Wilson Allen: The path to profit by unlocking data
Many law firms today are performance-focused, which typically means that they use time and billing data to inform a delivery model that optimises rates, utilisation and leverage to drive profitability. This has been an effective model for driving profit per partner. It is, however, inward-focused as opposed to concentrating on client value.
Many successful performance-focused firms are beginning to take the journey toward a more value-focused approach, which puts a greater emphasis on client relationship management and uses client feedback to drive strategic goals and marketing strategies. These firms have realised that, in an increasingly competitive market, the path to profit involves not only traditional performance objectives, but also client needs and expectations, and the relationship between a firm’s collective experience and the outcomes it achieves for its clients.
As data has traditionally been managed in silos, there often needs to be a cultural shift, starting with firm leadership, to encourage sharing and cooperation. The first step in the process is defining a firm’s strategic imperatives and ensuring a roadmap exists to provide the data to support them
One of the biggest hurdles firms have had to overcome in the effort to increase the focus on client needs and outcomes is expanding the pool of data that they use to inform strategy and operations. Unlocking profit potential requires a commitment to integrating data from financial, marketing, business intake, and other systems, to provide information about both performance and client needs and outcomes to the people who can act upon it. As data has traditionally been managed in silos, there often needs to be a cultural shift, starting with firm leadership, to encourage sharing and cooperation. The first step in the process is defining a firm’s strategic imperatives and ensuring a roadmap exists to provide the data to support them. Expanding the data pool can happen incrementally and still provide significant benefits from both an operational and a strategic perspective.
Firms making the journey have demonstrated the potential for change by delivering dashboards to measure practice group, industry, lawyer and client performance. Such information often becomes a springboard to show how integrated data can help firms provide more value to clients. But adding client feedback to the mix can help firms to look at their businesses from the outside in. Performing a gap analysis between what clients think about the firm and what the firm thinks about itself can offer new insight about how a firm delivers value.
As the world has evolved, so must law firms. Today the most valuable companies are not energy companies or manufacturers. They are Facebook, Apple, Google, and Microsoft – all companies that rely on sophisticated, integrated data analysis to fuel their businesses. Integrating previously disparate data stores can help firms rethink how to drive client value while continuing to improve performance.
