Economic turbulence disrupts traditional law firm profitability strategies, causing turmoil as a potential recession looms. Find shelter from the coming headwinds through advancements in legal business intelligence and financial software that empower your firm to:
Associates currently in the dark
BigHand research shows that most US and UK law firms (around 90% or more) are incentivizing lawyers to increase billable time entry and profitability margins. Yet, only about 40% of firms give lawyers access to matter-level billing information.
Keeping lawyers in the dark about finances leaves them to only guess their full worth and potential. This can negatively affect morale, productivity, and turnover rates. The push for more hours could be a factor influencing the 52% of mid-level associates who said they’d consider quitting for more work-life balance, as reported in an American Lawyer survey that also found:
Not only do lawyers not want to work longer hours, but additional work may not be available unless you can target the specific clients and matter types that generate the highest profits.
Data-driven tactics help ensure law firm growth
Over half (53% of NA and 51% of UK) of firms reported increased client demand for more financial transparency. Similar numbers (around half) of firms say clients increasingly demand matter budgets, client reporting, and real-time financial matter updates. Equipping lawyers with BI reporting and data visualization tools empowers them to meet client demands with:
Clients learn they can count on your firm to meet expectations. Meanwhile, you can drill down to determine each matter’s financial performance and how each lawyer contributed to it with metrics on:
And much more. Your firm can also identify the most profitable clients and matter types to pursue—yet another lever in your arsenal.
Increase cash flow and revenue with no guesswork
Data on finances and billing workflows opens the path for lawyers and accounting teams to reduce excessive write-offs and discounts, ultimately increasing cash flow and revenue. Associates can receive data-driven guidance on personal, team, and firm growth goals, with targeted KPIs that let you objectively award lawyers for accomplishments beyond billable hours.
Partners can assign work to the overall best-suited associates based on expertise, skills, availability, and cost (rather than convenience or bias), enhancing associates’ career development opportunities. With instant access to detailed reports, associates can knowledgably communicate with mentors, colleagues, and clients for less guesswork and faster results.
You can also provide automated time entry and timesheet generation tools proven to help lawyers to capture more billable hours. There is no panacea for growing through a recession. But small, meaningful steps to incorporate financial transparency in client relationships and business conversations can help your firm sustain profitability through the next downturn and beyond.
A view into the importance of empowering lawyers with real-time, matter level information to maintain profitability in the face of rising costs and reducing demand: Findings from over 800 senior finance professionals in the UK and North America.