Making better decisions

26 07 2010

Good management information is at the heart of the outsourcing industry. Having worked directly in this field, both as a lawyer and a commercial animal, for six years, I have seen plenty of spurious arguments and assumptions but to the sword by solid data. Where margins are slim, and operational efficiency is a must, having good quality management information is absolutely critical. Dashboards, and clear, real-time communication of data is a way of life, and decisions are made, if not purely on the data, at least supported by data.

The Partners were impressed by the dashboard, if not the information it was showing

Law firms are very different; many can produce plenty of data heavy spreadsheets showing chargeable hours, WIP levels and overdue debtors, but getting more meaningful information to both employees and clients can be more challenging. Profitability by matter (in real time) is not often seen by lawyers, nor is a team sales pipeline (showing forecast revenue, opportunities converted etc) and a profit and loss for specific services (for example showing cost of sale) is another one that would be very useful for law firms looking to evaluate their portfolio of services, but one that I’ve not seen much evidence of. From a client perspective, how about a report of who in a corporate client is calling the law firm, and what are the key issues triggering the calls? How about recurrence of questions: are some people asking the law firm the same question over and over? How could this information be used to highlight knowledge gaps or training needs? How about an analysis of employee tribunal claims over the last 12 months for a client, with some root cause analysis?

In this information rich world, there is so much more that can be done within the legal profession, yet unlike corporate life where the rise of analytics seems consistent across sectors, it seems to have passed many law firms by. Perhaps one reason is that many law firms still lack a Chief Information Officer. With management information sitting in the silos of finance or IT, perhaps without the skills to unlock it, the potential users of this rich seam of information may lack the awareness of what’s possible. A good CIO could help show them the “art of the possible” and also evangelise the benefits of good management information.

As law firms become ever more complex and distributed, arguably the need for good MI increases. For the firms that get it right, my belief is that it can create real competitive advantage; both directly in terms of delivering value directly to clients, and indirectly in terms of making lawyers more effective (in particular making sure they spend their time working on the right things).

So with that, go forth and create dashboards…..


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2 responses

4 08 2010
Paul Rutherford

The first question to ask on this issue is “who is the user and why are we providing them with data”. In the case of law firms (from my layman-user perspective) it’s usually a record of time to justify fees:

“This document took at 8.5634 hours to complete”

Well, you know what? I don’t care. Maybe the firm is just extremely inefficient at producing documents.

Much more important is the value of the work. “This piece of work cost me £500 to save me a £50 fine” is not good value. Reverse those numbers, and it’s great legal advice.

The problem is that value – perceived or otherwise – can be difficult to quantify.

We can measure everything, except the things worth measuring.

4 08 2010
intelligentchallenge

Funnily enough I had a conversation with a law firm partner about that very subject yesterday. His view was that (corporate) clients always talk about “value billing”, but in reality all they want is their bills to go down. My view was that actually, if I get some work that is really good and delivers extra value (for example if the matter is urgent and I get it at super speed) then I’m happy to pay upside. His response was that this approach requires a mature relationship, and not all clients will provide that. That I agree with, but there are also plenty of law firms that aren’t prepared to have a similar dialogue when the fees need to go downward: as you say, I don’t care how long it takes, unless we have agreed certain parameters and those have shifted. In those cases its a question of how we’ve allocated the risk between us.

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