Law firms are in business to make money, help people and ensure justice is served. However, the primary reason why people around the globe practice law is to make a good living. Legal practitioners who make prudent use of data ultimately make that much more money. If your law firm is not data-driven, it is time to put the “information avalanche” to good use.
The Importance of Being a Data-Driven Law Firm
Data-driven attorneys have made significant financial gains in recent years. There is no reason to assume these legal practitioners are uber-smart or tech geeks. The little-known secret of successful data-driven law firms is they make the most of the information they generate. In particular, data related to pricing matters a great deal. Nowadays, clients anticipate they w ill be provided with the option of an alternative fee arrangement. However, plenty of attorneys have not delved into these waters as they suspect they will have to set their fees egregiously low. However, the proper use of accurate data will make it that much easier to set the proper fixed fees that prove mutually beneficial to clients as well as attorneys.
Setting the proper pricing will prove easier with the analysis of data from prior cases. In particular, the number of hours each case required and the tasks necessary to complete those cases matter a great deal. Zero in on the amount of money your law firm earned from these tasks before making a decision on your pricing strategy. Once you have all the data analyzed, you can make a prudent decision about client fees in the context of their unique cases.
Creating additional revenue is not completely centered on recruiting more clients. Revenue generation is also dependent on how you and your team spend your time. The top attorneys at your firm should use this data to gauge whether company resources are being used in a manner that generates profits. Analytics can also be used to review the law firm’s performance and set the stage for future success. Such forecasting predicts patterns likely to develop in the future, the likelihood of new cases being added and the areas of the practice most likely to grow or shrink. Data ultimately helps law firm partners and head attorneys make intelligent, highly-strategic business decisions that ensure success across posterity.
Every Law Firm can Become Data-Driven
Transitioning into a data-driven law firm is somewhat challenging yet every firm is capable of making this important segue. Myriad resources are available to help your firm collect and study essential data that paves the way toward increased profits. It all starts with collecting data. Law firms should have accounting and practice management systems established to collect specific information. Everything from collection rates that compare revenue to billing to realization rates and utilization rates should be tracked down to the very last detail. This information is essential to understanding the number of hours spent completing billable work, the amount of money collected and the effectiveness of attorneys’ time spent working.
Once the data is collected, it must be analyzed. The proper legal billing and practice management programs will facilitate this task. As an example, TimeSolv’s legal time tracking/billing program gives attorneys access to dozens of reporting features. These features reveal important insights about time tracking, accounts receivable, project management, invoicing, payments, timekeeping and beyond. Make use of these insights and it will not be long until your law firm is truly data-driven.