Expectations for today’s law firm CFOs have evolved, with many new responsibilities landing outside traditional finance concerns. Using the right tools and tactics, CFOs can apply a keen set of analytical skills from a broad cross-organizational perspective to help their firm gain clear performance advantages.
Proactive law firm CFOs quickly discover they are uniquely positioned to lead firm growth, profitability, and digital transformation. As a law firm CFO, here are three ways you can take charge and fulfill your evolving role as a law firm change leader.
1. Lean into Disruptive Technology, inside and outside of Finance.
Accelerated digital transformation has pushed law firms to adopt technologies that support remote work, automate repetitive tasks, and improve productivity. To optimize software purchasing decisions—or any decision—you have to see where you’re going and know where you’ve been.
That means continuously measuring and monitoring the firm’s digital performance. A powerful yet flexible reporting foundation custom-tuned using BI and finance analytics tools allows you to look back on past actions with clarity, look forward with confidence, course correct now, and remodel operations in real-time.
Evaluate the Likelihood of a Strategy’s Success Prior to Allocating Resources.
CFOs are often familiar with using finance analytics tools to assess big picture numbers like revenue per lawyer, profit margin, and profit per equity partner (PEP). To meet today’s expectations, you need integrated digital systems firmwide to monitor more useful KPIs and measure more specific metrics, including leading indicators that show how likely you are to hit a goal. Integrated digital systems let you keep more fingers on more pulses, enabling you to make data-backed observations and:
- use more accurate revenue modelling in budgets and forecasts
- better determine reliable cost-improvement strategies
- proactively identify internal issues and respond to changing market conditions
- guide pricing and resourcing decisions that give your firm a performance edge.
Implement Specific Metrics to Track Progress toward Targets.
As a CFO, you can help your firm target the smartest KPIs and metrics among an ever-expanding universe from which to choose. For example, you can track distinct data points to calculate a technology tool’s impact on efficiency and answer questions like:
- How much time and effort have paperless prebills saved us? How much faster are invoices getting paid?
- What efficiency advantages did we gain through automatically generating and routing more reports? Where else can we apply similar automated processes?
- Did adding automated alerts prevent bottlenecks and delays? Should we add more notifications?
Embedding basic finance capabilities in systems throughout the firm also allows the finance team to answer ad hoc requests in minutes instead of hours or days.
Develop User-Friendly Dashboards That Enhance Clarity.
Custom role-based dashboards give your law firm real-time visibility and responsiveness. Your management team and lawyers get the right information where it needs to be quickly with automated report generation and targeted distribution.
Signal required actions with custom alerts. Dashboards with data visualization tools such as pie charts and graphs help lawyers manage workloads more effectively and focus their efforts where they’re needed most. Lawyers and staff access updated performance metrics daily to pinpoint when their performance, or that related to a group or matter, gets sidetracked.
2. Create Value through Strategic Leadership
Law firm CFOs are stepping up to advise firm management teams and lead digital transformation projects. To be seen as an effective agent of change, CFOs must also inspire and motivate. You can be instrumental in cultivating a firm culture that centers on education to help executives, lawyers and staff adapt to a rapidly changing world.
Promote a Culture of Continuous Measurement and Learning.
As Satya Nadella, CEO of Microsoft, puts it, leaders must transform from “know-it-alls to learn-it-alls.” This involves adopting a growth mindset as the foundation of a culture focused on continuous measuring and learning. Sharing more information across the firm will help groups work better together—an approach that requires the CFO’s backing to flourish.
Image source: NeuroLeadership Institute, The Microsoft Story
Tactics that CFOs can use to prioritize expanding employee skillsets firmwide include:
- Implement job rotations to ensure those in traditional finance roles continue to learn new skills.
- Develop individual and collective benchmarks to measure performance and inspire constant improvement.
- Provide KPI reports at regular intervals to help lawyers identify opportunities for improvement.
Also, stay open to expanding your responsibilities. Consider how your current capabilities connect to future opportunities for leading firm growth and profitability. Fearlessly pursue new skills that enable you to help the firm keep up with the changing marketplace.
3. Focus On Connecting the Dots
BI and finance analytics tools work like powerful microscopes with multiple magnifying lenses to help you drive cross-organizational alignment. From your high-level viewpoint, you can connect the firm’s people, processes, and resources in ways that eliminate productivity constraints, create earning capacity, and maximize long-term value.
We’re here to help you shape your firm’s move to a data-driven approach to performance optimization.
