using many of the incredible new technologies now at their disposal. These technologies aid the firms in delivering truly bona fide and cost-effective services to clients.
There are many traditional law firms out there, and as a result:
- Have procured and retrofitted relevant new technologies incrementally over the years often resulting in fragmented, stand-alone and non-integrated technology platforms
- The annual time and financial investment legacy firms make in technology is one of the highest and continues to increase
The above facts have been a major driver in the relentless merging and consolidation of law firms and other professional services firms. The reality is that without investing and maintaining up-to-date technology, many firms can no longer remain competitive.
The new role of data in legal
Data is simply information and data has been analyzed manually for centuries. But what’s new and different now are the recent advances in technology that allow data to be analyzed in a fully automated manner. Together with the use of algorithms and artificial intelligence, data ties together the entire workflow and client life cycle. The output of this new wave of data analytics is specific information which, once analyzed is useful for issue-spotting, decision-making, calculating and crafting options, and other ways to save time and money to increase productivity and profitability.
Data and predictive analytics are hot topics within the legal and professional services industries, but few firms have identified the specific data and projects that will best support their lawyers, practice groups and firm on a day‐to‐day basis to drive the revenue, cost savings and profit. Below are three ways leading law firms are using data analytics to make a measurable impact for their firms.
3 useful ways firms use data analytics to drive performance
Increasing efficiency & saving time
A major percentage of law firm growth has come and continues to come from lateral hires, acquisitions and mergers. The other major source of law firm growth continues to come from winning and on-boarding new clients. Both sources of growth require time and work, due diligence and risk management by lawyers and law firm staff. Every law firm is ethically bound to clear conflicts before undertaking any representation or finalizing a lateral hire, merger or acquisition. Business acceptance is a critical phase in the firm matter lifecycle.
According to Mike Kolb, Chief Information & Security Officer at Dickinson Wright, “since we have upgraded and fully integrated business acceptance on a new platform, our firm has dramatically increased the efficiency of on-boarding new clients and laterals, who appreciate the ability to get to work faster. In turn, this drives our firm’s commitment to delivering superior and cost-effective legal services.”
Increasing cash flow
Because law firm costs are such a high percentage of annual revenue, most every firm is constantly looking for ways to reduce or control costs and also to increase cash flow. Yet too many law firms assume the firm’s time and billing system and the firm’s lawyers are optimizing the return on investment (ROI) from the #1 cash generator in law firms – billable time. Reviewing and considering upgrades to the three key components related to billable time listed below can yield an excellent ROI both immediately and in the long term:
- Billable hour policies, requirements and procedures
- Realization and leakage
- Work in process (WIP) cycle and possible adjustments
For example, during a recent presentation at the Intapp Connect conference, Bret D. Chapman who serves as Chief Administrative Officer, Husch Blackwell LLP mentioned that recent adjustments and changes his firm has made to the above increased the firm’s revenue by over 29% in one year’s time.
Increasing organic revenue & expanding key client relationships
No asset is more valuable to law firms than key existing clients. Without clients, there would be no law to practice and no one to represent. Lawyers invest hundreds of non-billable hours a year and a lot of money on developing new work and clients.
Account management models are springing up in many leading law firms. What is an account management model? It is a formal, internal organization structure that integrates the service, marketing, sales, lead qualification and generation teams and efforts all within one framework. The purpose of this is so all firm lawyers and staff touching the client or account have a formal group within which to communicate and stay on the same page.
In fact, Baker McKenzie has recently deployed Intapp’s advanced relationship management and pipeline system within the firm to work solely with, for and on the firm’s top 100 accounts.