The law firm - A story of time gone by
• Doing the work – This goes without saying
• Getting paid for the work – It’s not always as simple as it sounds
- First of all it can help the firm gauge timekeeping performance at the firm.In the past firms have relied heavily on the ‘hours worked’ metric which essentially delivers on quantity of time but not on the quality of time inventory. The result can often lead to future collectability issues and negative realization and ultimately it may be a sign of unhappy clients. Happy clients, pay bills and they keep coming back! The “velocity” metric which essentially measures time elapsed between when the time was worked and when it was recorded is a measurement that delivers on the “quality” element. Measuring velocity at the firm, practice group and individual timekeeper level, will indicate the level of contemporaneous capture and in turn the quality of the inventory. Better quality inventory means improved collectability and better realization and most probably better client relationships. In fact firms have actually used historical data to prove the correlation between poor quality time (measured by low velocity numbers) and negative realization. The velocity stat is one that every firm should be trying to determine, giving them the power to act immediately, improving both the success of the firm and the benefit delivered to its clients.
- The second key area in the world of Alternate Fee Arrangements or Value Based Billing, (the preferred term used by corporate counsel), is understanding cost allocation to drive profitability, specifically in Fixed Fee matters. Put simply, knowing that the right experience /cost levels are working on the right phase/area of a matter can determine level of profitability and can also help in determining the optimal pricing to win in a competitive bid situation. Using analytics by mining the firms time data with focus on lawyer experience/cost vs. ranking the work product in terms of value (the value of the work at the “assessment vs. trial prep and/or pleading stages are obviously different) can produce compelling metrics that may lead to re-alignment of the resource pool against the matter-in-progress or impact a pricing model in the bidding process. The information gathered from both of the above, can help law firms take action in improving profitability, improving business development (i.e. more competitive bids) and improving client relationships, safe in the knowledge their time inventory is always of a high quality.