Podcast: How Law Firms Can Gain a Competitive Advantage with Financial Intelligence


Recorded by Reinventing Professionals - November, 2021

Ari Kaplan speaks with Rob Stote, the managing director of profitability products at BigHand, a provider of financial and operational productivity software, Michael Grupp, the CEO of BRYTER, a no-code software platform, and Tom Obermaier, the CEO of SurePoint Technologies, a provider of financial and practice management software about the recent report - Implementing Financial Intelligence to Give Law Firms a Competitive Advantage in 2022 and Beyond - that the three companies commissioned to identify key trends among law firm financial leaders.

Over time, all firms will be using data in their interaction with firms, so it's as much about not being at a disadvantage as it is about gaining a competitive advantage.

Podcast Transcript:

   

Ari Kaplan
Why did your respective teams participate in the consortium supporting this research?

Rob Stote
Having the viewpoints and the understanding of senior financial leaders at law firms about where business intelligence is trending within the legal market is important for us to understand.

Michael Grupp
Financial leaders in law firms are not the first stakeholders you look to understand business model changes, go-to-market shifts, and industry transformation. You typically discuss this with partners and you don't always think about the financial responsibles. The report shows that they are one of the driving forces and have a lot more visibility on data, as well as technology. We like that topic and conversation, so we are happy to be supporting this research.

Tom Obermaier
It is essential that we get great market research because it gives us a pulse on our brand and for product development. The trends and industry direction spearhead the voice of the market and of our customers in our product design.

Ari Kaplan
How does your focus on market research help serve your clients?

Rob Stote
We look at data in two different ways. We look at it as a way to provide benchmarking back to the market because it is hard for law firms in a vacuum to get some of this information and we also develop software for law firms, so listening to the market helps us develop features in our tools. For us to hear the depth and breadth of information in the report from a variety of firms helps us to inform our decisions as to what we put into our products.

Ari Kaplan
What global trends related to innovation and change does this research confirm?

Michael Grupp
The two key themes that this research highlights are data and trust. They are also the elements that define the relationship between lawyers or law firms and their clients. If you ask general counsel to describe their key currency, it would be trust. It is also about data and streamlining services. It is interestingly the same for CFOs, who are the new law firm consiglieres. They are in-demand advisors on the transformative strategies of their firms because they have the data to look back and help drive innovation going forward.

Ari Kaplan
What opportunities are law firms seeing in their focus on profitability and financial acumen?

Tom Obermaier
It was amazing to see in the research an absence of any meaningful focus on profitability. 17% of the participants do not measure it at all, which is a lost opportunity for law firms. You cannot run aa business exclusively on the basis of revenue generation. You also need to look at profitability, which emphasizes efficiency and helps you serve your customers more effectively. It also makes one a better lawyer and produces better law firms.

Ari Kaplan
Where are firms gaining a competitive advantage with business intelligence?

Rob Stote
It really is about providing value to your client and meeting expectations. The report indicates that 90% to 95% of the respondents see a competitive advantage in using business intelligence, which means that people are thinking about what they and their clients want. If you're able to create a culture of business intelligence and financial intelligence within your firm, you're able to communicate those details more effectively and provide greater value. The reality is that companies are becoming much more sophisticated. They have an expectation of a certain amount of transparency. Long gone are the days of doing the work and sending a bill. Clients are demanding better reporting and greater levels of intelligence. Over time, all firms will be using data in their interaction with firms, so it's as much about not being at a disadvantage as it is about gaining a competitive advantage.

Ari Kaplan
How do you see law firms deploying technology differently in 2022?

Michael Grupp
We have been talking about digital transformation for the last 15 years, but it is happening now, which is something that the report confirms. For the first time, firms are not just talking about where they plan to invest or deploy technology, they are already doing it. Some of the answers in the report clearly support the vision that the industry has become more sophisticated and experienced, and for the first time is also talking about data. We are not having a conversation anymore about what do we plan to do, but about what we did, what we learned from it, and how it will impact what we do moving forward. Technology is driving firms to innovate and more will invest in the digital strategy of their clients. The report also highlights that firms are talking about the shift from providing services to enabling self-service, building scalable applications, and delivering services differently.

Ari Kaplan
What skills do CFOs and law firm financial leaders have that are giving them a more influential seat at the management table?

Tom Obermaier
Law firm administrators, whether CFOs, CEOs, CIOs, or managing partners, really need to combine financial acumen with fluency in both technology and data. Mike Bloomberg was right when he said, “In God we trust, everybody else bring data.” It is essential to running any business today because it helps to identify new opportunities. It can also tell you how the firm is doing it and its levels of profitability. It also provides insights that help organizations move in new directions, pursue additional revenue growth, and accelerate collections.

Ari Kaplan
Where can law firms gain additional benefits from their data?

Rob Stote
There are those who share data and those who do not. A firm that we would consider to be open shares financial results, profitability patterns, and costs among its partners. Those that do not do so will be at a disadvantage when it comes to setting strategy and goals, understanding market direction, and interacting with clients because they will be less informed. Data also removes any emotional element when setting benchmarks. Many sharing organizations are, therefore, moving to a predictive or prescriptive model, and considering the trajectory of what will happen.

Ari Kaplan
How do you see law firms adapting to a hybrid workplace?

Michael Grupp
Collaboration and access to data repositories were the two things that law firms had to solve quickly and as our survey indicates, most of them did so. Law firms were actually less hindered by the pandemic than most organizations, mostly due to their ability to leverage technology faster than everybody expected. Hybrid work is increasing accessibility to a firm's assets all over the organization, which is a trend that the report describes.

Ari Kaplan
What will fuel law firm success moving forward?

Tom Obermaier
It is essential that leaders focus on automating growth, revenue, and profitability, while eliminating unnecessary administrative tasks so that a lawyer can spend more time servicing clients. Successful law firms will embrace technology because their clients will demand it. That technology really will empower more predictability, which make firms better, help them repeat their successes, and prevent past failures.