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What Law Firms Can Learn from Professional Services Organizations to Increase Profitability

By Justin Farmer, Director of Product Management

Justin Farmer

The current market analytics prove that the legal industry has heated up with increase competition and price pressures. The Peer Monitor Report data on legal demand shows a stagnant trajectory with a decline in demand over the second quarter of 2012 and only a slight increase in demand in 2012 at 0.5%. Further, according to the Peer Monitor report for Q4 2012, firms are still increasing the capacity with a positive attorney replenishment ratio which indicates lawyer hires out pace and attrition. Further, trends in legal spend shows increases in marketing and technology. Marketing spend has increased as firms focus on extending business development activities and stave off competition. Technology spend is up as well to help drive efficient business processing and reduce overhead costs. All signs that law firms need to grow their business and maintain a competitive edge in the market.

As business development activities grow, it is essential for firms to understand the key financial drivers that will help protect profit margins. This is true with many professional service organizations where managing a project is critical. These organizations deploy project management methodologies to not only guarantee customer satisfaction but to ensure company financial success. These same principals can be applied to many transaction types in the legal market and lead to better business decision making while delivering high quality legal work clients expect.

Key components of project management methodologies include transparency in activities and costs on the work that is being performed. This transparency transcends to all interested parties including the client services team and the customer. Customer satisfaction is achieved by clearly communicating expectations, managing changes in the scope and delivering the work product on time and on budget.

In today’s legal market how you innovate will set you apart from your competition. Firms that deploy project management methodologies can ensure not only financial success and customer satisfaction but also can assure adherence to best practices in legal work. Law firms win business based on their experience. However, many firms are finding new ways to practice law and deliver greater value to their customers. These practices can be just the differentiator the firm was looking for to set them apart in the market. Adhering to these practices ensures they consistently deliver that same quality work in the future.

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