The following is an excerpt from a new eBook titled 15 Ideas for Getting a Jump-Start on 2015 which is freely available with registration.
According to the 2014 Law Firms in Transition Survey from Altman Weil, a large majority of law firm leaders report that greater pricing competition, practice efficiency, commoditization of legal work, competition from nontraditional legal service providers, and non-hourly billing arrangements are all permanent changes in the legal landscape.
In the new landscape, finding opportunities in the changing market will prove difficult for firms resistant to change. But these changes also present many opportunities to improve law firms’ competitiveness, both long and short term.
As a start, firms should start small, take risks, learn some valuable lessons, and grow from the experience – in short, encourage innovation. For example, some firms have invested significant time and money in developing customized financial reporting producing performance metrics based on client billing, collection, realization, and costs associated with producing work – from task to timekeeper – then used those metrics to determine where the firm can offer more competitive alternative fee, or non-hourly, arrangements.
Smart firms continue to embrace the changes in the legal profession and in doing so, have opened the doors for increased business development opportunities.
For those firms looking to get started down the path of exploring strategic opportunities and addressing the challenges of the new landscape, it is important to have useful, and particularly, responsive analytics and meaningful data to draw from, and that information is usually right in your backyard – your time and billing systems.
Within your time and billing system resides all of the performance and historical data information that you will need. The historical data can be analyzed in many different scenarios, with varying assumptions, and in most cases, with relative ease, for making the most informed financial and strategic decisions for the firm.
Most important, before most firms can take these initial steps, I would add that law firm principals need to understand their firm’s performance. While internal systems and software can generate information, that information must be reviewed and analyzed with an understanding of how and why the firm performs as it does.
For example, do law firms know how much it costs to produce a billable hour? By practice? By timekeeper? By client or matter? Are your alternative fee arrangements generating profit?
Improved understanding of these economics will assist firms greatly in their pricing and strategic business development initiatives – both of which are critical to remaining competitive, and profitable, under the new legal landscape.
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The complete eBook, with 14 other expert view points, is freely available for download with registration here.
Frederick J. Esposito, Jr., CLM, is the Executive Director of Rivkin Radler, LLP in Uniondale, NY. He can be contacted on Twitter: @lawmgtguru or on LinkedIn. An earlier interview conducted for this blog can be found here: 5 Questions with a Law Firm CFO.
Note: A version of this article originally appeared in the American Bar Association’s Law Practice Today June 2014 under the title: The New Landscape: Challenges and Opportunities Facing Law Firms (reprinted with permission).
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