Legal time and billing systems, such as those built by Aderant and Elite, are great for tracking time, creating bills, and making standard reports. However, preparing and sending out bills is not enough, especially in these times. Clients are asking for discounts and demand is waning, so firms need more detailed profitability analysis than the standard reports from time-and-billing solutions provide.
Making sure you are collecting enough data, which is the domain of time-and-billing systems is only part of the challenge. Ensuring your team has the tools to put that data to work is the rest. Firms that harvest actionable trend data have better control over their day-to-day expenses and a clearer view of profitability.
Billing Requires Deep Understanding—But Don’t Forget Cost
Billing data can serve as good measures for understanding basic revenue trends as well as associate and partner performance. However, firms can miss valuable insights if the expense element of the profitability equation takes a backseat. Expense data analysis provides firms with actionable metrics to drive profitable behavior. Tying expense data to clients or matters can be critical when determining how to respond to pricing adjustment requests, including how much of a discount can be applied while still retaining profitability at the client level.
Dashboards are Key
The ability to understand your data on a daily basis—both on a granular level and as a big picture—is another critical aspect of profitability, especially with the market conditions changing so quickly right now. In today’s economic climate, firms need an all-inclusive (one-stop) dashboard. With a powerful dashboarding solution, firm managers can access a wealth of information, including accounts payable and accounts receivable data, financial reporting, and bank reconciliation. This quickly provides an in-depth picture of the law firm’s financials allowing law firm leaders to make and execute on key decisions faster.
Timeliness of Time and Billing Data Can Make All the Difference
At Iridium, we’ve consistently promoted the importance of fresh data and daily insights. Firm managers who employ daily trend analysis achieve much greater visibility into firm performance and areas for potential improvement. However, this only works if hours are posted and billed on a timely basis. Even though this may seem like micromanagement, daily trend analysis data helps firm managers understand what moves to make, while also improving collections and profitability. For those needing a quick start toward daily reporting, Iridium’s new Daily Insights Tracker may do just the trick.
Recessionary times can be especially difficult for law firms because they are under pressure from clients in terms of demand and rates. The most obvious answers to increasing profitability include reducing headcount or compensation, but firms must be careful and creative in trimming the fat. The way to ensure good decision making—for example understanding profitabilty by lawyer or matter to know exactly who to cut, and having the ability to predict demand to know how much to cut—always lies in having the best data at a glance. Continuous visibility into critical data helps firms reduce inefficiencies and extract value from parts of the firm they may not have expected.
If you have questions about how to effectively track and act on daily insights, we’re happy to provide guidance. Reach out to us online, or call us at (610) 981-2199. We’re here to support you.