THOMSON REUTERS ELITE

SUMMER 2015 EDITION

Forefront
 

Financial and Business Intelligence Systems Bring Real-time Analytics across Miles, Multi-level Management, and Mobile Devices

As competition continues to impact the picture of firms at all levels of the legal world, finance departments continue to be challenged to answer questions of where to invest firm capital, how to structure various departments, and how to best communicate performance and its various components to the partnership in order to incent optimal behavior. All of this makes the ability to deliver the right information consistently in a way that supports firm strategy a “cost of entry” for many firms who wish to remain at, or increase, current profit levels.

The good news is that, in many respects, the “promise of technology” has arrived. Financial and business intelligence systems have now evolved to the point where the distribution of right-time (often real-time) information can be delivered across various media to management and partners in whatever way they prefer to consume the information (i.e. via laptop, tablet, or smartphone, and through firm portals, apps, or standalone, configurable information platforms).

However, the more difficult challenge for CFOs and finance departments is thinking through the key questions in the context of the individual firm and ensuring that a firm’s financial information system is able to address the key needs that all firms face, in a way that’s scalable, upgradable, integrated to the firm, and cost effective from both an expense and resource perspective.

Key Issues

Finance departments have three major challenges when it comes to performance-related information:

  • Profitability measurement and communication
  • Distribution of key information to stakeholders
  • Development and maintenance of an integrated, scalable system

Profitability

Profitability is much more than simply generating P&L’s, balance sheets, and financial reporting.  Profitability now must include various lenses, including client/matter, lawyer, and partner profitability from various functions (working, billing, supervising, etc.) and departments and practice groups. The benefits of doing this well, and communicating effectively to the partnership at large, include better decision making, more strategic pricing and staffing of matters, and a greater understanding of “hygiene” aspects of the business model such as time capture, billing practices, and collections management.  Additionally, all of the above aspects become even more critical to understand at a deep level as firms and individual partners begin to move into alternative fee arrangements.  Finally, such an understanding becomes critical in helping with the analysis of why performance to goal was achieved (or not), and what levers could be pulled to bring underperforming groups or clients back in line with expectations.

Distribution

Firms have a lot of choices about how to deliver information, and the reality is that information has to be available to partners “on demand”—meaning via whatever device they are using. This does not mean that any level of information or analysis can be performed regardless of device, but a high-level view of what is happening with a practice group, individual, or client should be part of any strategy for delivering information to partners. Finance departments must carefully decide what information will be delivered, how it will be structured, and who will have to access to which pieces. However, at a minimum, partners should be able to quickly access critical points about their clients and books of business across key metrics. Best practices in this area would include the ability to deliver traditional reports via a centralized dashboard or portal, along with alerts on performance metrics outside the norm and an ability for partners to quickly query for specific pieces of information and get fast results.

Evaluation

In coming up with a system that meets the above two objectives, firms could choose to build from the ground up. For a very small group of firms with tremendous resources, that may be the right decision. However, for the vast majority of law firms, it’s much smarter to look to outside experts and pick a system that meets most or all of the following criteria:

  • Leverages current technology
  • Integrates with other systems easily
  • Allows for inclusion of multiple data sources
  • Allows for data to be delivered to a common platform (i.e. Sharepoint)
  • Is supported by a team that is concerned with maintaining compatibility with other major software dependencies (i.e. SQL, Windows)
  • Is on a plan to release new versions with more features on a regular basis

The cost—in terms of future vendor expenses as well as the time invested by internal resources—can be much higher if firms cannot or will not select a system or set of systems that meet the above criteria. Sometimes, this means a firm must give up certain aspects of old systems or ways of presenting information or calculating data. However, if the above two aspects are satisfied, the benefits can far outweigh such minor shortcomings, and the overall strength of the new business intelligence can put the firm on a path to sustain or increase profitability through the use of financial information and technology.


Wilson Legal Solutions

Wilson Legal helps law firms maximize the benefits of technology to reach new levels of operational efficiency and profitability. The company offers deep technical expertise, hands-on software experience, and best-practice insight to help firms leverage their investment in Elite practice management and business intelligence software. Click here for more information.

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