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Analyst Research:  The ROI of Law Firm Practice Management

The ROI of Law Firm Practice Management Tools

What would an additional 48-96 hours of billable time mean to small law firm over the course of a year?

In a new report titled, Building a Business Case for Law Practice Management, analyst firm Blue Hill Research demonstrates those extra hours could add up to more than $21,000 in annual revenue at the high end of estimates.

How does a law firm gain those additional hours? By investing in IT and specifically law firm practice management solutions to improve efficiency of both attorney and staff:

“Generally, research participants indicated that their interest in practice management stemmed from the availability of a centralized and integrated management of client, billing, and matter information. Practice management offers a “single source of truth” that preserves relationships between these types of information and automates tasks and scheduling of activities.”

The report’s author, David Houlihan, Esq., interviewed 45 law firms with 50 or fewer attorneys about their use of practice management tools. Based on those interviews he found law firms report a reduction of 4-8 hours per month in un-billable time and have approximately 40% fewer support staff.

For the smallest of law firms, the benefits of practice management solutions tended to center on reducing administrative burdens and therefore un-billable time, according to the report.  However, once firms cross the threshold of 10 or so attorneys – practice management tools tended to have a larger impact on the costs associated with support staff.  For example, and generally speaking, law firms with practice management tools – better automation – required fewer support staff.

A recent survey of 309 small law firms about billing processes places the promise of automation into an administrative context. The majority – about 62% – said their law firm typically spends between 8-16 hours a month invoicing and billing clients, while 58% said they felt this was too much time.  In addition to billing, the Blue Hill report cites eight other common law firm business processes that can be automated with practice management tools:

  1. Conflict checking
  2. Scheduling
  3. Time tracking
  4. Billing
  5. Account reconciliation
  6. Matter management
  7. Collaboration
  8. Remote access (mobility)

What about the time and effort – the change management aspects – it takes to implement such a solution?  The report cites a partner at a 25 attorney law firm:

“The analogy I use is this: imagine we all had to walk to the court house. Then, say we all got Cadillacs. I read the manual and take the time to learn all the features. You didn’t have the time to change. I start driving to court. Now, not only are you walking, you have to push your Cadillac. I don’t care how long it took me to read the manual, I’m going to pass you and my A/C is going to be on. Which one of us is going to have a better time in court?”

The complete report is filled with easy to read charts that explain the cost and revenue estimates used to build the case.  It also provides law firms with recommendations for developing a more precise business case tailored to the unique needs of a specific firm.

It is, as the title might suggest, an excellent guide law firms can follow for building their own assessment. The full report is freely available for download on the research firm’s website with registration.

If you enjoyed this post, you might also like:
8 Things Lawyers Say they Would Change about Billing 

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About Frank Strong

Frank Strong
Frank Strong is the communications director for the LexisNexis software division located on NC State’s Centennial Campus in Raleigh. In this capacity, he leads communications efforts in support of software products for law practice and law department management and also litigation tools – across large law, small law and corporate counsel segments. With more than 15 years of experience in the high-tech sector, Strong previously served as director of public relations for Vocus, which developed marketing, PR and media monitoring software. He has held multiple roles both in-house with corporations, ranging from startups to global organizations, and has also endured the rigors of billable hours, having completed gigs at PR firms including the top 10 global firm Hill & Knowlton. A veteran of two year-long deployments, Strong has concurrently served in uniform in reserve components of the military for more than 20 years, initially as an enlisted Marine and later as an infantry officer in the Army National Guard. Strong holds a BA in Film and TV production from Worcester State University, an M.A. in Public Communication from American University, and an M.B.A. from Marymount University. He is a PADI-certified Master Scuba Diver and holds a USPA "B" skydiving license.
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  1. […] Great article here from Business of Law Blog about how practice management software can help you stop leaving money on the table by finding more billable hours.  Over the period of a year, a new report estimates small firms could find an additional $21,000 in revenue by capturing 48-96 hours that would otherwise go unbilled. By automating tasks and scheduling activities, the increases in time really add up.  Are you maximizing your time in your legal practice? If you’re interested in learning the benefits of the latest legal practice management software, contact us. We’d love to show you. […]

  2. […] Analyst Research: The ROI of Law Firm Practice Management – Blue Hill Research published an excellent resource for small law firms building a business case and understanding the ROI of law firm practice management. […]