With law firms profitability being squeezed by alternative entrants to the market and consumer demands for fixed fee work, the benefits of powerful business intelligence solutions in delivering key strategies and measuring success in order to sustain profitability are more essential than ever.
Quality of data is key to mining meaningful business intelligence. And meaningful really is the key here. Most systems will dump data into Excel for you – but no one bothers doing so because very few stakeholders will have the time to spend trying to make sense of it all.
Business intelligence systems need to pull data from all areas of your business and present them to you in an easy to understand yet comprehensive way that means something. The fact is that most firms already have this data – they just don’t have it in one place and don’t know what to do with it to make it mean something to them.
Those firms that think business intelligence systems are unnecessary often don’t appreciate how far reaching they really are. Good business intelligence leads to strong strategic decisions in all areas of the business, from business development to finance. Firms are better able to assess and manage risky matters, which is great for compliance and PII, and they can compare how effective individual solicitors are compared to colleagues, which will ultimately feed through to HR planning.
There are other benefits of good business intelligence systems too. Our clients have found that just by implementing integrated practice management and business intelligence solutions they are increasing their profit margin by as much as 50% just by ensuring they are billing correctly, capturing all of their fees for items that are often overlooked such as emails and telephone calls and ensuring disbursements are passed on correctly.
All firms will tell you the hourly sale rate of their fee earners but how many know cost and profit margins per fee earner? To effectively deliver alternative fee arrangements you need to be able to look at historical profit margins to work out how much you can skim from your quotes – many firms just guess and end up finding themselves out of pocket.
The good news is that once firms get to grips with the wealth of information they now have at their fingertips they can make strategic plans to ensure they deliver clear competitive advantage that will see them successfully improving services to clients and increasing profitability over the next few years.