Law firm transparency: Top takeaways from the Chicago LVN Road Trip

In April, law firm leaders from across the US met in Chicago for the LVN Road Trip to discuss the importance of transparency both within a law firm and with clients. The session was well attended by legal professionals across pricing and legal project management, as well as in house counsel. In this blog I want to share some of the key takeaways from the day with those who were unable to attend

During his introduction, Kellog School of Management Professor Richard Jolly discussed the importance of transparency. He elaborated that communication, collaboration, and having difficult conversations are key components of law firm transparency. While we know this to be true, the real challenge is understanding how much transparency is reasonable to provide or expect, especially when different individual stakeholders, both internal and external, have different interpretations of what transparency means.

As BigHand’s Solutions Manager for Financial Productivity Products, I was delighted to dive into this topic more by joining the panel on “The Many Roles of Transparency in the Legal Services Delivery Model”. Top themes of the session included:

  • Creating a culture of law firm transparency internally with partners and other teams.

With each firm having multiple systems and sources of the truth, accessing accurate law firm financial metrics is challenging, as is understanding which teams need access to the data. Some teams are more concerned with profitability than others, and different teams might look at different metrics like margin, realization, or leverage, and calculate those in different ways from each other.  Furthermore, it is not uncommon for lawyers to want a unique view or presentation of their profitability from a standard report or matter profitability dashboard.

Despite varying business processes across firms, there is agreement that there is plenty of room for improvement, whether it be through improved software and systems, collaboration between support teams, or open communication.

  • Establishing meaningful matter transparency related to budget, scope and progress

Communication is critical to build trust and transparency. Before beginning work on a matter, lawyers need to have conversations with clients and their support teams around several areas including:

  • What the matter budget is and why
  • What are the matter phases and scope
  • Who is being staffed for the matter, and does it meet with Diversity, Equity and Inclusion needs as well as profitability goals?
  • What defines success for the client?

While the work is in progress, communicating the status of the matter as well as any deviations from the original plan is key. Improving firm use of matter budgeting will make this easier. Providing matter budget tracking at regular intervals builds the client’s trust in both the work and the firm, allows the client to manage expectations, and helps minimize write offs and improve law firm profitability.

  • Improving client satisfaction and value

As we saw in our legal pricing survey report, most firms are not providing clients with regular updates over the life of the matter. As a result, firms are gauging client satisfaction with continued work. A few firms shared that they conduct post-matter debriefs with the clients to understand client satisfaction, but this is not at all the industry standard.

Clients have expressed that they want regular updates not only on the progress of work, but also more insight into the cadence of billing so they can better manage their legal budgets. In addition, they are interested in transparency around resource management. Clients don’t always want or need to have the most experienced or expensive lawyers working on matters, and want more input into how matters are staffed. As much as possible, clients and firms need to be aligned on objectives and incentives.  

The first event of the LVN Road Trip was truly insightful, with lots of great discussion from an audience with diverse backgrounds. The idea of transparency has different meanings for varying stakeholders, and open communication and collaboration between people and processes is critical for the success and satisfaction of each party.

About BigHand Matter Pricing

BigHand Matter Pricing is a next-generation legal matter pricing, budgeting and cost management solution. Turning data into actionable insight and transparency that empowers your teams to make objective pricing decisions, armed with accurate real-time business understanding. Gain a data-driven understanding of matter profitability drivers like leverage, effort and costs, to give your teams the autonomy they need to boost productivity.

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