There has been a lot of recent commentary regarding the “impending doom” of Biglaw. Many industry observers point to a summer sprinkled with strategic layoffs (Weil Gotshal), changing partnership strategies (Patton Boggs), and speculated mergers such as Orrick + Pillsbury, or Patton Boggs + Locke Lord as the signs of significant change.
Recently, the Wall Street Journal highlighted how small and medium sized law firms are enjoying a growing share of corporate work that used to be the dominated by big law firms. Why? Smaller firms have been able to charge less, provide better service, while using talent that has years of Biglaw experience under its belt.
Biglaw Isn’t Dead, But Smaller Firms Are Catching Up
We have been advising clients that the current developments in Biglaw are the very early innings of a substantial industry change. We don’t believe that the Biglaw business model is by any means “dead”, but we have been pointing to several fronts on which small and medium sized law firms can continue to grab additional market share from their Biglaw counterparts. Above all, our experience validates that improving efficiency is a critical driver of law firm profitability and growth.
The Bottom Line: Efficiency is Key
But what is efficiency? It seems to be one of the more ambiguous and carelessly used words in the legal profession. From a practice management standpoint, efficiency is making more money from two of your primary resources: time & talent. In an evolving marketplace, improving efficiency will allow you to make more money, provide more value to your clients, and substantially improve opportunities to grow your firm.
Improve Efficiency Now: Analytics Will Jump-Start Your Business
Of all of the strategies and tools that we provide our clients to improve cash flow and partner compensation, the most powerful is analytics. Law Firm Analytics allow managing partners to improve revenues, increase profits, and more effectively balance work across their firm (leading to improved retention).
After achieving significant financial improvements using analytics, law firms can use their newly minted revenues to boost compensation, attract higher-level talent, grow their business, and increase market share. What are analytics?
Analytics: Taking the Guesswork Out of Law Firm Management
Managing a law firm via gut-instinct and intuition can lead to varying degrees of profitability. Sometimes, the firm makes a lot of money. Other years, not so much, especially when productive lawyers move on to greener-pastures.
Law Firm Analytics take much of the guesswork out of managing a law firm. Analytics drive better business decisions, higher profits, and make managing a law firm less time consuming. In fact, the firm’s new-found time and money can be devoted to endeavors that grow their law firm and capture market share. How does it work?
Analytics: A 3-Step Process With Proven Results
Analytics simplify law firm management. In fact, our proprietary three-step process improves law firm revenues by up to $50,000 per attorney:
- Report: Using the time and billing data that your firm already generates, Bridgesphere designs a custom reporting package for your law firm.
- Analyze: Our proprietary financial models analyze your billing data, highlighting specific opportunities to unlock time and money that is trapped within your data.
- Counsel: Our expert guidance helps partners quickly interpret our powerful reports, leading to improved revenues, higher profits, and improved employee retention.
The financial results are striking. Bridgesphere’s analytics have driven improvements in efficiency that boost revenues between 10% and 40% in a single year.
How to Improve Revenues Up To $50,000 per Attorney:
Every firm is different, but having reviewed volumes of law firm time and billing data, every team of attorneys consist of a unique set of opportunities, that if identified, can allow managing partners to take-action and make more money. The opportunities are voluminous, however, several examples of the financial opportunities identified by our analytics include:
- Not finishing “nearly-completed work” by the end of a billing cycle
- Attorneys billing the cases they “want to work on”, versus those that make the most business-sense for the law firm
- Having the wrong attorneys work on flat-fee matters (when an under-utilized counterpart can deliver better client service while earning higher profits for the firm)
- Allowing the wrong attorneys to “bill less” in exchange for time spent marketing
- Having the wrong mix of contingent fee and hourly work
- Early warning signs of overworked lawyers that are beginning to lose motivation
- Underproductive partners
While every law firm consists of a unique team of talent that gives rise to a unique set of financial opportunities: every law firm has the ability to improve revenues up to 10% by simply improving efficiency.
You Can’t Improve What You Don’t Measure:
Simply knowing the monthly or annual utilization and realization rates of your lawyers isn’t enough. Having real-time access to insights that are fully customized to help your firm make more money can help your small or medium sized law firm capture market share from larger competitors. Smaller firms need an edge. Law Firm Analytics can be your edge against larger law firms. Make more money, improve client service, retain your most valuable talent.
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