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ISSUE III 2019

Get Real. Why Now Is the Best Time for Law Firms to Drive Cultural Changes with Real-time Data Insights.

The legal sector’s working capital life cycle, from recording work to the moment cash arrives in the bank, is under more scrutiny than ever as the issue of lock-up, the sum of unbilled work, and debtors, continues to hold law firms back. According to an analysis of the top 50 law firms’ accounts in 2017, by Smith & Williamson, law firms were owed £5.2 billion by clients and nearly £2 billion sat on the books unbilled as work in process (WIP).

The longer legal work is unbilled, the harder it is to recover. Delayed invoicing can also hamper a client’s perception of a firm. Most importantly, companies need cash to grow, so lock-up not only creates operational challenges, but also inhibits investment in the future. If firms improved their lock-up by just one week, says Smith & Williamson, the top 50 law firms together would receive an extra £308 million of cash.

Part of the challenge lies with the very people who are most invested in the success of their law firm: the partners. Given the strong relationship-based nature of law, partners typically demand control and ownership over chasing client debt. While turning WIP into billings and debt into money are key performance indicators often found in a partner’s compensation plan, their reluctance to chase the client can hamper the financial operational efficiency of the firm. CFOs may try to push this cycle along, but they are often beholden to the will of the partners.

This is compounded by a lack of access to data. For firms that don’t have sophisticated business intelligence and information management solutions, data analysis is a manual and reactive process. CFOs, partners, and lawyers should be looking at data insights on a daily basis across the entire organization and various offices, departments, sections, and clients.

To improve cash flow and the overall success of law firms in a rapidly evolving business landscape, a major cultural shift is required. Finance teams require full visibility across the organization, powered by relevant and accessible real-time data. Crucially, they also need to permeate their contextual understanding of the power of real-time insights across the whole company, including urging partners to think and act in a more commercial way.

All law firms have vast amounts of data generated by their processing and transactional systems, but they fail to gather it in an accessible format and present it back to the business in a meaningful and timely way. Most people will not digest rows and rows of plain data, but visualizing it and implementing intuitive dashboards will expose the pain points. 

BigHand provides software solutions that give lawyers, partners, business managers, and finance teams crucial, real-time information on the state of their organization, enabling them to make smarter decisions. BigHand Quantum, for example, is a data-warehouse tool that automates the production, distribution, and consumption of key business information and gives lawyers and finance teams self-service analytics and reporting capabilities.

Global law firm Clyde & Co adopted BigHand Quantum to get its lawyers to engage more in the financial management of their clients. Not only did it achieve this, but it also found that the powerful data generated from the solution has enabled its staff to share information more quickly and consistently, providing one version of the truth across global locations and currencies to improve decision-making. Another firm, Foot Anstey, deployed BigHand Quantum to improve its reporting structure. With easy access to financial information, the firm’s lawyers now have a far better understanding of profitability by client, matter, sector, and work type.

It’s never going to be at the top of a lawyer’s list to chase down debtors, but if they’re aware of the quick solution, they can make the right call to deal with it. By not having to spend their time compiling, packaging, and disseminating data because it’s already available in real time, finance teams can instead focus on working with the business to interpret those insights and drive better decision-making. This transforms the role of finance in law firms.

Indeed, solving lock-up is just one area of value to be gained by increasing visibility across financial information. By acting on real-time insights, firms can improve their utilization, average billing rates, and recoverability, and partners can utilize the information to drive real business change. If you add all this together, it’s the Holy Grail of increased profitability. And by slicing insights by areas such as division, office, and partner, you can identify where you should be investing to grow the business.

Through easy access to all key financial metrics, partners can utilize the information to drive real business change. Foot Anstey has also deployed BigHand Evaluate, a matter budgeting and pricing tool that analyses aspects such as rates, staffing, and margins to determine whether work should be taken on and at what price. The new insights have enabled the firm to sharpen their pricing and avoid loss-making engagements.

Having achieved visibility over the health of their business and moving from a reactive to a proactive approach, the next steps for law firms will be not only understanding their core business drivers, but also harnessing and utilizing this data to provide detailed and accurate predictive analysis. With software solutions from BigHand, they can transform insights from historical data into savvy scenario-based planning for the future.
 

BigHand

BigHand is known for their leading voice products that integrate with a range of software platforms, including 3E MatterSphere. BigHand has since developed a suite of software solutions that empower customers to achieve big through their speech, delegation, document creation workflow and now, analytics tools. BigHand offers advanced analytics tools that enable organizations to achieve operational excellence through the power of transactional data. Their solutions help busy people achieve more in less time, with over 545,000 software licenses across 3,000+ global organizations. Their mission is to make big ideas become big achievements. That's the BigHand way. Click here for more information.

 
 
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