Nearly three weeks into the pandemic, most lawyers are finally settled into their home workspaces ready to get to work. However, many signs point towards a recession, as the stock market and unemployment rate are breaking with nearly 10 years of positive trends. Firms are starting to have serious questions about how to respond after years of strong demand and getting a fast start on answering them through business intelligence can make all the difference.
Legal has always been billed as recession-proof, but on the inside, we know that the downturn means that the legal space is going to be more competitive. Lawyers will now have to deliver quality service on a shrinking budget. In times like these, firms have to work smarter, and every decision made about the business side of law has extra weight.
We’ve been showcasing the benefits law firms can enjoy from business intelligence and financial analysis for years. Now is the perfect opportunity for your firm to experience it first hand. Your firm can best leverage its data to get through the economic downturn by tracking three specific key performance indicators: billing and inventory, comparative insights, and collections.
Billing and Inventory
Personnel on the business side of a law firm are accustomed to using spend data to track monthly trends in accordance with monthly billing cycles. Some especially savvy firms are starting to hone in on and analyze these efficiency trends on a daily basis. Daily analysis tends to uncover more granular inefficiencies that are less visible in a monthly metric analysis. More importantly, daily trend data shows how efficiently matters are being worked in near real-time, which keeps lawyers accountable and, by extension, keeps firms on budget.
Collections
Collections are a constant plague for law firms. We’re not going to pretend that business intelligence solutions are magically going to incentivize clients to pay on an ideal schedule. However, ongoing tracking of delinquency data can help maintain cash flows in uncertain times. BI solutions are especially helpful for putting related data all in the same place. This saves billers time when pulling collections data and helps law firms keep track of both the most consistently realized clients and the most consistently delinquent. One tip: focus on generally good payers that the data shows have slipped. That may have a more positive impact in the short term than chasing the frequently delinquent. We consider collections data a key performance indicator because it can have such a big impact on positive cash flows.
Comparative Insights
The final metric which firms should be closely monitoring is comparative insights. This is about seeing all the drivers from hours to margin percentage and comparing the numbers to prior periods. By seeing what’s changed in terms of discounts, write-offs, outstanding WIP, payment patterns, and more, your firm can better foresee risk and maintain profitability. Understanding the drivers of margin, even as they change, allows you to plan for improved profitability.
In stressful times like these, the best tools help firms maintain growth and consistency while keeping up with customer requirements for competitive pricing. Lawyers want to remain known for their reliability, and nothing will help more than giving them tools to dig deep into their own performance data. Iridium’s BI and financial analytics solutions give your firm key insights to improve your business, and there is no better time than now to invest in visibility.
